A Meeker Effect on Chinese Wireless Value-Added Services Stocks? (TOMO, LTON, KONG, HRAY)

While Morgan Stanley analyst Mary Meeker didn't recommend any of China's pure-play wireless value-added service (WVAS) companies that trade in the US in her recent report (while not a pure-play WVAS company -- she has an over-weight rating on Hong Kong traded Tencent Holdings) she did have some bullish comments about the WVAS industry. How have WVAS stocks traded since her report (published on September 12th)? Take a look -- at her comments on the WVAS industry, Tom Online (ticker: TOMO) (equal-weight rating) and then at the chart:

From Meeker's Report:

We view mobile value-added services (MVAS; industry sales for MVAS excluding those for mobile carriers was $770MM in 2004, and should grow at a CAGR of 28% to $1.6B in 2007) as an overlooked opportunity. Despite regulatory concerns, entry barriers are rising and a segment recovery is in sight.

Meeker on Tom Online's Investment Positives:

• Market leader in MVAS sales
• Only company that ranks within top 3 in every MVAS business
• Most balanced MVAS portfolio in the industry with IVR/RBT, SMS, and 2.5G evenly contributing to top line
• Edgy content -One of the largest wireless content aggregators
• Edgy services -TOM-Skype
• Edgy distribution-alliance with radio, TV and telecom operators; portal as a self-owned MVAS distribution channel

Meeker on Tom Online's Investment Risks:

• Policy risks -billing platform migration, idle accounts, content crackdown, and revenue sharing changes
• Margin pressure due to content and distribution alliance
• Under-monetized portal traffic

Wireless value-added service companies: Tom Online (ticker: TOMO), Hurray! (ticker: HRAY), KongZhong (ticker: KONG) and Linktone (ticker: LTON):

TOMO, HRAY, KONG, LTON Price Performance (Last 3 months):