SA Transcripts • Tue, Nov. 11
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- Xunlei shares had fallen sharply over the past month.
- This is likely due to related company Kingsoft's profit warning and also a potential dispute with the MPAA.
- Shares rebounded following the company's hiring of new CTO Mr. Lei Chen.
- Xunlei is still one of my favorite longs heading into upcoming earnings.
- Alibaba is hyped as China's Amazon, but its business is totally different.
- Xunlei, by comparison, is building a network of properties that closely resembles Amazon.
- Xunlei's 53% owner, Lei Jun, founded Amazon China, and appears set on rebuilding it via Xunlei.
- We have a chance to invest alongside him below XNET's IPO price.
- With $7/share cash supporting the share price, Xunlei is a low-risk, high-reward opportunity.
- Cheetah Mobile doubled since IPO, Xunlei is an extremely similar company whose stock hasn't yet popped.
- Cheetah and Xunlei share same backers including the Chinese Steve Jobs; smartphone billionaire Lei Jun.
- Xunlei will trade to $20/share should it follow Cheetah's footsteps.
- Xunlei should also trade above $20/share based on valuation with comparable Chinese internet companies.
- $7/share of cash; Xunlei's investors are protected from significant downside.
Xunlei Limited's IPO Quiet Period Expiration Opens Buying Opportunity
- July 18 marks the end of the SEC-enforced 25 day quiet period on underwriter research for XNET; July 19th is the first day underwriters can release reports.
- These detailed research reports will likely be positive and cause a short-term price increase in XNET in the days preceding and following the quiet period expiration date.
- Although XNET has not performed with consistent strength, its IPO was positive, suggesting investor confidence and excitement in Chinese tech firms.
- XNET’s reputable underwriters, including J.P. Morgan and Citigroup, will likely help boost the price of XNET shares at this time.
We Plan To Take A Hard Look At The IPO For Xunlei Ltd
- XNET, a Chinese provider of a cloud-based internet platform, designed to allow customers to access digital content at higher speeds, plans to raise $73.2 million in its upcoming IPO.
- While the environment for Chinese tech company IPOs has been positive lately, we have some concerns about XNET's core business could be at risk when China increases its internet speed.
- We like this IPO.
- XNET is one of the top 10 largest Chinese internet companies, as measured by user base.
- Comparing Q1 '14 with Q1 '13, the income statement metrics declined.
- But the price-to-book of 1.7 is low for a China-based Internet company with a large market share.
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XNET vs. ETF Alternatives
Xunlei Ltd and its subsidiaries are engaged in the provision of online advertising services on its websites, premium downloading services to its members, online video sharing and distribution and online game platforms for game developers and users.
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