China Digital TV: Expecting Stellar Growth

| About: China Digital (STVVY)
This article is now exclusive for PRO subscribers.

The market appears to be heading back up because of declining crude oil and gold prices, in addition to the stabilization of the US dollar after it bottoms. Without any negative news posted by the Fed regarding inflation or slow growth concern, the stock market will be pretty stable in the next month or so. The credit turmoil of the market due to the sub-prime mortgage assets owned by major banks, although still hovering around, have ceased to put a huge impact and downward pressure on the market after E-Trade (NASDAQ:ETFC) downed 59% on Monday.

Marketwatch and analysts from European countries have reports suggesting that the echoing huge write-down of sub-prime assets could have been over-exaggerated, which will then establish a base for the banks when their earning reports (10K) come out so they do not cross the bottomline and crash the market.

We should be able establish a stable market for China Digital TV Holding (STV) to start a bull-run later this week. The reasons for the lethargic movements around 32-33 dollars right now are largely due to the lack of investor attention, especially since the Chinese Prime Minister has delayed the Investor Program in China which diverts investor attention to other growing markets in South America and South Korea.

Nonetheless, since the fundamentals of China Digital TV Holdings, accounting for 44% market share in China and growing revenues, are solid and the digitalization of China is inevitable and forthcoming, we should be able to see the long term potential return of this company. When the news comes out regarding STV and its earning and growth potential, and earning reports show at least 40% growth and 30 million in revenue, this stock should draw the attention of the investing public, and a surge in stock price to at least $40 by the month's end is promising.

Adjusted for the volatility of the market, the target range after the earning report comes out should be $37-$39. Price target with an outstanding earning (33+ million, 50% growth in revenue) report should be $42.

  • Current stock performance: weak (attributed to the low volume of trading)
  • Company Fundamentals: Strong (growth company with tangible assets and products, market share 44% in China, industry is growing)
  • Recommendation: Long and hold

Analyst Disclosure: Covering general Chinese Market and Chinese advanced technology industry, long position on STV