Dangdang (DANG, Financial) delivered a firm performance in the fourth quarter of 2014 positioning a fifth successive quarter of profitability. Despite stiff competition from market leader Alibaba (BABA, Financial), sales of first-party broad products rose promptly increasing 42% year-over-year. On net revenue from primary business and the fee received from traders grew 27% year over year, attaining RMB2.5 billion in the fourth quarter of 2014.
The organization has possessed the capacity to develop sales astonishingly in the course of recent years. Revenue has expanded by 37% per year since 2010 to $1.3 billion. Furthermore, administration sees the overwhelming sustained growth, requiring a 28% expansion in the first quarter of 2015.
Dangdang has spent the better piece of the most recent three years building out a system of satisfaction focuses. That build out has kept the organization from creating a benefit as of not long ago.
Cheaper than rivals
Gross Merchandise Value from the market was 61% year-over-year to RMB2.2 billion. The combined sales of both first-party and the third-party marketplace reached RMB3.2 billion up 55% year-over-year. Considering trailing assessments, Dangdang is reasonably expensive with a P/E ratio of about 62. This is still fairly shy compared to Vipshop's (VIPS, Financial) 129 times trailing earnings. Dangdang's advancing P/E is rather a bit more alluring at about 21. Additionally, analysts are anticipating great things from Dangdang in terms of earnings growth, with full-year fiscal 2015 EPS estimated at $0.45 for an enormous increase of 264%.
Future plans on track
Dangdang remains focused on increasing its base of high class customers. In 2014, the number of new customers and active customers improved 24% to 30 million and 16% to 24 million, respectively. Its transformation rates are among the top in China’s ecommerce industry. Mobile orders stay to nurture in terms of involvement, signifying 31% of total orders compared to 13% in the year past period.
Dangdang have supervised to cut mobile customer attainment cost by employing multiple channels for marketing and promotion. In the digital business they’re exploiting their chief position in the publishing industry to assist shape China’s growing digital reading market. Customers are spending more and more time on their e-reader application and the growth rate of e-book download is speeding up. The company have prolonged their digital publishing policy for original content as well as their leisure reading and audio book business.
In short, 2014 was a prolific and a successful year for Dangdang. They attained all of their operational and financial targets, some suffering loss of RMB143 million in 2013 to recognizing a yield of RMB88 million in 2014. The RMB231 million pick up was outstanding primarily given their spent on cultivating the large amount of involvement and their investments in digital book and the mobile technology. In 2015, the company will go on to develop their principle in the market business and with their noteworthy market share in China’s book industry, they’re determined to push sharply in digital content and digital reading to grow customer stickiness.
Conclusion
Chinese etrade firms keep on posting massive revenue and profit growths. Dangdang is making a decent showing of taking advantage of rising tide, beating on earnings and revenue for its Q4 report. For financial 2014, the organization effectively turned things around following quite a while of losses. In addition, EPS is required to grow substantially in the current fiscal year. In spite of the fact that the stock is expensive, it would appear that its price tag is justified.
