Author: stlplace

Categories
China Stocks

More about Home Inns and Mindray

Reading Time: 2 minutes

Home Inns (HMIN) and Mindray (MR) both reported their Q3 earning last week. I listened to both the conference calls. HMIN obviously did better with revenue growth: RMB 160.4 m, 106.3% year over year growth. Mindray’s revenue growth was 21.6% because of the anti-corruption campaign in Chinese hospitals. I think that growth factor determined the stock PE ratio at this time, HMIN is 162, MR is 51.

Personally I think one quarter’s number could be misleading. So let’s look at the first 9 months number. Mindray revenue growth is 41.4%; Home Inns is 125% (from RMB 176 m to RMB 396 m). So once again HMIN is the winner here. The reason again is HMIN is growing like crazy these days. They opened 25 new hotels in Q3 and have 56 hotels in development. But I still have some doubts in its growth.

1) Home Inns room rate RMB 180 is not expensive in China coastal area (where it got started), it could be a bit expensive in central and western part of the China, when we consider the wage difference here.

2) Competition: it’s heating up. Besides Jinjiang Star, Motel 168, Super 8, Home Inns’s founder Ji Qi started another chain called Hanting, which is slightly expensive than Rujia (Home Inns), and targeted business travellers.

So the question is: will HMIN’s growth be sustained for a while? My bet is their brand will help them grow for a while, but like anything else in business, nothing can grow 100% forever 🙂 

Continue reading “More about Home Inns and Mindray”
Categories
China Technology

China Software Companies II

Reading Time: 2 minutes

A commond question about China software industry is: while China leads India on hardware, manufacturing and many other aspects, why is she behind India on software? After all, Chinese are smart people too. Well, the main reason, I think, is China has domestic demand for software, while India has to compete with the western developed countries (US, UK) for the projects. Or put it in another way, when Chinese companies enjoyed the relatively “easy money” for relatively simple domestic projects, Indian companies are swimming in the ocean, fighting with bigger fish such as IBM to get the food. The result? 20 years later, when Chinese companies are still swimming in the Eastern China sea, their Indian counterparts already landed in New York, LA, and London. This is not to dismiss the effort of Chinese software companies’ growth, which I will talk about later. Let me talk a little about Chinese domestic demand for now.

In the late 80s, there were need for companies and goverment agencies in the accounting area. The companies wanted to use computer to keep track of things. The goverment wanted to standarize things so that their life will be easier (collect tax etc). Two guys (incidentally, both accounting major) started developing the software: Wang Wenjing founded UFSoft in Beijing and Xu Shaochun founded Kingdee in Shenzhen. Later on they both evolved into ERP software vendor. It’s a natural extension from accounting to ERP, because “accounting” covers a great deal of the business: from planning, budgeting, to sales, revenue and cost. Today both companies are leaders among domestic ERP vendors; and UFSoft is bigger than Kingdee. But foreign vendors such as SAP and Orcale are getting the high end of the markets, due to their product strength and better relationship with multinational companies.

We know ERP certainlly is not the only game in the town, but China software companies essentially did start on this application. Some other companies such as Hangzhou’s Sunyard developed software for the banks; Dong Ruan (NeuSoft) started software outsourcing in Shenyang and Dalian. They both grow into big players. Meanwhile, there are many smaller shops which has 20 to 100 people and they develop custom software and provide consulting services for specific industries.            

Categories
China Technology

China Software Companies I

Reading Time: 2 minutes

I thought about this topic for a while; I decided to start it after seeing the recent hypes on E-future stock. E-future claims it is the first Chinese software company listed in the NASDAQ Capital Market. This is correct but it is a bit misleading. There are two markets in NASDAQ: National Market and Capital Market. Capital market is for small capital companies; and most Chinese companies such as Netease and Home Inns (Ru Jia) are listed in the National Market. The reason I mentioned this is there are at least two Chinese software companies in the NASDAQ right now: China.com (CDC Corp) and Ninetowns. You may say many Internet companies such as Baidu, Sina, Netease and Sohu are also developing software, why don’t I categorize them as software companies?

Well, in this discussion I define software companies as the companies that develop software and sell them to the end users (mainly enterprises), by licensing (Microsoft) or sell them as a service (Salesforce); and sometimes they derive majority of revenue from support and service (RedHat). In other words, as much as we like Google and Baidu, and their fantastic technology, they are not considered as enterprise software companies. In addition to companies that develop software (and have intellictual property), I will also discuss some software outsourcing companies in China. Because they also do enterprise software development or customization for companies like Microsoft or Oracle; and they provide consulting services for the end users sometime.

When I talk to people about enterprise software in China, the most frequent word I heard is “ERP”, or enterprise resourcing planning. It seems to many people that ERP is the only thing in enterprise software world. This is obviously not true. But on the other hand, I think it is also the first area computer (software) is used in the Chinese companies. UFSoft (Yong You), one of the largest software company in China, got started in Accounting and ERP software about 15 years ago. Interestingly, about 12 years ago I wrote a foxBase program to manage the cost accounting for my first employer in Shanghai. To be continued…

UFSoft

Categories
Stocks

It’s deja vu all over again

Reading Time: < 1 minute

E-future, a not well known Chinese company, set a record for Chinese stocks traded in the US. Its stock went from $10 to $43 in 4 days. In another words, in 4 days it “accomplished” what Google’s stock accomplished in 2 years: from $100 to $400. It seems like I missed a golden opportunity to get rich fast. But on the serious side, I think there are lots of bubbles involved. I looked at the price of 3 well known Chinese IPO stocks, the New Oriental (EDU), Mindray (MR) and Home Inns (HMIN), they are all trading at about PE 50 (ttm) now. Note HMIN and MR will report tomorrow and Thursday, we’ll see the stock get a reality check after that: if it beats, it will go to the moon; otherwise it will go back to the earth 🙂

I am also looking at the NyMex, New York Mercantile Exchange’s IPO this Friday, should be as hot as today’s Google. I bought NyMex’s competitor, Interconntinental Exchange (ICE), on Nov 17 2005 (and sold it the next day), the ICE has been gone from $38 to $97 in about a year 🙁  

PS, the SEC filing of E-future can be found here.

Categories
Software development

Increamental Development

Reading Time: < 1 minute

Friday afternoon, 4 PM, finanlly I made things working: I mean the program compiled and ran at the first time. So what did I do? I found there are some minor problems here and there, and I decided to correct them. Off I went to make those “important” changes. By 5 PM I completed the changes and now the code stopped compiling and to make things worse, I promised to my boss to give him/her a demo on Monday morning! Why would I put myself into this kind of situtation? Or don’t we all have those kinds of situation in our development life?

Continue reading “Increamental Development”
Categories
Saint Louis

What’s this

Reading Time: < 1 minute

Normally I had it in a “to-go” cup. This is the first time they put it in the glass cup.

IMG_4342  IMG_4340
Categories
Fun Saint Louis

Some pictures from Wash U. Diwali

Reading Time: < 1 minute

Diwali is the most important festival in India. I went to the Indian students Diwali party here at Washington Univ, Olin school of business. This is the second time I went to the Diwali: the first one was 7 years ago (1999) when I was in graduate school at Rolla. I like the enthusiasm Indian students showing their cultures to people from other background. Although I still can not take their curry. By the way, the dean of Wash. U. b-school is originally from India.

IMG_4336 IMG_4335
IMG_4334 IMG_4332
Categories
Business China

B2B Developments in China

Reading Time: < 1 minute

B2B, business to business, was a popular concept in dot com era. The idea was to connect the companies (suppliers, OEM, vendors…) using B2B software. In those days, there are a few B2B software companies such as Commerce One flied high. But B2B never grew as big as people dreamed in the US. On the other hand, Alibaba, the China company connecting Chinese manufacturers with foreign buyers, was very successful. The bar raised again recently as more players joined the party. One of them, is the Ninetowns (NINE), the company provides software for importing and exporting in China. The following is I saw from Andy Yu’s blog (in Chinese, see below).

We all know in business especially foreign trade, trust is very important. Essentially TooToo is creating its own rank system for the Chinese exporters. They have the raw data when providing the software and services for Chinese companies, and the rank is based on those data. When foreign buyers see an exporter is certified by TooToo, or “China Qualified Supplier”,  they can worry less about the quality etc. TooToo (Ninetowns) essentially is trying to create a credit report for the Chinese suppliers.

Continue reading “B2B Developments in China”
Categories
Saint Louis

Talent Election Party

Reading Time: 2 minutes

As promised I put some of the photos I took last night at Jim Talent election party. It’s interesting to see some young people (high school, college) to show up. The McLaskill photo was taken at my home TV.

IMG_4314 IMG_4304
IMG_4299 IMG_4318
IMG_4295 IMG_4289
Categories
Business Saint Louis

Election

Reading Time: < 1 minute

By now I think most people are happy with the election being over. At least we don’t have to bear with the silly ads on the TV any more. While I am not a political junkie, I went to the Jim Talent’s US senate re-election party in Frontenac last night. I figured rather than watching the TV at home, why not join the party as I used to saw people (mostly supporters) gathering for their canidates. I just want to get a feel of election party, that’all. The reason I picked Talent’s party because it’s only 10 minutes drive for me (hint, I lived near republican strong hold, Ladue). Later on I learned that Mclaskill’s party offered free bear. There are many interesting people there; I will post pictures later on and let them do tht talk.

Wall Streets obviously did not like the Democrats taking over house (expected) and likely control of the senate (unexpected). But in my mind, other than those stocks heavily influenced by the goverment policies, i.e., drug, oil/gas, defense, health care, stem cell, alternative energy, most stocks are unaffected by this. Also, (little noticed), Wall Street’s biggest headache, Mr. Elliot Spitzer won the Governor race in New York. That means he will leave the Attorney General post. I bet many people in the Street will be very happy 🙂

On the immigration issue, it could be positive because Democrats are pro immigrants in general. This could means the revival of immigration reform bill currently deadlocked in congress. Note President Bush is for the bill. Can we expect getting Green Card faster? I would not speculate on it because it’s way too early to tell — note there are some conservative democrats got elected, and they could make things uncertain.