Stock Update (NYSE:DANG): E Commerce China Dangdang Inc (ADR) Announces Unaudited 2Q:15 Results


E Commerce China Dangdang Inc (ADR) (NYSE:DANG), a leading business-to-consumer e-commerce company in China, today announced its unaudited financial results for the second quarter ended June 30, 2015.

Second Quarter 2015 Highlights

  • Total net revenues for the second quarter of 2015 were RMB2,312.3 million ($373.0 million), a 29.8% increase from the corresponding period in 2014.Gross Merchandise Value (“GMV”) from the marketplace in the second quarter of 2015 was RMB1,890.6 million ($304.9 million), a 32.1% increase from the corresponding period in 2014. The combination of product revenue from principal business and GMV from the marketplace reachedRMB4,130.3 million ($666.2 million) and grew 31.8% year-over-year.
  • Dangdang had approximately 9.7 million active customers, including approximately 3.5 million new customers, in the second quarter of 2015, representing increases of 15% and 19%, respectively, from the corresponding period in 2014. Total orders for the second quarter of 2015 were approximately 19.5 million, a 19% increase from the corresponding period in 2014.
  • Mobile orders accounted for 40% of total orders for the second quarter of 2015, compared to 17.0% for the corresponding period in 2014.
  • Net loss for the second quarter of 2015 was RMB21.2 million ($3.4 million), or negative 0.9% of total net revenues, compared to net income ofRMB28.8 million in the second quarter of 2014, or 1.6% of total net revenues.

“During the second quarter of 2015, we achieved another quarter of steady growth in revenue and new and active customers. We expanded our leading position in China’s books and media market, gained additional share in the baby, children and maternity destination category and continued to enjoy some of the highest conversion rates in the industry,” said Ms. Peggy Yu Yu, Executive Chairwoman of Dangdang.

“Mobile orders remained close to record levels at 40% of total orders, and we improved monetization of our mobile platform with a sharp increase in mobile advertising revenue. Our digital business is gaining momentum, driven by our growing catalog of e-books, including original content.  Although we incurred a loss for the quarter, we generated RMB77.6 million in operating cash flow and closed the quarter with RMB1.7 billion in cash and equivalents.  We remain focused on the future healthy development of our business,” Ms. Peggy Yu Yu concluded.

Second Quarter 2015 Results

Dangdang’s total net revenues in the second quarter of 2015 were RMB2,312.3 million ($373.0 million), a 29.8% increase from the corresponding period in 2014.

Media product revenue for the second quarter of 2015 was RMB1,391.8 million ($224.5 million), representing an 18.3% increase from the corresponding period in 2014. General merchandise revenue for the second quarter of 2015 was RMB847.8 million ($136.7 million), representing a 61.7% increase from the corresponding period in 2014. Other revenue including revenue from third-party merchants for the second quarter of 2015 was RMB72.7 million($11.7 million), representing a 9.7% decrease from the corresponding period in 2014, primarily due to a decline in logistics revenue from third-party merchants.

Dangdang had approximately 9.7 million active customers, including approximately 3.5 million new customers, in the second quarter of 2015, representing increases of 15% and 19%, respectively, from the corresponding period in 2014. Total orders for the second quarter of 2015 were approximately 19.5 million, a 19% increase from the corresponding period in 2014.

Gross margin in the second quarter of 2015 was 14.8%, compared to 20.1% in the second quarter of 2014 and 15.2% in the first quarter of 2015. The year-over-year decrease in gross margin was due to a larger contribution of general merchandise sales as a percentage of total net revenues and a decline in logistics revenue from third-party merchants. The quarter-over-quarter decrease in gross margin was due to adjustments associated with customer loyalty programs.

Fulfillment expenses, which include warehousing, shipping and customer service expenses, were RMB204.7 million ($33.0 million), representing 8.9% of total net revenues, compared to 10.7% in the corresponding period in 2014 and 9.1% in the first quarter of 2015. The year-over-year and quarter-over-quarter decreases in fulfillment expenses as a percentage of total net revenues were primarily due to improved operational efficiency.

Marketing expenses were RMB74.6 million ($12.0 million), representing 3.2% of total net revenues, compared to 4.6% in the corresponding period in 2014 and 4.3% in the first quarter of 2015. The year-over-year and quarter-over-quarter decreases in marketing expenses as a percentage of total net revenues were the result of lower expenditures for advertisements and online marketing programs during the quarter.

Technology and content expenses were RMB59.9 million ($9.7 million), representing 2.6% of total net revenues, compared to 2.6% in the corresponding period in 2014 and 2.8% in the first quarter of 2015. The quarter-over-quarter decrease in technology and content expenses as a percentage of total net revenues was primarily due to operating leverage.

General and administrative expenses were RMB47.9 million ($7.7 million), representing 2.1% of total net revenues, compared to 2.3% in the corresponding period in 2014 and 2.3% in the first quarter of 2015. The year-over-year and quarter-over-quarter decreases in general and administrative expenses as a percentage of total net revenues were primarily due to larger scale.

Government grants and value-added tax refunds were RMB1.3 million ($0.2 million) representing 0.1% of total net revenues, compared to 0.9% in the corresponding period in 2014 and 0.0% in the first quarter of 2015. The year-over-year decrease as a percentage of total net revenues was primarily due to a limited amount of government grants and tax refunds.

Share-based compensation expenses, which were allocated to related expense line items, were RMB2.5 million ($0.4 million) in the second quarter of 2015, compared to RMB2.9 million in the corresponding period in 2014,representing a 14.7% decrease.

Dangdang recorded an operating loss of RMB42.7 million ($6.9 million) in the second quarter of 2015, compared to operating income of RMB14.6 million in the corresponding period in 2014.

Operating loss excluding share-based compensation expenses (non-GAAP) was RMB40.2 million ($6.5 million), compared to operating income excluding share-based compensation (non-GAAP) of RMB17.5 million in the corresponding period in 2014.

Net loss was RMB21.2 million ($3.4 million), compared to net income of RMB28.8 million in the corresponding period in 2014.

Net loss excluding share-based compensation expenses (non-GAAP) was RMB18.7 million ($3.0 million), compared to net income excluding share-based compensation (non-GAAP) of RMB31.7 million in the corresponding period in 2014.

Net margin was negative 0.9%, compared to 1.6% in the corresponding period in 2014. Non-GAAP net margin was negative 0.8%, compared to a non-GAAP net margin of 1.8% in the corresponding period in 2014.

Diluted loss per ADS was RMB0.26 ($0.04), compared to diluted earnings per ADS of RMB0.35 in the corresponding period in 2014.

As of June 30, 2015, Dangdang had cash and cash equivalents, restricted cash, short-term time deposits, held-to-maturity investments and available for sale investments of RMB1,706.7 million ($275.3 million), compared to RMB1,399.0 million as of December 31, 2014. As of June 30, 2015, Dangdang had no bank loans.

Capital expenditures for the second quarter of 2015 were RMB12.6 million ($2.0 million).

Receipt of Preliminary Non-binding “Going Private” Proposal

On July 9, 2015, the Company announced that its Board of Directors (the “Board”) received a non-binding proposal letter, dated July 9, 2015, from Ms.Peggy Yu Yu, Chairwoman of the Board, and Mr. Guoqing Li, director and Chief Executive Officer of the Company (together, the “Buyer Group”), proposing a “going-private” transaction (the “Transaction”) to acquire all of the outstanding ordinary shares of the Company not already beneficially owned by theBuyer Group for $7.812 in cash per American depositary share (“ADS”), each representing five common shares.  The proposed purchase price represents a premium of 20% to the closing trading price of the Company’s ADS on July 8, 2015, the last trading day prior to the receipt of the non-binding proposal letter.

The Board has formed a special committee consisting of independent, disinterested directors to evaluate the Transaction. The special committee has retained Duff & Phelps (Duff & Phelps, LLC and Duff & Phelps Securities, LLC) as its financial advisor and Shearman & Sterling LLP as its United Stateslegal counsel in connection with the review and evaluation of the Transaction.  There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law. (Original Source)

Shares of E-commerce China Dangdang closed yesterday at $5.97 . DANG has a 1-year high of $14.48 and a 1-year low of $5.56. The stock’s 50-day moving average is $6.67 and its 200-day moving average is $8.42.

On the ratings front, Brean Murray Carret analyst Fawne Jiang reiterated a Hold rating on DANG, in a report issued on May 29. According to TipRanks.com, Jiang has a total average return of -1.4%, a 38.1% success rate, and is ranked #2985 out of 3742 analysts.

E-Commerce China Dangdang Inc is aB2C e-commerce company in China.The Company is engaged in selling books online. It is alsoengaged in other media products and selected general merchandise categories.