Friday, October 5, 2007

I care about China's TV-watching habits

My China brothers and sisters, I care about your daily intake of television.

Have you caught up to our normal "rations" here in America? You know, the so-called experts have told us for decades that there's something wrong with watching, two, three, 15 hours a day of TV. To that, I say, whaaat? It's still cheaper, even with digital cable, than going to the movies three times a week. Cheaper than renting out DVDs every other day. You can trust that I love my TV, which I actually don't watch so much. More like I hear it in the background as I work work work. But back to you. Digital TV is on its way to you, available now in almost all of your provinces. Sign up. Enjoy. Laugh. Cry. Then watch some more TV!

But seriously, I have a sudden concern about TV-watching habits in China because my barely-existent exposure to China just grew. By a lot. It wasn't BIDU, CEO, CHL or even YGE. No, I wanted a stock in its infancy, with new technology in a land that's just starting to get used to digital-quality feeds and three-digit TV networks on the channel clicker. That's why China Digital TV (STV) fit the bill.

STV plus points
• its products are at 130 pay-TV operators in 26 provinces
• 44% market share
• China is requiring a switch to digital transmission
• revenue is up 108% for the first half of 2007 (YOY)
• net income is up more than three-fold for the same period

But the numbers are relatively tiny. Teeny tiny. And I loathe touching an IPO for weeks after its birth, let alone on its debut. (I stayed away from LULU until the stock found itself.)

It's the growth and new technology (to China's 1.3 billion pairs of eyeballs) that makes STV compelling. I can't say I feel absolutely comfortable with the Co's fundamentals since aren't a whole lot of numbers available. But the stock debuted today, originally priced below $13, then priced at 16, and opened at 37.50. Mania? Call it what you will. I didn't hear about it at all until late in the day, when CNBC mentioned it twice in a 5-minute period. So I checked it out and the intrigue grew. So did the discomfort.

Friday buys have been good to me, and though STV closed today's session below my entry point of 29.15, I have a very small position. I just fret because I don't know if the market will treat STV like a big boomer China stock or a middling wanna-be. Many of the recently hot China stocks, like CBAK, pulled back today, while BIDU, CEO and CHL rocketed again.

Is this a long-term hold? I can't say it is, not without more data. This is a rarity for me, a short-term trade, most likely. News will flow over the weekend, more people will hear about today's market explosion, and they'll look for some potential homerun stocks. China stocks. I'm glad this Co has some numbers to stand on, and I think the stock will run next week. But it's all speculation. It's not a stock I can add to my spreadsheet and pin down with 15 or 20 different statistical categories.

I can't even give this stock a grade yet without more data. Strictly a momo play, and if I still own shares when more data comes out weeks or months from now, maybe then I'll be able to grade the stock and consider it a longer-term hold. I could've just enjoyed today's gains, but I had to reach. More proof that I may still be attracted to chaos. Ugh.

Yes, chaos. STV has a puny float of 12 million shares. If my position weren't small, I might have to load up on dramamine.

Read more in Ivy Lessner's article at TSC. Play the Next Big China Stock With These IPOs

China Digital TV prospectus

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