Merrill starts
Chinadotcom coverage
By Tim Eaton, CBS
MarketWatch.com
Last Update: 8:31 PM ET Jun
2, 2000
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HONG KONG (CBS.MW) -- Merrill Lynch
initiated coverage of Chinadotcom with a
long-term ?buy? rating and an
intermediate-term ?accumulate? rating
because of its business plan, market
position and probable entry into the
World Trade Organization.
In a research comment Friday, Merrill
Lynch analysts David Cui and Matei
Mihalca rejected the market perception
that Chinadotcom -- first listed on the
NASDAQ in July 1999 (CHINA: news,
msgs) -- is merely a Chinese language
portal.
They
instead
identified
Chinadotcom
as a
?leading
pan-Asian
Internet
company, operating in businesses ranging
from e-solutions and online ad agencies
to portals, often as a leader in these
markets.?
The analysts noted that the value of the
stock should range from $18.60 to $48.80
per share. They expect the price to sit
closer to $48 per share as sentiment
improves towards China-related stocks
after China?s probable entry into the
WTO.
The Merrill analysts also approve of the
company?s strategy to build a network of
Internet companies. Cui and Mihalca write
in their research note that this tactic ?will
become more than the sum of its parts.?
They expect that the Hong Kong-based
company will soon break into the
business-to-business arena.
Chinadotcom shot up to 78 in early
March on news of the company?s
investments in two Chinese Web
companies and share-swap agreement
with Japan's Softbank valued at $20
million.
Chinadotcom?s stock closed up 4 1/16, or
17 percent, to 27 7/8. Trading volume
was 6.2 million shares, about 2.8 million
shares over its 50-day average.
The Hong Kong company currently has
1,600 employees in 24 offices in Asia,
Australia and the U.S. The company had
$561 million in cash at the end of March
and burns $3 million per month.
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