NEW YORK (TheStreet) -- ChinaCache International Holdings (CCIH - Get Report) soared to a one-year high of $26.84 on Monday after the content delivery network announced a $55 million private placement.
The company announced via a press release that it had signed "a definitive securities purchase agreement with certain institutional investors affiliated with one of the world's leading institutional investment management firms." The aggregate investment will total $55 million at a purchase price of $16.34 a share for for 3,365,973 American Depositary Shares. The company expects the transaction to close by the end of March.
"We are pleased to have attracted top-tier institutional investors to strengthen our institutional ownership profile and augment our capital expenditure needs," said acting CFO Jing An in the statement. "One of our top priorities is to continue to attract long term institutional investors to our company as we execute on our plans to drive shareholder value. With this financing, certain early stage and existing investors can achieve liquidity, and enable additional quality investors to establish a presence in the ChinaCache name."
The stock amassed a volume of 1,669,257, more than double its average of 698,282. It holds a one-year low of $3.50 and hit a low of $19.50 for the day.
TheStreet Ratings team rates CHINACACHE INTL HLDGS -ADR as a "hold" with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHINACACHE INTL HLDGS -ADR (CCIH) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 16.5%. Since the same quarter one year prior, revenues rose by 35.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Although CCIH's debt-to-equity ratio of 0.09 is very low, it is currently higher than that of the industry average. To add to this, CCIH has a quick ratio of 1.54, which demonstrates the ability of the company to cover short-term liquidity needs.
- 36.08% is the gross profit margin for CHINACACHE INTL HLDGS -ADR which we consider to be strong. Regardless of CCIH's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CCIH's net profit margin of -8.26% significantly underperformed when compared to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 916.9% when compared to the same quarter one year ago, falling from $0.46 million to -$3.72 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet Software & Services industry and the overall market, CHINACACHE INTL HLDGS -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: CCIH Ratings Report