After the release of weak manufacturing data, Chinese stocks dropped on Monday, Reuters reports. The ShanghaiComposite fell more than 6% before trading in China was halted for the day.
The selloff in China also affected U.S.-traded Chinese stocks such as SouFun and Momo (MOMO), which is declining in late afternoon trading, Reuters reports.
"The ferocious velocity of the first few minutes in China caught some people by surprise," Rob Bernstone, managing director in equity trading at CreditSuisse, told the Wall Street Journal. "Whatever traders were planning to do today as far as 2016 - I think those bets went out the window."
Based in Beijing, SouFun is a real estate Internet portal in China.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate SOUFUN HLDGS LTD as a Buy with a ratings score of B-. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels and notable return on equity. We feel its strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 15.0%. Since the same quarter one year prior, revenues rose by 30.4%. 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.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Internet Software & Services industry and the overall market, SOUFUN HLDGS LTD's return on equity exceeds that of both the industry average and the S&P 500.
- After a year of stock price fluctuations, the net result is that SFUN's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
- The debt-to-equity ratio of 1.06 is relatively high when compared with the industry average, suggesting a need for better debt level management. Regardless of the company's weak debt-to-equity ratio, SFUN has managed to keep a strong quick ratio of 1.77, which demonstrates the ability to cover short-term cash needs.
- You can view the full analysis from the report here: SFUN