mrmarket
11-06-2010, 09:54 AM
The Sino-Indian War, was a war between China and India that occurred in 1962. A disputed Himalayan border was the main pretext for war, but other issues played a role. There had been a series of violent border incidents after the 1959 Tibetan uprising, when India had granted asylum to the Dalai Lama. The war ended when the Chinese declared a ceasefire on 20 November 1962, and simultaneously announced its withdrawal from the disputed area.
The war might not be over. Got a question about your bank statement? You call an 800 number and you get “Sammi” on the phone. Well Sammi tries really hard to sound like an American. He asks you “how about these Bears” and that if you saw them “keek touchdown yay”. You start to wonder where Sammi actually resides. Most likely he’s in India. But China’s not going to let that happen much longer.
Statistically, the United States graduates roughly 70,000 undergraduate engineers annually. China graduates 600,000 and India 350,000. What we can’t do, India can do. What India can do, China can do better. VanceInfo (VIT) is just the company for us HUGE outsourcing fans.
Yesterday I bought VIT at 37.57. I will sell it in 4 – 6 weeks at 43.46. Here’s why I like VIT:
http://chart.finance.yahoo.com/z?s=VIT&t=1y&q=&l=&z=l&p=s&a=v&p=s&lang=en-US®ion=US
Well..that’s a heck of a chart, isn’t it? Look at its climb from the middle of July. Most charts like this keep going for at least a couple more months. They have a PE of 61 and the big hurdle ahead is the earnings announcement coming up on November 17th but the way these numbers have been coming in for similar companies recently, this should not be anything to fear. Earnings will most likely catapult the stock price higher.
Vance found its humble start when it was actually selected by to recode its OS2 operating system into Chinese. Once they successfully completed that, VIT was hungry for new assignments. Vance today does work for IBM, Microsoft and a host of other multinational corporations. Now they are a front to back software solutions company.
Want to know how good Vance is? There is a California systems company named TIBCO, that is run by an India-born chief executive, who nuked an Indian outsource company in favor of Vance. That’s loyalty for you.
There is an American trend now to diversify out of Indian outsourcing and China has been ready to pick up the slack. A lot of multinational corporations already have tentacles in the Chinese market anyway – or they already operate in China. Vance can sell to these companies without even leaving home!
So while China continues to quietly buy up our country (of the $2.1 Trillion of US debt held by foreign countries, a little less than one-fifth is held by China), they might as well have our jobs too. What makes China most interesting as an outsourcing destination is the cost. China is cheaper than India. An engineer who makes $100,000 a year in the US makes about $6,000 to 12,000 a year in China. If they are just as good too, then there’s not much of a decision is there? The initial Indian outsourcing boom has driven up these salaries in India, making them more expensive to outsourcing customers. Chinese universities can keep pumping out engineers as long as there is demand for them.
VIT has been seen in the employment space gobbling up these engineers, which means that they have work for them to do which means that they are growing their revenues which means that their earnings will grow. Believe it or not even domestic Chinese companies are using outsourcing. Wow..what a great concept. Outsource your work to people in your own country. VanceInfo does IT work for the big Chinese banks and infrastructure companies.
In August 2010, VanceInfo was selected to the 2010 Global Services "Top 10 Outsourced Product Development Vendors" list. This marks the first time a Chinese vendor has been selected by Global Services to be among the world's leading vendors of software research and development services. The "Top Outsourced Product Development Vendors" category is a subset of the overall Global Services 100 list that represents companies that serve mature global customers through advanced global delivery models, have a broad portfolio of service offerings or niche leadership, and have demonstrated business excellence.
Now the beauty of VIT is that it is still small. While the gargantuan Indian outsourcing companies have revenue in the billions, VIT had only only $148 million in 2009 sales. However this makes growth opportunities so much more simplified. In 2009, VanceInfo's domestic China business grew more than 100% from 2008. It generated 40% of its 2009 sales from Chinese companies. Thirty-eight percent came from the U.S. and 15% from Europe. So they are making a lot of their money from “insourcing” ha ha ha $$$MR. MARKET$$$ just invented a new word.
So do they make money?
Second Quarter 2010 Financial and Operating Highlights:
n Net revenues in the second quarter of 2010 increased to $51.8 million, up 49.8 % from $34.6 million in the second quarter of 2009.
n Operating income in the second quarter of 2010 was $8.3 million, up 54.3% from $5.4 million in the second quarter of 2009.
n Non-GAAP diluted EPS was $0.20 in the second quarter, up from $0.14 in the second quarter of 2009.
The company's Q2 results showed a 43% rise in profit and a 50% gain in sales. Sales growth has actually increased from 44% to 47% to the now insane level of 50%. EPS growth has, of course, moved along with it. This company is a juggernaut. (Has anyone actually ever seen a juggernaut? Just sayin).
The company has given us lots of guidance. Let me tell you something, when a company has a P/E of 61 and still has the balls to give guidance, you know they are going to blow these numbers out of the water. Otherwise their stock price would get massacred if they miss. VIT has given Outlook for the Third Quarter and Full Year 2010:
-- Third quarter 2010 net revenues to be between $53.5 million and $54.5 million, representing a 33% to 36% increase from the corresponding period in 2009.
-- Third quarter 2010 diluted EPS to be between $0.15 and $0.16 on a GAAP basis, and non-GAAP diluted EPS(1) to be between $0.18 and $0.19.
Full year guidance as follows:
-- 2010 net revenues to be at least $207 million, representing a 40% increase from 2009.
-- 2010 diluted EPS to be between $0.66 and $0.70 on a GAAP basis, and between $0.77 and $0.81 on a non-GAAP basis.
I have no idea how they possibly could be saying this with a straight face. Even the ANAL-ysts don’t believe them. ANALysts see full-year earnings rising 50% to 78 cents a share. They expect a 24% gain in 2011.
Doesn’t anyone know how to brag anymore? When I play blackjack in the high roller section and my chips start to pile up, I yell out: “Can’t LOSE! CAN’T LOSE!! I am HUGE!”. Meanwhile my Asian friends next to me in the casino are winning more than me but they don’t say anything. Maybe it’s a cultural thing? Maybe they just don’t like hearing me yell?
Anyway, $$$MR. MARKET$$$ knows that VIT is going to put up revenues of $220 million (oh by the way the dollar is crashing as QE2 prints more money..so this number can even go higher) which will generate earnings of $0.95/share. That takes your share price to $57.95 if they can sustain the PE of 61. As long as sales keep growing at this pace, that PE is going to stay up there.
Here’s what the boss had to say about their revenue growth:
"We are very pleased with our revenue growth and business momentum in the second quarter," said Chris Chen, Chairman and Chief Executive Officer of VanceInfo. "The outstanding results were driven by our effective execution and increasing demand for our services across markets. We are also starting to gain traction in new business areas with a more diversified client base. While we remain alert about the uncertain global economic dynamics, we are confident of our ability to continue deliver strong business performance and drive shareholders' returns in the second half of 2010."
How you can not like this man? He is MY MAN. Can’t wait to collect my profits on VIT.
I am HUGE!!
Bring me your finest meats and cheeses. Did you like this write up? You? YOU? YOU?? Tell a friend to sign up for free at www.mrmarketishuge.com (http://www.mrmarketishuge.com/)
$$$MR. MARKET$$$
The war might not be over. Got a question about your bank statement? You call an 800 number and you get “Sammi” on the phone. Well Sammi tries really hard to sound like an American. He asks you “how about these Bears” and that if you saw them “keek touchdown yay”. You start to wonder where Sammi actually resides. Most likely he’s in India. But China’s not going to let that happen much longer.
Statistically, the United States graduates roughly 70,000 undergraduate engineers annually. China graduates 600,000 and India 350,000. What we can’t do, India can do. What India can do, China can do better. VanceInfo (VIT) is just the company for us HUGE outsourcing fans.
Yesterday I bought VIT at 37.57. I will sell it in 4 – 6 weeks at 43.46. Here’s why I like VIT:
http://chart.finance.yahoo.com/z?s=VIT&t=1y&q=&l=&z=l&p=s&a=v&p=s&lang=en-US®ion=US
Well..that’s a heck of a chart, isn’t it? Look at its climb from the middle of July. Most charts like this keep going for at least a couple more months. They have a PE of 61 and the big hurdle ahead is the earnings announcement coming up on November 17th but the way these numbers have been coming in for similar companies recently, this should not be anything to fear. Earnings will most likely catapult the stock price higher.
Vance found its humble start when it was actually selected by to recode its OS2 operating system into Chinese. Once they successfully completed that, VIT was hungry for new assignments. Vance today does work for IBM, Microsoft and a host of other multinational corporations. Now they are a front to back software solutions company.
Want to know how good Vance is? There is a California systems company named TIBCO, that is run by an India-born chief executive, who nuked an Indian outsource company in favor of Vance. That’s loyalty for you.
There is an American trend now to diversify out of Indian outsourcing and China has been ready to pick up the slack. A lot of multinational corporations already have tentacles in the Chinese market anyway – or they already operate in China. Vance can sell to these companies without even leaving home!
So while China continues to quietly buy up our country (of the $2.1 Trillion of US debt held by foreign countries, a little less than one-fifth is held by China), they might as well have our jobs too. What makes China most interesting as an outsourcing destination is the cost. China is cheaper than India. An engineer who makes $100,000 a year in the US makes about $6,000 to 12,000 a year in China. If they are just as good too, then there’s not much of a decision is there? The initial Indian outsourcing boom has driven up these salaries in India, making them more expensive to outsourcing customers. Chinese universities can keep pumping out engineers as long as there is demand for them.
VIT has been seen in the employment space gobbling up these engineers, which means that they have work for them to do which means that they are growing their revenues which means that their earnings will grow. Believe it or not even domestic Chinese companies are using outsourcing. Wow..what a great concept. Outsource your work to people in your own country. VanceInfo does IT work for the big Chinese banks and infrastructure companies.
In August 2010, VanceInfo was selected to the 2010 Global Services "Top 10 Outsourced Product Development Vendors" list. This marks the first time a Chinese vendor has been selected by Global Services to be among the world's leading vendors of software research and development services. The "Top Outsourced Product Development Vendors" category is a subset of the overall Global Services 100 list that represents companies that serve mature global customers through advanced global delivery models, have a broad portfolio of service offerings or niche leadership, and have demonstrated business excellence.
Now the beauty of VIT is that it is still small. While the gargantuan Indian outsourcing companies have revenue in the billions, VIT had only only $148 million in 2009 sales. However this makes growth opportunities so much more simplified. In 2009, VanceInfo's domestic China business grew more than 100% from 2008. It generated 40% of its 2009 sales from Chinese companies. Thirty-eight percent came from the U.S. and 15% from Europe. So they are making a lot of their money from “insourcing” ha ha ha $$$MR. MARKET$$$ just invented a new word.
So do they make money?
Second Quarter 2010 Financial and Operating Highlights:
n Net revenues in the second quarter of 2010 increased to $51.8 million, up 49.8 % from $34.6 million in the second quarter of 2009.
n Operating income in the second quarter of 2010 was $8.3 million, up 54.3% from $5.4 million in the second quarter of 2009.
n Non-GAAP diluted EPS was $0.20 in the second quarter, up from $0.14 in the second quarter of 2009.
The company's Q2 results showed a 43% rise in profit and a 50% gain in sales. Sales growth has actually increased from 44% to 47% to the now insane level of 50%. EPS growth has, of course, moved along with it. This company is a juggernaut. (Has anyone actually ever seen a juggernaut? Just sayin).
The company has given us lots of guidance. Let me tell you something, when a company has a P/E of 61 and still has the balls to give guidance, you know they are going to blow these numbers out of the water. Otherwise their stock price would get massacred if they miss. VIT has given Outlook for the Third Quarter and Full Year 2010:
-- Third quarter 2010 net revenues to be between $53.5 million and $54.5 million, representing a 33% to 36% increase from the corresponding period in 2009.
-- Third quarter 2010 diluted EPS to be between $0.15 and $0.16 on a GAAP basis, and non-GAAP diluted EPS(1) to be between $0.18 and $0.19.
Full year guidance as follows:
-- 2010 net revenues to be at least $207 million, representing a 40% increase from 2009.
-- 2010 diluted EPS to be between $0.66 and $0.70 on a GAAP basis, and between $0.77 and $0.81 on a non-GAAP basis.
I have no idea how they possibly could be saying this with a straight face. Even the ANAL-ysts don’t believe them. ANALysts see full-year earnings rising 50% to 78 cents a share. They expect a 24% gain in 2011.
Doesn’t anyone know how to brag anymore? When I play blackjack in the high roller section and my chips start to pile up, I yell out: “Can’t LOSE! CAN’T LOSE!! I am HUGE!”. Meanwhile my Asian friends next to me in the casino are winning more than me but they don’t say anything. Maybe it’s a cultural thing? Maybe they just don’t like hearing me yell?
Anyway, $$$MR. MARKET$$$ knows that VIT is going to put up revenues of $220 million (oh by the way the dollar is crashing as QE2 prints more money..so this number can even go higher) which will generate earnings of $0.95/share. That takes your share price to $57.95 if they can sustain the PE of 61. As long as sales keep growing at this pace, that PE is going to stay up there.
Here’s what the boss had to say about their revenue growth:
"We are very pleased with our revenue growth and business momentum in the second quarter," said Chris Chen, Chairman and Chief Executive Officer of VanceInfo. "The outstanding results were driven by our effective execution and increasing demand for our services across markets. We are also starting to gain traction in new business areas with a more diversified client base. While we remain alert about the uncertain global economic dynamics, we are confident of our ability to continue deliver strong business performance and drive shareholders' returns in the second half of 2010."
How you can not like this man? He is MY MAN. Can’t wait to collect my profits on VIT.
I am HUGE!!
Bring me your finest meats and cheeses. Did you like this write up? You? YOU? YOU?? Tell a friend to sign up for free at www.mrmarketishuge.com (http://www.mrmarketishuge.com/)
$$$MR. MARKET$$$