SouFun Earnings Beat on Solid Segmental Results, Guides Low - Analyst Blog

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SouFun Holdings Ltd . ( SFUN ) reported operating net income of 16 cents per share in the second quarter of 2014, a penny higher than the Zacks Consensus Estimate. Earnings also improved 6.7% year over year.

The improvement was primarily driven by solid performance across all of SouFun's business divisions.

The company reported net income of 15 cents, up 15.4% year over year.

SouFun's impressive performance prompted the share price to rise 11.8% and close at $11.56 yesterday.

Behind the Headlines

Total revenue of SouFun grossed $168.2 million in the quarter, improving 16.7% year over year due to growth in marketing services. However, revenues lagged the Zacks Consensus estimate of $177 million.

Going by segments, Marketing services revenues increased 26.1% and continues to witness strong demand from developer clients, especially in lower tier cities. Revenues from e-Commerce services rose 8%, driven by increased penetration in more cities, partly offset by soft demand for new homes. Listing services revenues improved 8.6%. Other value-added services revenues improved 100% year over year, largely on the strength of increase in real estate data related services.

While operating expenses moved up 35.9%, selling expenses rose 37.8% owing to increase in staff costs and advertising and promotion expenses. General and administrative expenses also rose 33.5%.

Though expenses climbed up, a higher revenue increase drove a 7.8% improvement in operating income .

Adjusted earnings before income tax, interest expenses, interest income, depreciation and amortization (EBITDA) improved 8.7% year over year to $87.7 million.

Financial Update

SouFun exited 2013 with cash and cash equivalents of 239.2 million, down about 59% from 2013-end.

Long-term loans stood at $181 million, in line with 2013-end level.

Cash flow from operating activities was $40.1 million the quarter, decreasing about 50% year over year. The decline stemmed from entrusted loans provided to developers and home buyers under financial services program and decrease in advance payments from clients.

Dividend Update

The board of directors of SouFun declared a cash dividend of $1.00 per share. The dividend will be paid on Aug 29 to shareholders of record on Aug 18.

Guidance

SouFun expects to generate $727-$739 million in revenues in 2014, down from $780-$796 million. This translates into a year-over-year growth of 14-16% (down from 22.5-25%). The downward revision accounts for slowdown in the Chinese real estate market, reduction in fees charged for listing services and longer time taken for new businesses to contribute significantly to revenue growth.

Zacks Rank

SouFun presently sports a Zacks Rank #4 (Sell).

Performance of Other Business Service Providers

Avis Budget Group Inc. ( CAR ) reported second-quarter 2014 operating income of 68 cents per share, beating the Zacks Consensus Estimate by 7.9%.

Cardtronics Inc.'s ( CATM ) second-quarter 2014 operating income of 55 cents per share beat the Zacks Consensus Estimate by 5.8%.

Viad Corp. ( VVI ) posted second-quarter earnings per share of 44 cents, surpassing the Zacks Consensus Estimate by 12.8%.


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SOUFUN HLDG-ADR (SFUN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CAR , CATM , VVI , SFUN

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