The 'Amazon' model with local wisdom
■ Initiate coverage with NEUTRAL. We initiate coverage of Dangdang, a
leading pure-play B2C e-commerce company in China, with a NEUTRAL, as
it is almost fairly valued. Our probability-based target price for Dangdang is
US$30.4, implying 246x 2011E diluted P/E, 2.5x PEG and 4.9x P/S in 2011.
■ Well positioned in China’s fast emerging e-commerce market.
Dangdang is the largest Chinese language online book retailer, and one of
the biggest online malls in China offering general merchandise, with a 9%
market share according to iResearch.