SouFun Holdings (SFUN): Serves red-hot China real estate market

By Paul Goodwin, Chief Analyst, Cabot China & Emerging Markets Report
From Cabot Wealth Advisory 1/9/14 Sign up for Cabot Wealth Advisory—it’s free!

The stock I’m recommending is SouFun Holdings (SFUN). SouFun owns and operates the biggest real estate website in China, and the Chinese real estate market continues to be red-hot. That’s basically the story for SouFun, a company founded in 1999 that offers website advertising to developers and agencies, listing services to agents, brokers, developers and property managers and value-added services via subscription.

SouFun’s website and databases cover more than 320 Chinese cities, and the company has about 100 offices that focus on the needs of local markets. Revenue, which comes from ads, subscriptions and specialized listing services that include customized marketing programs, grew just 25% in 2012, as the Chinese government tried to cool the property business. But quarterly growth in 2013 has been much stronger: 56% in Q1, 49% in Q2 and 45% in Q3. After-tax profit margins hit an impressive 52.2% in Q3, with quarterly earnings hitting an all-time high.

There is risk in SouFun, as the Chinese government has a great deal of power to chill real estate transactions if it thinks the market is overheating. But SouFun has shown that it can supply a valuable service that is finding eager users.

And I don’t think I’m violating my preference for growth stocks if I point out that the company’s stock pays a dividend with a forward annual yield of 2.8%!
And the stock has been a rocket-shot since it broke out of a base at 25 in July and topped 90 just this week.

Lots of investors have been finding out that Chinese stocks are on fire at the moment. And the portfolio of Cabot China & Emerging Markets Report reflects that enthusiasm. If you’d like to see other stocks like SouFun Holdings that combine great stories with sizzling performance, you should check out a no-risk subscription. Click here for more information.