Xunlei (NASDAQ:XNET) is a Chinese technology company that provides online services such as cloud computing, online video, and online gaming. The company has been on a strong growth trajectory in recent years and its stock has been performing well. Investors have been bullish on Xunlei and the stock has seen a steady increase in its share price.
Xunlei has been able to capitalize on the growing demand for online services in China. The company has been able to expand its business into new areas such as cloud computing and online gaming. This has allowed Xunlei to tap into new markets and expand its customer base.
Xunlei has also been able to benefit from the increasing popularity of mobile devices. The company has been able to develop mobile applications that allow users to access its services on the go. This has been a major driver of growth for the company and has allowed it to reach more customers.
In addition, Xunlei has been able to take advantage of the growing demand for online video content in China. The company has been able to develop a platform that allows users to access a variety of online video content. This has been a major driver of growth for the company and has allowed it to reach more customers.
Overall, Xunlei has been able to capitalize on the growing demand for online services in China and has been able to develop a platform that allows users to access a variety of online content. The company has also been able to benefit from the increasing popularity of mobile devices and the growing demand for online video content. As a result, Xunlei continues to merit a strong buy rating.
Xunlei (NASDAQ:XNET) is a Chinese company that is under followed and under covered in the US due to the lack of English language info available. It operates a powerful internet platform in China based on cloud technology to enable users to quickly access, store, manage, and consume digital media content on the internet. It provides cloud acceleration, blockchain, shared cloud computing and digital entertainment services. Its core product, Xunlei Accelerator, has approximately 48.0 million monthly unique visitors in December 2021. It also provides cloud computing and other internet value-added services, including live streaming services and online game services. It has a pre-installing services agreement with a Xiaomi group company which manufactures Xiaomi phones, a well-recognized brand of smart phones in China, providing mobile phone users with access to its acceleration services. It also has a decentralized cloud computing product, OneThing Cloud, which allows users to share their idle internet bandwidth and storage resources with its content delivery networks.
In November 2022, XNET reported third quarter revenues that grew 12.8% sequentially and 47.1% year over year. Revenues from cloud computing were US$29.1 million, representing an increase of 2.7% from the previous quarter. Revenues from subscription were US$25.0 million, representing a decrease of 1.7% from the previous quarter. Revenues from live streaming and other IVAS were US$34.2 million, representing an increase of 39.4% from the previous quarter. This increased revenue resulted in a new all-time high in net income for the quarter. The company also has a strong cash position, with 66.5M ADS outstanding, the company has about $3.75 ($251M/66.5M) of cash and short term investments per ADS on hand. With the stock trading at $2.12 that’s 178% of the share price. This explains why the company still sports an appreciable negative enterprise value of ($85.8M).
Since authorizing a $20M share repurchase plan in March 2022, as of September 30, 2022 the company had used $4.3M of it. This is the result: Data by YCharts Given the company’s profitability and extremely strong cash position, I expect it to continue with its share repurchases, eventually using the full $20M that has been authorized and perhaps following that with another authorization.
Valuation metrics for the company are incredibly strong, with a negative enterprise value. With that fact noted, here is Seeking Alpha’s summary of the valuation metrics. Options for XNET trades options but they are not particularly liquid. The biggest risk with XNET is the same one that plagues most Chinese stocks, i.e. the company is a VIE and thus shareholders don’t actually own the company. These risks are, in my opinion, somewhat mitigated by XNET’s net cash position and its growing revenues and income.
I believe that XNET is currently presenting us with a buying opportunity which arises mainly because the company is so under followed and unknown. There are no Wall St analysts on it, public info (in English) is hard to gather and it doesn’t need financing. But all of that can be an edge for small investors. I recently had my position called away, but plan to be a buyer of the stock going forward. I believe that the valuation numbers coupled with so much cash on hand and growing revenues completely justify a “strong buy” rating on XNET.