China Finance Online (NASDAQ:JRJC)

2012 Fourth Quarter Results

• Net revenues for the fourth quarter of 2012 were $5.2 million compared with $10.8 million for the fourth quarter of 2011.
• Gross profit was $3.4 million compared with $8.7 million for the fourth quarter in 2011. Gross margin for the fourth quarter of 2012 was 65.5% compared with 80.8% for the fourth quarter of 2011.
• Net loss attributable to China Finance Online for the fourth quarter of 2012 was $4.9 million, compared with a net loss of $15.4 million in the fourth quarter of 2011. Both basic and diluted weighted average number of ordinary shares in the fourth quarter of 2012 was 109 million. Each ADS represents five ordinary shares of the Company.
• Loss per ADS was (0.22) vs last years quarter of (0.71)

"Amid a sluggish domestic stock market, we continue to proceed with our strategic transition, diversify our product offerings, invest in core internet capabilities and streamline operations to position ourselves for the next stage of growth. We have rebranded our oversea financial platform to unify brand identity and strengthen the recognition of our flagship portal site - www.stockstar.com. We continue to proactively pursue diversified business development and resource consolidation. On the internet platform front, we began real-time trading broadcast on jrj.com and stockstar.com to allow investors to interact directly with professional investment advisors in real time. We also continue to organize and host key industry events to build relationships with institutional partners and enhance our brand loyalty among end users. Operationally, we remain confident in the long-term prospect of our business and anticipate our financial position to improve further in 2013," commented Mr. Zhiwei Zhao, Chairman and CEO of China Finance Online.

Third Quarter 2012 Results

• Net revenues were $7.2 million compared with $13.5 million for the third quarter of 2011 due to the Company's strategic transition amid a challenging business environment;
• Gross profit was $5.5 million compared with $11.2 million for the third quarter of 2011;
• Net loss attributable to China Finance Online was $3.2 million.
• Net loss per share of $0.14 per ADS vs a net loss of $0.16 in third quarter of 2011

We are honored to be selected as a long-term strategic partner for Tsinghua's PBC School of Finance. We look forward to launching collaboration on a variety of fields including research and project incubation related to internet finance, providing internship and employment opportunities, co-education of post-doctor students, as well as co-hosting high-end commerce and finance themed forums and conferences. The agreement serves as a solid acknowledgement of our industry-leading competency and future prospect," said Mr. Zhiwei Zhao, Chairman and CEO of China Finance Online.

"Business environment remains considerably challenging as the Chinese economy grows at its slowest pace in three years and the Chinese stock market continues its slide to new multi-year lows. Facing difficulties, we have streamlined our operations to become a leaner and more efficient Company. We also have plans to initiate additional cost-cutting measures going forward," commented Mr. Zhao. "We are starting to see early signs of stabilization in cash attrition and anticipate our financial position to improve further in 2013. With significant number of high net worth households and the rising middle-class, the market prospect for securities investment advisory and wealth management in China remains exciting in the long run. We continue to lay the foundation for future growth through attracting customers through our flagship financial portal sites, enhancing our financial data and product capabilities, developing technology and human infrastructure, and resource consolidation."

Second Quarter 2012 Results

• Net revenues were $8.1 million compared with $13.8 million for the second quarter of 2011 due to the challenging global and domestic macroeconomic environment and a weak Chinese stock market; 
• Gross profit was $5.5 million compared with $11.6 million for the second quarter of 2011;
• Net loss attributable to China Finance Online was $2.6 million. 
• Diluted loss per ADS of $0.12 vs loss of $0.08 in prior year quater.

Mr. Zhiwei Zhao, Chairman and CEO of China Finance Online, commented, "Amidst the persistent European sovereign debt crisis and a slowing PRC domestic economy, the Chinese stock market continued its downward trend during the second quarter of 2012. China's GDP growth dipped below 8% for the first time in twelve consecutive quarters. The Shanghai A-Share index breached its three-year lows and investor sentiment remains fragile. A tough macroeconomic and market environment poses substantial challenges for our ongoing operations.

"In the face of these challenges, we are implementing additional cost-cutting initiatives to increase efficiency and improve operational performance. We continue to expand the influence and technical capabilities of our flagship financial media platforms for further internet applications. With improving internet capabilities and consistent user traffic, we are also looking to upgrade our advertising business.

"Meanwhile, we continue to proceed with operational transition and we have launched trial services for our securities investment advisory operations during the third quarter. In the third quarter of 2012, one of our PRC affiliates obtained regulatory approval to distribute mutual funds. The newly granted mutual fund license will allow us to diversify our product portfolio and help expand our customer base. However, given the trying external environment, it will take some time for such new segments to generate revenues.

"In the midst of a slowing economy and weak stock markets, we are proactively laying the foundation for future growth through product innovation, resource consolidation and streamlining our corporate structure. Our strategic vision remains to become a leading service provider of informational and other value-added financial products for Chinese investors through leveraging on our proven strength in vertically integrated market intelligence and our substantial experience in financial services," concluded Mr. Zhao.

First Quarter 2012 Results

• Net revenues for the first quarter of 2012 were $9.1 million, compared with $15.0 million for the first quarter of 2011.
• Non-GAAP net loss attributable to China Finance Online, which excluded the non-cash share-based compensation expenses of $0.2 million, was $1.1 million for the 2012 first quarter, compared with a non-GAAP net income of $1.9 million for the same quarter of 2011.
• Non-GAAP net loss per share for the 2012 first quarter was $0.05) vs earnings per share of $0.08 in prior year period.

Mr. Zhiwei Zhao, Chairman and CEO of China Finance Online, commented, "Amid concerns toward a slowdown of the Chinese economy, the Chinese A-Share market again was one of the most underperforming global equity markets during the first quarter of 2012. Trading turnover and market capitalization shrank further as China's GDP and corporate earnings growth trended lower. Demand for paid securities analysis software continued to be negatively impacted across the board as investor sentiment remained fragile.

"As we transition our business toward securities investment advisory services, we continue to leverage our leadership in financial information services, data solutions and web technologies, to expand our user base. Our flagship sites jrj.com and stockstar.com are two of the most established financial portal sites in China with tens of millions of users. We keep strengthening our research and development in new areas including open-source platform application, wireless application, financial micro-blogging, and HTML5 technology. Furthermore, our exclusive partnership with Baidu will enable us to provide our market-leading financial information services to a much broader audience," Mr. Zhao concluded.

BEIJING, June 18, 2012 /PRNewswire-Asia/ -- China Finance Online Co. Limited ("China Finance Online", "the Company") (NASDAQ GS: JRJC), a technology-driven, user-focused market leader in China in providing vertically integrated financial information and services including news, data, analytics, securities investment advisory and brokerage-related services, today announced that its flagship portal site Stockstar.com ("Stockstar") has entered into an exclusive partnership with Baidu.com ("Baidu") on a mobile web application to provide financial information services.

Under the partnership, Stockstar and Baidu have launched a mobile web application integrating Stockstar's proven financial information services with leading internet technologies. The application allows users to access a variety of information on companies traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange.

Pioneered in introducing HTML5 technology into developing financial information services, the application greatly enhances user experience of searching for and digesting financial information on mobile devices through a highly user-friendly system interface and lower requirement on data usage. Users are able to quickly and conveniently access information including company profile, trading data and charts, and company news without having to install any local application or account registration.

The web application went live in June 2012. Through the application, smartphones running on Google Android and Apple iOS operating systems are now able to access financial information by inputting company name or ticker into Baidu's search engine.

Mr. Zhiwei Zhao, Chairman and CEO of China Finance Online, commented, "This partnership speaks volumes about our leadership in financial information services and technologies. Stockstar is one of the most established financial portal sites in China with a proven track record in data processing, website optimization, and client development. As more Chinese are spending more time seeking market intelligence online, extending our competitive advantages to the mobile internet market is a natural choice.

"Meanwhile, we are excited to provide our timely, reliable and robust financial information services to Baidu users. Baidu is the No. 1 website in China with the largest user base and highest traffic rank. I am optimistic that by building on Baidu's powerful and far-reaching platform we will be able to expand our potential users and provide them with a better mobile experience in accessing financial information that is faster, cheaper and more streamlined," Mr. Zhao concluded.

2011 Fourth Quarter Financial Highlights

• Net revenues were $10.8 million compared with $14.8 million for the fourth quarter of 2010;
• Gross profit was $8.7 million with a gross margin of 80.8% compared with $12.4 million and 84.1% for the fourth quarter of 2010;
• A total of $15.2 million in non-cash impairment loss of goodwill and intangible assets was recorded following an impairment test;
• Net loss attributable to China Finance Online was $15.4 million;
• Excluding non-cash share-based compensation expenses and non-cash impairment loss of goodwill and intangible assets, non-GAAP net income attributable to China Finance Online was $80,000.

Business Outlook

Cost reduction associated with the transition will help offset the loss in revenues and mitigate the loss of cash flow to a certain extent. The Company plans to implement additional cost-cutting initiatives to increase efficiency and improve operational performance. Deferred revenues will continue to be realized until the expiration of outstanding premium individual subscriptions. The Company intends to preserve its cash balance as ample cash is critical for ensuring the success of the strategic transition.

New businesses such as securities investment advisory and other wealth management services are still in the early stage of development. The Company does not expect these areas to contribute material revenues any time soon. During this transition period, the Company will no longer provide financial or operational guidance.

"Given the increasing availability of financial products, investors are diversifying their investments and at the same time seeking professional investment advisory and guidance on wealth management. We are taking necessary actions now to adapt to the evolving external environment and better position ourselves for future growth," commented Mr. Zhiwei Zhao, Chairman and CEO of China Finance Online.

Third Quarter 2011 Results

Maintaining Market Perform Rating after a Mostly In-Line 2Q11

2Q11 Results In-Line with Expectations

China Finance Online (Ticker: JRJC, Market Outperform) reported its 2Q11 financial results that were mostly in-line with our expectations. Revenue in the quarter came in at $13.8 million, a touch above our estimate of $13.5 million. Non-GAAP net income was $63,000, representing a basically flat $0.00 EPADS, slightly missing our respective estimates of $0.3 million and $0.01.

Our Take

The 2Q11 performance did not come as a surprise as we had anticipated a soft quarter in light of the lackluster Chinese stock market performance and trading volume as well as the company’s weak deferred revenue in 1Q11, which tended to be a fairly reliable leading indicator for performances in subsequent quarters. At this point, we see little improvement in the next couple quarters in terms of the macro picture and believe things could turn worse before getting better for the company. Looking forward to 2012, we anticipate a more subdued inflationary environment in China, (as compared with this year,) coupled with a somewhat modest, but still healthy, real GDP growth of over 8%. We believe this overall less ominous macro environment should be reflected in the Chinese stock market performance and provide a friendlier operating environment for China Finance Online next year.

We are not concerned about the COO departure, which was due to personal reasons. Despite the company’s recent lackluster financial performance, we continue to have faith in the current management team led by its CEO and CFO. We believe this professional management, with its familiarity with the company operations, can provide a competent and steady hand in leading China Finance Online through the current uncertain period.

Adjusting Estimates and Maintaining Market Perform Rating

We have tweaked our model to reflect the 2Q11 results. We now estimate China Finance Online will report full year 2011 revenue of $51.5 million, gross profit of $42.2 million, and pro forma net loss of $3.8 million, or $0.17 loss per diluted ADS. Please note that we are taking a decidedly more conservative approach in projecting the company’s remaining 2011 financial performance than the management’s guidance. We do expect things will turn around next year however. For full year 2012, we estimate revenue, gross profit, and pro forma net income will reach $53.7 million, $44.8 million, and $3.8 million (or $0.17 EPADS), respectively. We continue to view China Finance Online as a long term investment opportunity considering China’s market size and the company’s industry-leading position. In the short term, however, we choose to remain on the sideline, pending greater clarity on the company’s near to medium term business prospects, which are related to China’s economic outlook and stock market performance. We will revisit our rating should the share price yield significantly more attractive entry levels or if there are potentially game-changing corporate developments down the road.

Notice Regarding Privacy and Confidentiality:

Rodman & Renshaw, LLC reserves the right to monitor and review the content of all e-mail communications sent and/or received by its employees.

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member SIPC.
Member FINRA.

Rodman and Renshaw on JRJC                                         9/01/2011

Maintaining Market Perform Rating after a Mostly In-Line 2Q11

2Q11 Results In-Line with Expectations

China Finance Online (Ticker: JRJC, Market Outperform) reported its 2Q11 financial results that were mostly in-line with our expectations. Revenue in the quarter came in at $13.8 million, a touch above our estimate of $13.5 million. Non-GAAP net income was $63,000, representing a basically flat $0.00 EPADS, slightly missing our respective estimates of $0.3 million and $0.01.

Our Take

The 2Q11 performance did not come as a surprise as we had anticipated a soft quarter in light of the lackluster Chinese stock market performance and trading volume as well as the company’s weak deferred revenue in 1Q11, which tended to be a fairly reliable leading indicator for performances in subsequent quarters. At this point, we see little improvement in the next couple quarters in terms of the macro picture and believe things could turn worse before getting better for the company. Looking forward to 2012, we anticipate a more subdued inflationary environment in China, (as compared with this year,) coupled with a somewhat modest, but still healthy, real GDP growth of over 8%. We believe this overall less ominous macro environment should be reflected in the Chinese stock market performance and provide a friendlier operating environment for China Finance Online next year.

We are not concerned about the COO departure, which was due to personal reasons. Despite the company’s recent lackluster financial performance, we continue to have faith in the current management team led by its CEO and CFO. We believe this professional management, with its familiarity with the company operations, can provide a competent and steady hand in leading China Finance Online through the current uncertain period.

Adjusting Estimates and Maintaining Market Perform Rating

We have tweaked our model to reflect the 2Q11 results. We now estimate China Finance Online will report full year 2011 revenue of $51.5 million, gross profit of $42.2 million, and pro forma net loss of $3.8 million, or $0.17 loss per diluted ADS. Please note that we are taking a decidedly more conservative approach in projecting the company’s remaining 2011 financial performance than the management’s guidance. We do expect things will turn around next year however. For full year 2012, we estimate revenue, gross profit, and pro forma net income will reach $53.7 million, $44.8 million, and $3.8 million (or $0.17 EPADS), respectively. We continue to view China Finance Online as a long term investment opportunity considering China’s market size and the company’s industry-leading position. In the short term, however, we choose to remain on the sideline, pending greater clarity on the company’s near to medium term business prospects, which are related to China’s economic outlook and stock market performance. We will revisit our rating should the share price yield significantly more attractive entry levels or if there are potentially game-changing corporate developments down the road.

Notice Regarding Privacy and Confidentiality:

Rodman & Renshaw, LLC reserves the right to monitor and review the content of all e-mail communications sent and/or received by its employees.

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member SIPC.
Member FINRA.

Second Quarter 2011 Results

• Net revenues were $13.8 million, compared to $15.3 million in the second quarter of 2010;
• Gross profit was $11.6 million with a gross margin of 84.3%, compared to $13.2 million and 86.2% in the second quarter of 2010;
• Excluding share-based compensation expenses and investment impairment, non-GAAP net income attributable to China Finance Online in the second quarter of 2011 was $63,000 with diluted non-GAAP net earnings per ADS of $0.00 vs $0.10 in 2010.

First Quarter Results:

• Net revenues were $15.0 million, compared with $15.2 million for the first quarter of 2010;
• Net income attributable to China Finance Online was $1.4 million with diluted GAAP earnings per ADS of $0.06 for the first quarter of 2011, compared with a net income of $0.14 million and diluted GAAP earnings per ADS of $0.01 in the first quarter of 2010;
• Excluding share-based compensation expenses, non-GAAP net income attributable to China Finance Online in the first quarter of 2011 was $1.9 million with diluted non-GAAP earnings per ADS of $0.08, compared with a non-GAAP net income of $1.8 million and diluted non-GAAP earnings per ADS of $0.08 in the first quarter of 2010;
• Annual guidance for net revenues revised down from $58 million to $55 million and non-GAAP net income from $3 million to a loss of $1 million in light of weakening investor sentiment regarding the languishing Chinese stock market and the impact of new Chinese regulations on both the Company's revenues and costs.

Mr. Zhiwei Zhao, Chief Executive Officer of China Finance Online, commented, "We see a more challenging external business environment. Domestic investor confidence remains low as concerns about the sluggish Shanghai index and a slowdown in Chinese economic growth have caused investors to scale back their stock market exposure. Meanwhile, the China Securities Regulatory Commission (CSRC) is stepping up its regulatory reform of China's securities investment advisory industry, and in particular, the securities advisory software business. This is the first time for the government to implement industry wide regulations of this sort. The evolving interactions between service providers and the regulatory bodies necessary to gauge the effect and effectiveness of the new regulations dictates a transition period that is taking longer than most industry participants, including ourselves, had anticipated. Additionally, while we have proactively adapted our sales and marketing strategies in the current environment, the timing of the new regulations in the midst of a sluggish Chinese stock market has nevertheless weakened our customers' confidence in stock investment and their interest in our products and services, and has deterred their purchasing decisions on subscription of our stock advisory software services.

Rodman and Renshaw on JRJC                   6/17/2011

Downgrading to Market Perform Based on Reduced Medium-Term Outlook

We are downgrading the shares of China Finance Online (Ticker: JRJC) from our previous rating of Market Outperform to Market Perform.

With the lackluster domestic Chinese stock market performance, an inflationary environment, and a changing government policy and competitive landscape, we believe the company is facing an increasingly difficult operating environment as well as an inflection point with regard to its current business model. Thus we are adopting a much more conservative view with regard to the company’s near to medium term outlook (for the next 3-4 quarters).

Slumping Chinese stock market performance hindering business

Reflecting concerns on the country’s economic outlook, the Chinese stock market has had a lackluster performance so far this year, exemplified by the Shanghai Composite’s almost 7% year-to-date decline. More ominously for China Finance Online, China’s stock market trading volume as a whole decreased even more significantly, down about 19% year-to-date, based on Shanghai Stock Exchange’s 30-day trading volume moving average. As China Finance Online’s business, especially its bread and butter individual subscription business, is intrinsically tied to stock trading interest and activities, any noticeable apathy towards the domestic stock market can have material negative impact on the company’s financial performance. While the company’s top line result was adequate in the last quarter, deferred revenue, which is a good indication for future performance, has shown signs of weakening. The company reported $39.8 million of deferred revenue in 1Q11, noticeably lower than previous figures of $46.0 million in 4Q10 and $43.8 million in 1Q10. This leads us to believe that revenue might come under some pressure over the next several quarters. We acknowledge that the individual subscription business has not been the most “sexy” part of the company’s growth story over the past couple of years. However, when this segment, which contributed to about 80% of the company’s total revenue in the most recent quarter, shows weakness, no amount of growth in the company’s other business segments can completely compensate for the loss, at least for now. Particularly worthy of a mention is the company’s venture into the brokerage services sector. While we do like the potential this new business segment represents, rising asset prices in China is making it extremely difficult for the company to make any meaningful acquisitions of quality brokerages/financial service providers at current time, in our opinion. We believe management is facing an inflection point regarding which strategic direction the company should focus on going forward.

Major Risks

Major risks to our rating and price target include intense competition from existing and potential competitors; a potential prolonged Chinese stock market slump; execution risk; and political and regulatory risks related to operating in China.

Notice Regarding Privacy and Confidentiality:


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Rodman and Renshaw on JRJC                                          03/28/2011

Sobering 2011 Guidance after Mixed 4Q10 Results; Lowering PT to $8

Mixed 4Q10 results

China Finance Online (Ticker: JRJC, Market Outperform) reported its 4Q10 financial results that missed our top line estimate but beat our bottom line forecast. Revenue for the quarter was $14.8 million, below our estimate of $15.6 million. Individual subscription fees continued to be the major revenue source, contributing 77% of the quarter’s total revenue. Advertising was the second largest revenue contributor, accounting for 13% of total revenue. Brokerage related services came in third, contributing 6% of total revenue. Institutional subscriptions, which accounted for 4%, rounded up the revenue streams. Gross profit in the quarter was $12.4 million, below our expectation of $13.4 million. Pro forma net income however, was $0.7 million, corresponding to an EPADS of $0.03, beating our respective estimates of $0.4 million and $0.02. Registered user accounts increased 44.3% YoY to 20.2 million as of December 31, 2010, exceeding the company’s year-end target of 20 million. Active paid subscribers were approximately 156,000, up 32.3% YoY. For full year 2010, the company realized a record $59.7 million of revenue, pro forma net income of $6.5 million, and pro forma diluted EPADS of $0.28, all representing significant improvements from their respective figures in 2009.

2011 guidance below expectation

China Finance Online provided its 2011 guidance that is significantly below our previous expectation. The company now expects to generate full year revenue of $58 million and pro forma net income of $3 million. Our previous estimates had the company realizing $61.6 million of revenue and $15.0 million of pro forma net income for 2011.

Adjusting 2011 estimates and introducing 2012 forecasts

In light of the company’s recent quarterly results and management’s 2011 guidance, we believe the less-than-robust Chinese stock market and increasing competition will pose a challenging operating environment for the company in 2011. We are adjusting our 2011 estimates accordingly. We now expect the company will report full year 2011 revenue of $58.9 million, gross profit of $50.3 million, and pro forma net income of $3.6 million, or diluted EPADS of $0.16. We are introducing our 2012 forecasts, in which revenue will reach $63.0 million, gross profit will reach $54.0 million, and pro forma net income will reach $8.9 million, corresponding to EPADS of $0.38.

Maintaining Market Outperform rating but lowering PT to $8

Despite the lowered 2011 expectation, we are maintaining our Market Outperform rating on the shares of China Finance Online. We continue to believe the company’s business is not only viable but also promising. Led by a professional management, the company continues to represent an attractive long term investment opportunity, in our opinion. Furthermore, the stock is currently trading below its $4.99 net cash per share, which we believe represents compelling valuation. In this regard, we recommend buying on share price weakness. We are, however, lowering our price target to $8 from $13 previously based on our lowered expectation. Our new $8 price target is now based on the shares trading at 20x our 2012 pro forma EPADS estimate of $0.38.


Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Fourth Quarter Results:

• Net income attributable to China Finance Online was $89,000 for the fourth quarter of 2010, compared with a net loss of $2.7 million in the fourth quarter of 2009;
• Excluding stock-based compensation expenses, non-GAAP net income attributable to China Finance Online in the fourth quarter of 2010 was $0.7 million, compared with non-GAAP net loss of $1.1 million in the fourth quarter of 2009.

Mr. Zhiwei Zhao, Chief Executive Officer of China Finance Online, commented, "We are pleased with the Company's performance in 2010 as we sustained our growth momentum as we achieved the highest annual top line in our corporate history. We remained committed to long-term innovation as product development expenses accounted for more than 20% of our annual top line. While we consolidate and steady our individual subscription operations, our institutional subscription, advertising and brokerage service-related businesses provide other sources of growth in challenging market condition. Meanwhile, we continue to make strides in enhancing our operating efficiency through further cost reduction, thus boosting our bottom line and increasing shareholders' value."

Diluted Non-GAAP net earnings per ADS attributable to China Finance Online were $0.03 for the fourth quarter of 2010

The Company expects to generate net revenues of $58 million for fiscal year 2011. Non-GAAP net income, which is defined as net income excluding stock-based compensations, for the 2011 year is anticipated to be $3million.

Rodman & Renshaw on JRJC                                                       11/30/2010

3Q10 Results Mostly In-Line 

China Finance Online (Ticker: JRJC, Market Outperform) reported its 3Q10 results that were mostly in-line with our expectations. Revenue for the quarter was $14.4 million, more or less in-line with our estimate of $14.6 million. Gross profit was $12.3 million, a touch shy of our estimate of $12.5 million. Pro forma net income, however, was $1.9 million, or $0.08 diluted EPADS, slightly higher than our respective estimates of $1.6 million and $0.07. Registered user accounts reached 18.46 million at the end of September, up 40.7% YoY. Active paid subscribers reached 144,600, up 29.1% YoY. The company also updated its 2010 full year guidance from the previous $56-$62 million of revenue and at least $4 million of pro forma net income to a more upbeat tone of at least $59 million of revenue and at least $6 million of pro forma net income. At the end of 3Q10, the company had $104.2 million of total cash, cash equivalent, and restricted cash.

In our opinion, the past quarter was a period of consolidation for China Finance Online and the financial results offered little surprise. Amid the choppy Chinese stock market over the past several months, the company has been focusing on improving operational efficiency after a period of infrastructural and marketing investments. In the mean time, it continues to keep its eyes open for possible collaborations, joint ventures, or acquisitions, which could serve as the company’s next significant growth driver.

New CSRC Regulations Favorable 

In October, China Securities Regulatory Commission (“CSRC”) announced two new provisional regulations governing the securities software and advisory business that will become effective at the beginning of next year. This development did not come as a surprise as we had been anticipating it over the past several months. Overall, we believe the new regulations should be favorable to China Finance Online as they exert greater control over the currently fragmented Chinese securities software and advisory market and effectively favor the “Haves” over the “Have-Nots.” (China Finance Online is certainly one of the biggest “Haves” in this market segment.) In addition, they further blur the line between financial software and securities advisory industries, and in effect encourage the company to further expand into the securities advisory market. In this regard, we continue to believe a full-fledged financial services route represents a viable development option for China Finance Online.



Notice Regarding Privacy and Confidentiality: 


This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

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Third Quarter Results

• Net revenues for the third quarter of 2010 were $14.4 million, compared with $14.6 million for the comparable period in 2009. GAAP income from operations for the third quarter of 2010 was approximately $0.33 million compared with a loss of $1.81 million in the third quarter of 2009.  Non-GAAP income from operations, which excluded stock-based compensation expenses, was $0.83 million for the 2010 third quarter, compared with a non-GAAP loss of $0.17 million for the comparable period of 2009.

• GAAP net income attributable to China Finance Online for the third quarter of 2010 was $1.35 million compared with a net loss of $1.03 million in the 2009 third quarter. Diluted GAAP net earnings per ADS attributable to China Finance Online were $0.06 for the third quarter of 2010.

• Non-GAAP net income attributable to China Finance Online, which excluded the stock-based compensation expenses of $0.5 million, was $1.85 million for the 2010 third quarter, compared with a non-GAAP net income of $0.60 million for the same quarter of 2009. Diluted Non-GAAP net earnings per ADS attributable to China Finance Online were $0.08 for the third quarter of 2010. Total diluted outstanding ADSs were 22,970,713 at the end of September 2010.

Business Outlook

The Company reiterates its expectation to increase the registered user accounts to 20 million by year end 2010, up 43% from 14 million at the year end of 2009, and up 82% from 11 million at the year end of 2008, respectively.

The Company updated its annual guidance for the year 2010 and expects net revenues to exceed $59 million. The Company also updated its guidance of annual non-GAAP net income attributable to China Finance Online, which excluded stock-based compensations, to exceed $6.0 million

The Company reiterates its expectation to increase the registered user accounts to 20 million by year end 2010, up 43% from 14 million at the year end of 2009, and up 82% from 11 million at the year end of 2008, respectively.

The Company reiterates its net revenues guidance of an amount ranging from $56 million to $62 million for the 2010 year.

The Company also reiterates its guidance for non-GAAP net income, which is defined as net income attributable to China Finance Online Co., Ltd. excluding stock-based compensation, for the 2010 year in an amount ranging from $2 million to $4 million. The Company intends to achieve positive free cash flow of over $8 million in 2010, excluding potential M&A activities. Free cash flow is defined as net cash flow from operations minus capital expenditure.

"The ripple effects from the on-going financial crisis in Europe and the Chinese government's regulation of the domestic real estate market have caused significant turbulence in the Chinese stock market and negatively affected Chinese investors' confidence. Although we posted a solid performance in the 2010 first quarter, we remain cautiously optimistic about the outlook for 2010. We believe that the need for high-quality financial data is bound to increase in the long run. Our role in providing vital financial information to enable Chinese investors to make more intelligent investment decisions will eventually be recognized and rewarded by the vast investor population in China," Mr. Zhao concluded.

The above forecast reflects the Company's current and preliminary view, which is subject to change. A number of important factors including, but not limited to, fluctuation in the Chinese stock market, could cause the actual results to differ materially from those contained in the above guidance.