Posted 08/23/2011 04:47 PM ET
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1" 2" 3" 4" Few Chinese companies that went public in the U.S. since the start of last year are selling above their offering price, but digital map provider AutoNavi Holdings' (AMAP) stock still points in the right direction.
Shares in AutoNavi closed Tuesday at 15.45. That's off from their all-time high of 22.72 hit in November, but above the IPO price of $12.50.
AutoNavi is China's No. 2 provider of digital mapping technology, behind NavInfo.
When 35 red Audi, BMW and Mercedes cars cruised in Beijing in July (to celebrate a wedding), it's a safe bet that many carried AutoNavi GPS. View Enlarged Image
AutoNavi's mapping technology is used in GPS-based auto navigation systems and in mobile phones.
And while China's economy has been slowing, sales of luxury cars most likely to have GPS are going strong.
The popularity of German luxury cars in China and fast-growing sales of computer-like smartphones are driving AutoNavi's growth, analysts say. The Beijing-based company's mapping technology comes preinstalled in some Audi, BMW and Mercedes models.
In the smartphone market, AutoNavi is developing a version of its mapping software for Apple's (AAPL) iPhone, says Nomura analyst Leping Huang. It should be ready in Q3, he wrote in a research note.
For now, AutoNavi is getting a boost as phones that use the Android operating system take market share from Nokia (NOK), which has its own mapping technology, says Oppenheimer analyst Andy Yeung. Samsung and Motorola Mobility (MMI) phones use AutoNavi's mapping software.
"German vehicles are doing very well in China, and AutoNavi is benefitting from that as well as from Android-based phones," Yeung told IBD. "AutoNavi is very dominant with the German luxury vehicle makers, while NavInfo is more aligned with Japanese manufacturers like Toyota (TM)."
Audi sales in China rose 35% in July compared with July 2010, and BMW sales rose 61% in the first half of 2011, says the Nomura research note.
AutoNavi reported Q2 earnings Aug. 17 and beat analyst expectations. The profit beat stemmed largely from "strong digital map sales to the auto industry, mainly for luxury cars in the Chinese market," wrote Nomura's Huang.
Excluding items, AutoNavi said it earned 21 cents per share, up 17% from 18 cents a year earlier and 3 cents above analyst views. Revenue rose 49% to $33 million from $22.6 million. Analysts expected $29.5 million.
Hikes Sales Guidance
AutoNavi upped its 2011 sales guidance to a range of $122 million to $125 million (42% to 46% growth) from its earlier forecast of $117 million to $120 million (36% to 40% growth).
NavInfo and AutoNavi dominate China's auto navigation market much as Navteq and TeleAtlas do in the U.S. and Europe, says Yeung.