Goldman Sachs Comments On E-House (China) Holdings Following Earnings

E-house EJ reported 4Q10 revenue of US$125mn, up 41% and 7% QoQ and YoY, respectively, and non-GAAP net profit of US$21mn, up 59% QoQ but down 39% yoy and 21% below our previous forecast of US$26mn. On CRIC, management expects the strong top-line growth to continue and margin outlook to remain stable. Goldman Sachs estimates CRIC will contribute close to 40% of our revised 2011E non-GAAP EPS estimate vs. 26% in 2010.

Management turned cautious over the near-term property market outlook due to government policy tightening and expects the commission rate of its primary agency business to be continuously under pressure. Despite the near-term challenges, management believes Ehouse is well positioned to take advantage of the market downturn and will expand into more tier-3 cities; it targets exposure to a total of 200 cities for its primary agency business over the next three years.

Goldman Sachs has a Neutral rating and $13.5 PT on EJ

EJ closed Thursday at $11.63