Profit from China Finance's Strategic Alliance with China Telecom

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Knowledge is power, and in the case of China Finance Online (JRJC)’s strategic alliance with China Telecom (CHA) – that knowledge is profitable.

China Finance Online, a leading mainland financial information provider, has forged a partnership with China Telecom – resulting in an instantaneous readership of more than 40 million broadband users and 10,000 business halls. Working together, these two companies will jointly launch a personal finance portal. The financial online publication will be hosted on China Telecom’s Vnet, which is one of the country’s most visited websites.

Upon news of this announcement, several Asian ADRs rose, signaling the tremendous potential set forth by this strategic alliance.

Interestingly, although China Finance Online has experienced a rally in its stock prices, gapping up $3.01 with tripling of its average volume, the current valuation is still only 30% of the peak the symbol hit last year.

Perhaps investors are weary from Xinhua Finance Media (XFML)’s rollercoaster pricing ride, whose IPO pricing at $13 has now dropped to approximately $5.

Or, investors may still be skeptical based upon China Finance Online’s underperformance in the last three quarters, but this new strategic alliance guarantees millions of online, internet savvy subscribers – which are difficult for any portal to achieve, especially overnight.

Is there still room for the stock price to rise? As the reality of the strategic alliance surfaces, the stock has tremendous potential to form legs and continue the run. Given the fact that China Telecom’s 40 million broadband subscribers only comprise 20% of its total customer base, the number of subscribers to the financial portal can only continue to grow.

After all, when you review the financial powerhouse players in the Chinese internet media game, such as Sohu.com (SOHU) and Baidu.com (BIDU), China Finance Online holds tremendous potential. The current pricing is still tremendous undervalued, and for long-term investors, you have not yet missed the true run.

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