Sitoa Global Eyes E-Commerce Growth Worldwide
Ken Nagy, CFA
Sitoa Global Inc. (STOA), is an e-commerce facilitator that engages in the development, integration and hosting of B2C (business-to-consumer) social e-commerce sites. Sitoa formed Sonsi.com with Charming Shoppes, Inc. (NASDAQ:CHRS) which brings together a customer base of plus sized women in an effort to create a social network combined with a focused on-line storefront. The firm has expanded into China and Southeast Asia and changed the business model for B2C in the area. Where in the past foreign companies would have to commit container loads of product in order to sell to the area, now they can put their products on-line and take some of the risk out of the business model. We view Sitoa as a high risk/ high reward speculative stock. The characteristics of the payoff investors receive could look similar to that of a call option. Our rating for this stock is Neutral.
Sitoa owns the proprietary technology behind its Focused Social Marketplace platform and that the platform is designed and built to handle hundreds of enterprise and microsellers and tens of thousands of products. The Company has already developed and is currently maintaining and hosting Sonsi.com, a focused social marketplace, which has collected a number of online sellers focused on the social community for women sizes 12 and up.
More recently, Sitoa announced that during its third quarter fiscal 2011, it launched its bi-lingual Focused Social Marketplace in China, Chunjie365 (chunjie365.com) and began the build out and launch ShopShipUSA, (shopshipusa.com).
In our opinion the internet is still growing and has a relatively low 24.7% penetration rate compared to the population. Especially if one considers Asia which has approximately 56% of the world’s population yet remains only 18.5% penetrated. Another trend to consider in assessing the Sitoa growth rate is the explosion of handheld devices such as IPhones. There are in effect more and more devices being connected and each new connection is a new opportunity in the chain.
E-Commerce growth rates are soaring in China. Total e-commerce sales soared 60% year-on-year in the first half of 2010 to $340 billion, according to government figures. On Taobao, China’s largest online retail platform, the average number of transactions per user grew by 35% year-on-year, according to data released by Alibaba.com
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