Could ChinaCache International Holdings (NASDAQ: CCIH) Rebound After These Catalysts?

Technology stocks are still hot in China. One Chinese Internet information provider had an impressive move on March 6, 2017, on abnormal trading volume. Now, According to OTC Markets, ChinaCache International Holdings (NASDAQ: CCIH) traded just over 18 times its 30-day average daily trading volume. CCIH returned 12.50% on the day, but it’s still down on the year. The stock was down over 25% over the past three months and 12.11% YTD. The company’s news today may have been one of the catalysts to push the stock higher.

Take a look at CCIH’s recent performance:

ChinaCache Stock Performance

Source: TradingView

About ChinaCache

ChinaCache is one of the leaders in total solutions provider of Internet content and application delivery services, in China. The company has over 20K servers, 8.2B pages served daily and 80M unique IP visits per day. The company’s network interconnects with various networks operated by all telecom carriers, major non-carriers and local Internet service providers. Due to ChinaCache’s extensive research, it could grow its revenues and earnings with various partnerships. Now, ChinaCache is among the first pick when it comes to businesses, government agencies and other enterprises looking to enhance the reliability of online services and applications, while improving end-user experience.

ChinaCache Announced Definitive Agreement to Sell Data Center Assets

The news CCIH entering into definitive agreements to sell equity interest to multiple companies pushed CCIH higher. CCIH aims to sell 79.0% of its equity interest of ChinaCache Xin Run Technology, also known as Xin Run, to Tianjin Shuisan, Shanghai Qiaoyong and Tianjin Dingsheng. This sale would be for RMB 221.2M in cash, before expenses and fees.

Following the definitive agreements, Tianjin Shuishan, Shanghai Qiaoyong and Tianjin Dingsheng agree to purchase 47.67%, 26.33% and 5.0%, respectively, of the equity interest in Xin Run. Consequently, this would be worth RMB 133.5M, RMB 73.7M and RMB 14.0M, respectively.

According to ChinaCache Chairman and CEO Song Wang“This transaction will significantly strengthen our balance sheet. In addition, by divesting the majority interest in this capital intensive business, we can focus on our asset-light and technology-driven CDN business.”

Moreover, CCIH CEO stated, “We believe the transaction will enable Xin Run to achieve growth and unlock value, which may further benefit our shareholders. After the transaction, ChinaCache and Xin Run may explore partnership opportunities to provide our enterprise customers with premium total solutions.”

That in mind, the Board of Directors has already approved the transaction. However, the transaction is still subject to customary closing conditions, including receiving requisite governmental registration.

Prior to the news of its definitive agreement, ChinaCache had something else in the works.

ChinaCache and PacketZoom Paternship

On Feb. 27, 2017, ChinaCache announced an exclusive partnership with PacketZoom. Now, this partnership aims to accelerate and improve the reliability of mobile app content delivery in China’s massive market. Following the agreement, PacketZoom granted exclusive rights to build mobile-friendly infrastructure, in China. Specifically, CCIH would have access to Packet Zoom Expresslanes, targeted at improving mobile app content delivery. That in mind, the partnership’s term is three years, but could be subject to renewal.

With over 1B mobile users in China, there’s a demand for streamlined mobile app content deliver. Consequently, there may be an increased demand for content providers services. Consequently, this partnership could be the key driver of ChinaCache’s revenue and earnings growth.

According to ChinaCache CEO, “We are pleased to establish this partnership with PacketZoom. As a leading provider of enterprise CDN solutions for mobile apps across China, we strive to ensure the optimal mobile user experience for our customers. We are excited this partnership allows us to speed up mobile apps over evolving cellular networks and improve the user experience for popular local apps as well as global apps operating in China.”

Moreover, according to PacketZoom CEO Shlomi Gian, “With almost 1.3 billion mobile users in some of the most densely populated cities globally, it’s no surprise that mobile user experience has become a priority for content providers.”

According to Gian, “The combination of PacketZoom’s Mobile Expresslanes™ for last mile optimization with ChinaCache edge servers and middle mile optimization is the ideal solution for optimal mobile app experience – especially in crowded markets where networks can be overworked.”

The Bottom Line

ChinaCache returned over 10% on March 6, 2017. Traders exchanged 1.3M shares, just over 18 times its 30-day average daily trading volume. The news of CCIH entering into a definitive agreement to sell data center assets pushed its shares higher that day. The company could continue its rise with its partnership with PacketZoom and the potential equity sale of Xin Run.


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