Chinese Internet content company CDC Corp. (CHINA) has been upgraded to a Buy from a Hold by Zacks senior Chinese market analyst Paul Cheung, CFA. Here's why:

"CDC's revenue for the first quarter of 2007 increased 41.4% year-over-year, and EPS [earnings per share] exceeded market consensus estimates. CDC is well positioned to leverage the growth opportunities in small-to-medium business enterprise software market and China's online game market.

"In addition, its stock trades at a lower valuation than its peers. Overall, we don't think its current stock price fully reflects the company's intrinsic value. Therefore, we are upgrading our Hold rating on CDC shares to a Buy rating.

"Based on our estimate for fiscal year 2007 earnings per share, the stock is trading at 18.3x, which is much lower than the industry mean. Based on our estimate for fiscal year 2008 earnings per ADS [American Depositary Share], the stock is trading at 14.3x, which is also much lower than the industry mean. Using a P/E [price-to-earnings] multiple of 18.0x our fiscal year 2008 earnings per ADS estimate of $0.57 yields a target price of $10.25, which can reflect company's great growth prospects, in our view."