The Southwood Group looks at the operator of the popular Chinese Micro blogging service Weibo, Sina Corp, having beaten forecasts on profits after a surge in advertising revenue.
Hong Kong, March 3, 2014 (PressReleasePoint) -
Chinese Sina Corp has posted fourth-quarter earnings that exceed analyst estimations as its Weibo micro blog entered the black for the first time, with advertising revenue from new services more than doubling. Value-added services, such as games and VIP membership fees, helped to boost the profitability of the micro blogging service whilst revenue from non-advertising streams helped Sina deal with strong competition from its rival the internet giant in China, Tencent Holdings Ltd. Sina Corp which has already selected banks for an IPO of its Weibo service, which could raise up to $500 million under current valuations but is not expected until after that of Alibaba Group Ltd.
In 2013, Net income at Weibo rose to $44.5 million, up from $2.36 million in 2012 beating the $28 million average projected by analysts, with sales also gaining by 42% rising to $197 million. Advertising revenue at Weibo surged 45% up to $160 million, comfortably hitting the company’s forecast range of between $160 million and $162 million. Total non-advertising revenue for Sina Corp rose 30%, while Weibo saw this increase by 114%, with the company forecasting first-quarter non-GAAP revenues of between $162 million to $167 million.
“The landscape of the Chinese online business world is one of the most vibrant and expanding examples in the world, with it being able to support growth rates that would seem impossible just about anywhere else including the United States, where of course there are still examples of massive entities exhibiting growth, but nowhere near the number and variety of their Chinese counterparts,” expressed Jonathan Douglas, Senior VP of The Southwood Group.
Sina Corp which is working with Alibaba Group Holding Ltd, a shareholder in Weibo, to boost usage of Weibo which was China’s biggest micro blogging outlet with 61.4 million daily active users at the end of December, up from 58.9 million in September. Sina agreed in April to sell 18% of Weibo to Alibaba for $586 million, with the two companies deciding to collaborate in areas of business including online marketing and payment as more Chinese internet users turn to e-commerce on smart phones and tablets. Shares of Sina Corp fell 8% in extended trading after the release of the results, with the stock advancing 4.3% to close at a month high of $76.08 in trading on the Nasdaq.
“The teaming up of both Sina and Alibaba in regards to Weibo, certainly has not escaped attention of analysts here at The Southwood Group and with the possibility of an IPO at Weibo the company is looking more and more appetising from an investment standpoint. Investors holding positions in Alibaba are also seeing the benefit from the collaboration at Weibo, we are continuing to advise our clients as to the best positions to be held in this ever expanding sector,” concluded the Senior Vice President at The Southwood Group.
As an equity-research house, The Southwood Group specialises in providing fundamental research and data analysis, ultimately facilitating trend identification, and finally stock selection. The company has professional managers with extensive experience in all aspects of investing and legal compliance, all of whom had spent their careers in the global finance industry from Hong Kong to New York. It is established on ideals of perseverance, enduring commitment to its clients and, most of all, due diligence.
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