Independent TMT Analyst

Edison Lee, CFA

Equity Bottom-Up

<ul><li>BABA, Baidu, Tencent, Sina and Weibo together accounted for 71% of China's digital advertising spending in 2015. Their combined share will likely hit 74% to 75% this year.</li><li>Among these top five media of advertising, Baidu's share has fallen more than 10 ppts since 1Q14 while Tencent's share has tripled, amid from a low base. Baidu's position is the weakest given the need to clean up its P4P platform yet it has the largest dependence on advertising as a revenue source (92%).</li><li>Over the next one to three years, we expect Tencent to have the strongest advertising revenue growth potential owing to its powerful social media platforms of QQ and Weixin/WeChat. It is currently generating advertising revenue of only Rmb2.42 per month per user.</li><li>However, in 2H16, Alibaba is the best positioned as far as growth potential and regulatory risks are concerned. Its share of advertising revenue among the top five has risen by 5 ppts since 1Q14 but advertising contributed only 56% of total revenue in 2Q16. It will likely be least vulnerable to the new government rules on Internet advertising, because its users are naturally looking for advertising on its online marketplaces. </li></ul>

BABA, Baidu, Tencent, Sina and Weibo together accounted for 71% of China's digital advertising spending in 2015. Their combined share will likely hit 74% to 75% this year.Among these top five media of advertising, Baidu's share has fallen more than 10 ppts since 1Q14 while Tencent's share has tripled, amid from a low base. Baidu's position is the weakest given the need to clean up its P4P platform yet it has the largest dependence on advertising as a revenue source (92%).Over the next one to three years, we expect Tencent to have the strongest advertising revenue growth potential owing to its powerful social media platforms of QQ and Weixin/WeChat. It is currently generating advertising revenue of only Rmb2.42 per month per user.However, in 2H16, Alibaba is the best positioned as far as growth potential and regulatory risks are concerned. Its share of advertising revenue among the top five has risen by 5 ppts since 1Q14 but advertising contributed only 56% of total revenue in 2Q16. It will likely be least vulnerable to the new government rules on Internet advertising, because its users are naturally looking for advertising on its online marketplaces. 

China's Ad Market Post 2Q Results - BABA Best Positioned; Least Vulnerable to Regulatory Risks

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Event-Driven

I initiated trade idea of SINA / WB on July 21st (<a href="https://www.smartkarma.com/insights/sina-wb-stub-ratio-at-all-time-low" target="_blank" data-smartkarma-citation="insights:4697">SINA / WB: Stub, Ratio at All Time Low</a>). Both <a href="https://www.smartkarma.com/entities/22691" target="_blank" data-smartkarma-citation="entities:22691:1">Sina Corp (Class A) (SINA US)</a> and <a href="https://www.smartkarma.com/entities/3826" target="_blank" data-smartkarma-citation="entities:3826:1">Weibo Corp (ADR) (WB US)</a> reported 2Q results last night. The stellar overnight performance of both stocks tells a lot about how the numbers beat the street's expectations. In this insight, I will provide a quick update of how the trade has moved since my initiation and how will the latest result impact the trade. First, SINA's discount to NaV is returning to its…

I initiated trade idea of SINA / WB on July 21st (SINA / WB: Stub, Ratio at All Time Low). Both Sina Corp (Class A) (SINA US) and Weibo Corp (ADR) (WB US) reported 2Q results last night. The stellar overnight performance of both stocks tells a lot about how the numbers beat the street's expectations. In this insight, I will provide a quick update of how the trade has moved since my initiation and how will the latest result impact the trade. First, SINA's discount to NaV is returning to its…

SINA / WB: Post 2Q Update, Portal Did Well, Stub Remains Cheap

<ul>
<li>The PBOC is tightening its control over online payment platforms. Owing to the strict requirement to implement the "real name basis" for every third-party online payment account, <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26:1">Tencent Holdings Ltd (700 HK)</a>'s WePay platform has been reportedly forced to close down 3,000 merchants' online payment function.</li>
<li>A significant e-Commerce platform has developed on the back of Tencent's QQ, Weixin and WeChat services, utilizing the "Circle of Friends" functionality and Tencent's WePay system. However…</li>
</ul>


The PBOC is tightening its control over online payment platforms. Owing to the strict requirement to implement the "real name basis" for every third-party online payment account, Tencent Holdings Ltd (700 HK)'s WePay platform has been reportedly forced to close down 3,000 merchants' online payment function.
A significant e-Commerce platform has developed on the back of Tencent's QQ, Weixin and WeChat services, utilizing the "Circle of Friends" functionality and Tencent's WePay system. However…


China Internet - Downside Risk for 2H16 Driven by Tightened Regulations on Online Payment and News

<a href="https://www.smartkarma.com/profiles/286" target="_blank" data-smartkarma-citation="accounts:286">New Street Research</a> (NSR) first mentioned about SINA / WB trade in April ( <a href="https://www.smartkarma.com/insights/sina-weibo-capturing-the-shift-to-mobile-advertising-in-china" target="_blank" data-smartkarma-citation="insights:3400">Sina / Weibo: Capturing the Shift to Mobile Advertising in China</a>  ) and later met management of Sina (<a href="https://www.smartkarma.com/insights/sina-weibo-growth-in-advertising-verticals-and-social-commerce-sina-offers-cheap-entry-into-weibo" target="_blank" data-smartkarma-citation="insights:4229">Sina/Weibo: Growth in Advertising Verticals and Social Commerce. Sina Offers Cheap Entry into Weibo</a>). I'd like to provide more data points around this pair, thanks to our cloud based <a href="https://www.smartkarma.com/tools/holdcos" target="_blank">holding company analyzer</a>. <h2>Sina as a holding company</h2>A quick recap of what is in the <a href="https://www.smartkarma.com/entities/22691" target="_blank" data-smartkarma-citation="entities:22691:1">Sina Corp</a> 's holding company structure:<ul><li>55% of stake in …</li></ul>

New Street Research (NSR) first mentioned about SINA / WB trade in April ( Sina / Weibo: Capturing the Shift to Mobile Advertising in China  ) and later met management of Sina (Sina/Weibo: Growth in Advertising Verticals and Social Commerce. Sina Offers Cheap Entry into Weibo). I'd like to provide more data points around this pair, thanks to our cloud based holding company analyzer. Sina as a holding companyA quick recap of what is in the Sina Corp 's holding company structure:55% of stake in …

Founder, Riedel Research

David Riedel

Founder

Independent equity research on GEM Markets

Riedel Research

Riedel provides equity research and analysis to leading financial organizations. By becoming members of a region (Asia, Latin America, Emerging Europe or Global), organizations have access to an integrated set of services including:

Regular company coverage reports
Up-to-date investment decision advice (buy, hold, sell)
Monthly regional and global conference calls
Customized company reports and unlimited on-line access to the program's services.

Riedel provides research coverage of companies across the full range of market capitalization. Experienced research professionals in each market develop company reports and analysis as well as earnings models and projections. Ratings are Buy, Hold and Sell with a focus on compelling investment ideas - both long and short. Downloadable, dynamic earnings models are built to facilitate sensitivity analysis.

Please feel free to contact us for complimentary access to our written research.  We want to show you that our unique research flow can add value and help develop a long-term, high value-add relationship.

Riedel's model focuses on providing clients with unique insights and consulting in addition to unlimited access to all produced research This model allows members to receive exponential benefits for their retainer fees.

SINA - Trading Below Value of Weibo Holding - BUY<ul class="ul1"><li class="li2">SINA is one of the most under-appreciated Internet investments in China.  The company owns the dominant ‘Twitter’ service in China as well as a widely used news portal.</li></ul><ul class="ul1"><li class="li2">The shares are currently trading below the value of their ownership in Weibo.</li></ul><ul class="ul1"><li class="li2">We believe this provides a profitable arbitrage opportunity.</li></ul><ul class="ul1"><li class="li2">We set the value of their Weibo stake at USD80/share (using a price for WB below the current market price) and use this as the SINA price target - This alone is nearly 60% higher than Sina’s market price.  BUY.</li></ul><ul class="ul1"><li class="li2">Non-Weibo revenues will continue to shrink, but this will help improve margins.</li></ul>

SINA - Trading Below Value of Weibo Holding - BUYSINA is one of the most under-appreciated Internet investments in China.  The company owns the dominant ‘Twitter’ service in China as well as a widely used news portal.The shares are currently trading below the value of their ownership in Weibo.We believe this provides a profitable arbitrage opportunity.We set the value of their Weibo stake at USD80/share (using a price for WB below the current market price) and use this as the SINA price target - This alone is nearly 60% higher than Sina’s market price.  BUY.Non-Weibo revenues will continue to shrink, but this will help improve margins.

SINA - Arbitrage Opportunity in Chinese Internet - Shares Could Double - BUY

China

SINA Corporation is a global Internet media company operating Chinese-language destination sites. The Company offers a network of branded content and services targeting people of Chinese descent worldwide. SINA.com offers online news, entertainment, community, and commerce through web sites that are produced and updated by local teams in China, Hong Kong, Taiwan, and North America.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Sina Corp (Class A) (SINA US)

China's Ad Market Post 2Q Results - BABA Best Positioned; Least Vulnerable to Regulatory Risks

BABA, Baidu, Tencent, Sina and Weibo together accounted for 71% of China's digital advertising spending in 2015. Their combined share will likely...

Edison Lee, CFA

SINA / WB: Post 2Q Update, Portal Did Well, Stub Remains Cheap

I initiated trade idea of SINA / WB on July 21st (SINA / WB: Stub, Ratio at All Time Low). Both Sina Corp (Class A) (SINA US) and Weibo Corp (ADR)...

Ke Yan, CFA, FRM

China Internet - Downside Risk for 2H16 Driven by Tightened Regulations on Online Payment and News

The PBOC is tightening its control over online payment platforms. Owing to the strict requirement to implement the "real name basis" for every...

Edison Lee, CFA

SINA / WB: Stub, Ratio at All Time Low

New Street Research (NSR) first mentioned about SINA / WB trade in April ( Sina / Weibo: Capturing the Shift to Mobile Advertising in China ) and...

Ke Yan, CFA, FRM

SINA - Arbitrage Opportunity in Chinese Internet - Shares Could Double - BUY

SINA - Trading Below Value of Weibo Holding - BUYSINA is one of the most under-appreciated Internet investments in China. The company owns the...

David Riedel

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)