Sina (SINA) reported better-than-expected third-quarter earnings today. Q3 revenue grew 22% year-on-year to $185 million, above the $183 million consensus. Earnings per share came in at $0.42, beating the consensus $0.32. The company guided Q4 revenue of$195-199 million (40-43% year-on-year growth), above the consensus $187 million.
The new Weibo partnership with Alibaba seems to be working, on two fronts.
First, according to management, 48% of Weibo’s daily active users already linked their Weibo accounts to their Taobao accounts. Weibo should be able to benefit from those mega sales events likes the Singles’ Day sale this Monday.
Second, Weibo now contributes to 30% of Sina’s total sales and is the revenue growth driver. Revenue from Weibo grew 128% year-on-year and Alibaba contributed to almost half of Weibo’s advertising dollar.
Citi analysts Ravi Sarathy, Muzhi Li, and Gregory Zhao raised their Buy target price from $96 to $104. On valuation, the analysts used integrated P/E:
We believe the Street should use an integrated valuation methodology for the company: either DCF or P/E or some combination thereof, rather than SOTP, given the strategically and operationally inseparable nature of the portal and Weibo.
On that [P/E] basis, applying a PEG of 0.7x 2014E (0.8x 2015E), to capture the “J-Curve” nature of the company’s move through breakeven to profitability, gives a P/E of 49x ’14E falling to 32x ‘15E and a TP of US$104. Buy.
Oppenheimer analyst Andy Yeung, who also has a Buy on Sina with $90 price target, thinks we should not overlook the older portal business:
Portal ad resumed growth for the first time since 2Q12. However, the strong performance of vertical websites, e.g. BITA, SFUN, JOBS, QUNR, WUBA, etc., suggests that the potential of SINA’s portal hasn’t been fully realized. Management indicated it’s planning to revamp the vertical channels on its portal to unlock hidden value.
News 
Market Data 
Discover 
