Sina Corp. (SINA)
By Paul Goodwin, Chief Analyst, Cabot China & Emerging Markets Report
From Cabot Wealth Advisory 4/14/14 Sign up for Cabot Wealth Advisory—it's free!
Right now, markets are in a swivet, with growth stocks tanking and sectors like energy, commodities and other cyclicals finding buyers while the market leaders from the last year or 18 months take a pounding.
So I’m not looking for one of the high-flying growth stocks that would ordinarily be in my sights. I need a company with big growth possibilities that represents a good value right now.
Thus, here’s Sina.com (SINA), a big Chinese Web portal company that offers a ton of online services for free (much like Yahoo in the U.S.) and gets its money from advertising, mobile value added services and games. The company has had four years of double-digit revenue growth and 2013 earnings were $1.13 per share, after a disappointing 15 cents per share in 2012.
The big wild card in the Sina.com story is the company’s Weibo microblogging service that has half a billion (with a b) users in China.
Sina.com has announced that it intends to spin off Weibo, a move that would realize a monster pile of money for the parent company.
Add to that the recent decline in SINA from 90 in January to just over 50, and you have an attractive setup. SINA still has a P/E of 51, so it’s not exactly a value stock. But this steep correction makes it a very attractive target once 1) the stock finds support and puts in a sound bottom, 2) the underlying broad emerging markets universe gets back on its feet and 3) the stock’s chart shows evidence of investors coming back in.
I know that’s a lot of qualification for a “favorite stock,” but that’s how I’m thinking these days.
To learn about additional stocks on Paul’s watch list, consider a risk-free trial subscription to Cabot China & Emerging Markets Report. For details, click here.
Sina (SINA): Long-term upside potential
By Paul Goodwin, Editor of Cabot China & Emerging Markets Report
From Cabot Wealth Advisory 5/14/13 Sign up for free Cabot Wealth Advisory
My stock recommendation today is a conditional one. The company is Chinese Internet portal Sina (SINA) that offers a huge bundle of news, weather, sports, games, email, mobile services, affinity groups, specialized content and, most important of all, the Sina Weibo micro-blogging service.
Sina uses a relatively conventional business plan, offering a wide array of information and services to attract people, then selling advertising space to merchants. This kind of advertising contributes about three-quarters of Sina’s revenue, with most of the rest coming from wireless value added services.
Much more sexy is Sina's Weibo, which is like a Chinese version of Twitter, with a couple of big differences. First, Twitter is banned in China, as the government worries about its potential for inflaming anti-government sentiment, organizing demonstrations and disseminating subversive content. Weibo gets more tolerance because the government is more confident that the company will enforce content rules.
SINA stock has had a rough time of it in recent years, dropping from a high of 147 in 2011 (the height of Weibo excitement) to just 59 in recent trading. Competition has eaten into the company’s profitability and it has probably allowed its content to get a little stale.
Despite this, more than four out of five analysts rate SINA as a buy, probably because of its improved valuation and its long-term potential for growth.
The big story about Sina is that Alibaba Group, the largest e-commerce company in China, has bought an 18% stake in Sina’s Weibo service for $586 million. This tie-up got investors’ attention; SINA jumped from 50 to 55 on April 29 when the news came out.
That’s a big catalyst for change. But in the near term, the bottom-line truth about Sina will come out on Thursday, May 16 when the company reports its Q1 results. Analysts are looking for a loss of 11 cents per share, which would be a major improvement over year-ago losses. And the forecast for 2013 is for earnings of 69 cents per share.
There’s a lot of long-term upside potential for SINA, but you’ll have to wait for the reaction to Thursday’s announcement to see how things will fare in the short run.
(And just as a reminder, if you had a subscription to Cabot China & Emerging Markets Report, I’d be watching the reaction for you.) To sign up, click here.
By Paul Goodwin, Editor of Cabot China & Emerging Markets Report
From Cabot Wealth Advisory 8/1/11 Sign up for free Cabot Wealth Advisory e-newsletter
My stock pick today is a recommendation for your watch list.
I included Sina.com (SINA) in the portfolio of the Cabot China & Emerging Markets Report on October 1, 2010. SINA was trading at 51 then, and I was attracted by the company's consistent revenue and earnings growth and by the beautiful 10-month base the stock etched beginning in November 2009. There was a lot of value stored up in SINA, and when it broke out above its old resistance, I recommended buying it.
After taking profits twice, we finally sold our SINA holdings in early June, as the stock was correcting sharply on high volume.
I never really lost faith with Sina. com, but letting a correction eat your profit (especially when the Cabot China-Timer was flashing an emphatic warning signal) is a great way to turn a gain into a loss.
Since that sell in mid-June, SINA has bounced back well, and looks to be entering a new consolidation phase.
The big story for Sina. com is, of course, its Sina Weibo microblog service. Sina Weibo is the first really successful microblog service to be tolerated by the Chinese government. The Chinese authorities have been severe in banning the most successful U.S. services like Twitter, Facebook and YouTube because they fear that they have been used to coordinate protests and create unrest.
Sina Weibo is approved because Sina. com is a know quantity, a company that knows what content will and won't be tolerated and enforces the rules enthusiastically.
My feeling is that SINA is in the process of building potential value, and what I'm hoping for is a calm consolidation that tightens into a range between 105 and 115. If that happens, a break above recent resistance at 125 will be a proper buy signal.
Keep your eyes on this one. I will too.
And if you want continuing advice on Sina. com and other top Chinese or emerging markets stock that trades on U.S. exchanges, check out the Cabot China & Emerging Markets Report. Hulbert Financial Digest recently named it the #2 investment newsletter for five-year performance! With an annualized return of 17.2% for the five years ending June 30, Cabot China & Emerging Markets Report is stomping versus the Wilshire 5000's paltry 3.4% gain during that period. Click here to learn more!
By Elyse Andrews, Editor of Cabot Wealth Advisory
From Cabot Wealth Advisory 1/22/11 Sign up for free Cabot Wealth Advisory e-newsletter
One of my favorite stocks in Paul Goodwin’s Cabot China & Emerging Markets Report portfolio today is Sina Corp. (SINA), the most popular full-service Web portal in China. Paul wrote about the stock in late September, here’s what he said:
“If you haven’t heard of Sina.com, it’s not surprising, since it doesn’t make much effort to build traffic outside China. But for many Chinese, Sina.com is their preferred source for news, email (both free and premium), weather, games, e-commerce, streaming audio and video, community and affinity groups. It’s the default setting on more Chinese computers than any other.
“Sina monetizes all that traffic by selling banner, button and text-link advertising (which collectively contributed 64% of 2009 revenues), offering wireless value-added services (WVAS) such as news, financial information, sports, weather and jokes sent to mobile phones, plus dating services, games, quizzes, educational content, ring tones and screen savers (33% of last years sales) with 99% of revenue coming from within China.
“The company experienced four quarters of slowing earnings growth in 2009, but the most recent quarters have shown earnings up 48% and 45%. Revenue growth is also back on track after three quarters of declines, with 15% growth in Q1 2010 and 10% growth in Q2. Sina Corp.’s after tax profit margin was an admirable 27.9% in Q2.
“But Sina Corp. has always been a solid, well-run operation with strong revenue and earnings growth and profit margins well above 20%. So why is the company suddenly coming in for such enthusiastic support from investors?
“The answer is Sina Weibo, Sina Corp.’s new microblogging service that has mushroomed into an online phenomenon. Sina Weibo (we’re told that the name translates to “Sina microblog”) began beta testing in August 2009, and was up and fully operational by the end of last year. By early March 2010, the service had five million registered users, and had doubled that number by mid-May!
“Other microblog services have been in China for a long time, but Sina Weibo has some strong advantages. First, it has the built-in base of more than 400 million users of Sina.com and Sina’s WVAS customers to market its services. Second, it’s a Chinese service, which many Chinese users prefer, giving it a leg up over Twitter. Third, Sina.com’s long experience in monitoring and controlling content allowed it to step in when Twitter and Chinese services like Fanfou, Jiwai and Digu were banned by the government on suspicion that they had been used to spread messages during the ethnic violence in Xinjiang in July 2009.
“Sina Weibo imposes the same 140-character limit on messages as Twitter, but 140 Chinese characters can convey much more information than 140 English letters. Add to that the embedded photos, videos and lyrics that the service enables, plus the entertainment and sports stars who have signed on as star bloggers, and Sina Weibo has huge momentum going for it.”
Paul recommended the stock at 51 and since his subscribers bought it in early October, SINA has roared higher and is now trading around 80! The stock (and the market in general) took a hit this week. You could buy it here and hope for the best or you could read Paul’s latest thinking on this stock and others in the latest Cabot China & Emerging Markets Report. Learn more today!
Editor of Cabot Wealth Advisory
Elyse Andrews edits Cabot Wealth Advisory, a free email newsletter that offers independent, no-nonsense investment advice on how to build long-lasting wealth written by Cabot's analysts and editors. Every Saturday, Elyse writes the Weekend Digest, which includes her column and a summary of Cabot Wealth Advisories that readers may have missed during the week. Elyse is also a regular contributor to The Iconoclast Investor, a blog for Cabot editors and readers to share their views and interact with each other.
|Sina Corp. (SINA)
37th Floor Jinmao Tower
88 Century Boulevard
Shanghai, 200121 China
86 21 5049 8666
|Index Membership: N/A
Industry: Internet Software & Services
Full Time Employees: 6,400
5/14/13 Sina (SINA): Long-term upside potential
8/1/11 Sina.com (SINA): In the process of building potential value
1/22/11 Sina Corp. (SINA): Full service web portal in China