There is one Chinese company worth buying as the market continues to edge to higher levels: SINA Corp (NASDAQ:SINA). This company still has a long way to go to monetize its assets, so short-term the trade is very risky. Although if you are a long-term investor then this is a good position to get into for future profit.
The company boasts a market cap of $3.9 billion, and with its Weibo service I believe the value is justified. The reason why I believe the value is justified is because earnings growth is at 370%. Weibo is like Twitter here in the United States, but it has more added features. Weibo had added features for those free users who decide to move to premium services. Weibo has around 300 million people signed up to the site, and if only a fraction of those users join the premium services then it will be huge for SINA Corp (NASDAQ:SINA).
Short-term, SINA will trade in a volatile manner. For example, back in 2011, SINA Corp (NASDAQ:SINA) traded at the highest level it has ever been at around $130 per share. The good news is that it still trades below its 52-week high of $70, but I believe that it will go higher than that over the next few years. The company is still spending to grow itself, so you may be holding SINA for a long time.
In the future, investors can expect SINA Corp (NASDAQ:SINA) to grow earnings by 23% over the next five years. This growth will come from both SINA’s Weibo, and its online social network platform. For instance, Weibo generated around $66 million of revenue in 2012. The key thing to notice is that 77% of the $66 million came from online advertising. The partnership between SINA and Alibaba would generate $380 million in advertising sales over the next three years.
Alibaba has faith
Investors of SINA Corp (NASDAQ:SINA) got a nice surprise on April 29 when Alibaba agreed to buy an 18% stake in SINA’s Weibo platform. Alibaba will pay $556 million for the stake in weibo, valuing weibo at $3.3 billion. This was a huge surprise for a lot of SINA’s investors, and an even bigger surprise for all those who were shorting SINA Corp (NASDAQ:SINA). Short interest on SINA dipped to 0.8% of the total outstanding shares. This is the lowest short interest since back in 2006. For this reason, SINA Corp (NASDAQ:SINA) will continue to trade higher as a floor has been set.
A mixed bowl of earnings
SINA reported its fourth-quarter earnings of $139.1 million, and $.03 earnings per share. The revenue beat since the analyst estimates were for $136 million, but the earnings missed since it was expected for the company to beat the EPS of $.05 per share. A lot of what CEO Charles Chao said was that 2012 for the company was a year of investing heavily into the SINA platform.