Games Gio Danisi SINA

Sina Q3: Portal Losses Partially Offset A Great Quarter And The Medium-Term Outlook – Sina Corporation (NASDAQ:SINA)

Sina Q3: Portal Losses Partially Offset A Great Quarter And The Medium-Term Outlook - Sina Corporation (NASDAQ:SINA)

The major highlights from the 2018 third quarter have been:

  • Money from operations at $100.8M
  • Income of greater than $557M (+26% YoY)
  • Gross margin at 80%
  • Non-GAAP revenue from operations at over $168M (+16%YoY)

Such good outcomes made Sina’s (NASDAQ:SINA) inventory surge by greater than 5% within the days that adopted the earnings launch, regardless that its worth continues to be depressed, at a really low buying and selling vary with multiples which might be arduous to consider for a corporation like this: P/B at 1.7 and P/S at 2.four.

Supply: Yahoo Finance

As standard, Weibo’s (NASDAQ:WB) terrific efficiency pulled SINA’s outcomes and, as regular, these outcomes have been counterbalanced by one other dangerous quarter for SINA’s personal portal enterprise, which was negatively affected principally by modifications in the best way income is reported.

Funding internet efficiency turned barely to the constructive aspect (≈2% yr up to now) and much better than the Chinese language broad market.

Supply: Yahoo Finance

In any case, a change in steerage managed to chill down an preliminary burst of optimism minutes after the discharge (the inventory was gaining as a lot as eight%).

In truth, because of the uncertainties in in the present day’s macroeconomic and regulatory surroundings, SINA now’s forecasting 2018 full fiscal yr income in a variety between 14 billion and 14.2 billion yuan. That is roughly $2.09 billion to $2.12 billion, about four% decrease than the vary from its earlier steerage.

Breaking down SINA’s sections

As I mentioned right here, this firm could be thought-about as a holding that manages a portal enterprise along with cellular apps at an organization degree.

SINA’s holdings are stored in a big portfolio of round $1B (greater than 20% of the corporate’s complete capitalization), however the actual jackpot is its controlling stake in Weibo (46% of excellent shares and 72% of voting rights), a package deal that ought to be value greater than half of Weibo’s market worth of over $14B.

Third-quarter working revenue was constructive at $127.4M. As soon as we subtract Weibo’s contribution, we’re left with an working lack of $35M for the portal and cellular software enterprise.

That is how the division carried out sequentially:

Supply: Firm’s studies, writer’s elaboration (knowledge in million dollars)

Portal advert income got here in at $74.5M, reducing by round 10% beneath the previous accounting technique. Non-advert income posted a decline of 35% YoY and 14% sequentially at $24.1M. This steep decline is usually on account of stricter laws within the Chinese language monetary service market, which brought on a current wave of defaults throughout P2P business and, naturally, affected portal’s Fintech cost enterprise.

As a beacon of hope, administration has been speaking about rising the cellular promoting enterprise, specifically the SINA Finance APP, whose DAU has grown greater than 200% yearly.

On the non-advert enterprise aspect, the current progress development of the micro mortgage facilitation enterprise is a constructive improvement.

It seems to be like Mr. Market seems to be on the poor outcomes of this phase in an effort to justify its low valuation of the entire firm. But, this looks like an overreaction since SINA possesses the assets to each take in its portal loss and, ultimately, flip it round (firm’s FCF totaled $54M simply within the final quarter).

SINA’s investments

The firm’s investments amounted to $1.7B on the finish of September, a rise of over 20% yr thus far (thanks partially to a change within the accounting guidelines). If we subtract Weibo’s lengthy-time period investments, we’re left with roughly $1B in each private and non-private corporations, whose worth is accounted for on the idea of both their value/truthful worth or an fairness technique.

The vary of SINA’s investments varies from giant Chinese language IT corporations, like Alibaba (NYSE:BABA), whose remaining shares have been bought on the finish of 2017, to actual property companies, like Leju (NYSE:LEJU), or journey-sharing corporations, like Didi (DIDI) and Kuaidi Taxi.

To sum it up, the next graph represents how SINA’s investments trended over the past 4 years (the figures don’t embrace the contribution of Weibo’s lengthy-time period investments).

Supply: Firm’s stories, writer’s elaboration (knowledge in million dollars)

It’s value mentioning that, as an entire, SINA’s corporations which are accounted for with the fairness technique have little or no debt, and the reported worth ($315 million on the finish of final yr, based on the 2017 annual report) is conservatively assumed to be drastically under their internet asset worth.

Supply: SINA’s 2017 Annual Report


The firm stored its rising trajectory, reaching new highs with internet revenues at greater than 460M (+44% YoY) and internet revenue up by over 60% in comparison with the identical quarter of final yr.

Weibo clearly represents SINA’s golden goose. The truth is, Weibo’s inventory doesn’t even appear to be absolutely valued in the meanwhile, with a complete market cap at simply ten occasions internet gross sales, which is sort of subdued for such an exquisite enterprise.

Supply: Firm’s reviews, writer’s elaboration (knowledge in million dollars)


SINA’s third quarter registered a tremendous progress of the Weibo enterprise and a pleasant restoration of its funding holdings, which turned barely constructive yr up to now.

The portal enterprise continues to be dropping cash, following a multi-yr development that the corporate will attempt to reverse by leveraging on its cellular apps and monetary providers.

Nevertheless, Mr. Market retains on ignoring SINA’s controlling stake in Weibo when valuing the corporate’s inventory worth. This represents a terrific alternative for a agency with loads of money available. Actually, SINA retains on repurchasing its shares.

Final quarter, over $200M in shares have been purchased again at extraordinarily depressed costs. During the last yr, SINA’s complete share rely has diminished by about three%.

In fact, the decrease its share rely drops, the upper its particular person shareholder’s stake in Weibo grows.

Even when SINA’s portal nonetheless expertise losses within the upcoming years, the corporate’s double-digit top- and backside-line progress, excessive margins of its enterprise, wholesome stability sheet and the extreme underestimation of its belongings (worth-to-guide worth ratio at lower than 1.eight, with Weibo stake valued at fairness) would deserve a three-yr PT estimation of at the least $200 (≈three occasions the inventory worth on the time I’m scripting this!).

Disclosure: I’m/we’re lengthy SINA.

I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it (aside from from In search of Alpha). I’ve no enterprise relationship with any firm whose inventory is talked about on this article.

window.SA = “App”:”name”:”SA”,”fullName”:”Seeking Alpha”,”type”:”regular”,”host”:””,”emailHost”:””,”pro”:false,”proPlus”:false,”contributorCenter”:false,”realHostName”:””,”isCms”:false,”cancelPV”:false,”isSharkPreview”:false,”usersOnSite”:”7,162,243″,”assetHosts”:[“”,””,””,””],”moneData”:”params”:”subscribe_color=test_v1″,”assetHost”:””,”userEchoHost”:””,”env”:”dev”:false,”staging”:false,”production”:true,”test”:false,”gaAccountId”:”UA-1466493-1″,”comscoreAccountId”:8500672,”fbAppId”:”624608951014846″,”twitterAccountName”:”SeekingAlpha”,”rollbarToken”:”5edf110be2fc4cecb32637fc421111e2″,”perimeterXAppId”:”PXxgCxM9By”,”embedlyKey”:”a6da93fdfc49472099ce63260954716b”,”mp”:false,”chat”:”host”:””,”pageConfig”:”Refresher”:”active”:false,”Data”:”article”:”id”:4226792,”title”:”Sina Q3: Portal Losses Partially Offset A Great Quarter And The Medium-Term Outlook”,”stub”:false,”primaryTicker”:”sina”,”primaryIsCrypto”:false,”isTranscript”:false,”isSlides”:false,”twitContent”:”$SINA – Sina Q3: Portal Losses Partially Offset A Great Quarter And The Medium-Term Outlook”,”isProArticle”:false,”isProPaywall”:false,”paywallReason”:null,”isArchived”:false,”inEmbargo”:false,”is_wsb”:false,”isAuthorNewsletter”:false,”titleTest”:null,”archiveOn”,”isProNoEmbargo”:false,”url”:””,”isFreeMpArticle”:false,”isFreeProArticle”:null,”isInsight”:false,”insightSlug”:””,”price_at_publication”:”65.49″,”themes”:[“sa-exclusive”,”earnings”,”china-country”,”internet-software-services”,”technology”,”article”,”global-markets”],”from_liftigniter”:false,”isAnyProArticle”:false,”allowMpPromotion”:false,”article_datetime”:”2018-12-06T14:08:25.000-05:00″,”isEtf”:false,”taggedUrlsHtml”:”u003cspan itemscope itemtype=’’u003eu003ca href=’’ sasource=’article_navigation’ itemprop=’url’u003eu003cspan itemprop=’title’u003eTechnologyu003c/spanu003eu003c/au003eu003c/spanu003e, u003cspanu003eInternet Software u0026 Servicesu003c/spanu003e, u003cspanu003eChinau003c/spanu003e, u003cspanu003eEarningsu003c/spanu003e”,”isFidelityEducationPage”:false,”contentData”:null,”marketingBullet”:null,”author”:”id”:104053,”userId”:48841665,”slug”:”gio-danisi”,”exclusiveResearch”:null,”tagId”:578084,”name”:”Gio Danisi”,”picture_url”:””,”is_brand_author”:false,”show_managed_account”:false,”comments”:”discussion_status”:zero,”discussion_message”:”Comments disabled for this article”,”brand”:null,”firstResearchAuthor”:,”pageType”:”article”,”articleModeratedMsg”:null,”qmChartData”:”isMF”:false,”isETF”:false,”isCEF”:false,”etfData”:,”isCrypto”:false,”chartTimes”:”MARKET_OPEN_TS”:1544106600,”END_TIME”:”12/06/2018 16:00″,”1D”:”12/06/2018 9:30″,”PREV_1D”:”12/04/2018 9:30″,”5D”:”11/28/2018 9:30″,”1M”:”11/06/2018 9:30″,”6M”:”06/06/2018 16:00″,”1Y”:”12/06/2017 16:00″,”5Y”:”12/06/2013 16:00″,”10Y”:”12/05/2008 16:00″,”20Y”:”12/04/1998 16:00″,”MAX”:”01/01/1950 9:30″,”object”:”id”:594,”name”:”SINA”,”slug”:”sina”,”visible”:true,”searchable”:true,”tag_kind_id”:52,”is_defunct”:false,”updated_on”:”2018-10-21T03:23:45.000-04:00″,”content”:”Sina Corporation”,”Ads”:”slots”:[“container”:”article-left-slot-2″,”data”:”name”:”/6001/”,”disable_collapse_empty_div”:false,”targeting”:”tile”:160,”size”:[[160,600],”fluid”],”str”:”160×600,fluid”,”container”:”article-left-slot-3″,”data”:”name”:”/6001/”,”disable_collapse_empty_div”:false,”targeting”:”tile”:162,”size”:[[160,600],”fluid”],”str”:”160×600,fluid”,”delay”:true,”whenOutOfView”:”article-left-slot-2″,”container”:”article-right-slot-1″,”data”:”name”:”/6001/”,”disable_collapse_empty_div”:false,”targeting”:”tile”:1,”size”:[[300,250],[300,600],”fluid”],”str”:”300×250,300×600,fluid”,”cls”:”mb25″,”flex”:true,”container”:”article-right-slot-2″,”data”:”name”:”/6001/”,”disable_collapse_empty_div”:false,”targeting”:”tile”:100,”size”:[[300,100]],”str”:”300×100″,”cls”:”mb25″,”container”:”article-right-slot-3″,”data”:”name”:”/6001/”,”disable_collapse_empty_div”:false,”targeting”:”tile”:2,”size”:[[300,252],”fluid”],”str”:”300×252,fluid”,”cls”:”mb25″,”native”:true,”container”:”article-middle-slot-1″,”data”:”name”:”/6001/”,”disable_collapse_empty_div”:false,”targeting”:,”size”:[[640,40]],”str”:”640×40″,”container”:”ad_728x90″,”data”:”name”:”/6001/”,”disable_collapse_empty_div”:false,”targeting”:”tile”:728,”size”:[[728,90]],”str”:”728×90″,”delay”:true,”delta”:500,”container”:”instream_recommendation_ad”,”data”:”name”:”/6001/”,”disable_collapse_empty_div”:false,”targeting”:”tile”:50,”size”:[[3,3],”fluid”],”str”:”3×3,fluid”,”delay”:true,”delta”:500],”testScroll”:true,”disabled”:false,”kvs”:”d”:[“news”,”sectors”,”global-markets”],”t”:[“news”,”sa-exclusive”,”earnings”,”china-country”,”internet-software-services”,”technology”,”article”,”global-markets”],”aid”:”4226792″,”a”:”gio-danisi”,”cnt”:[“fed”,”taxes”,”fin-tech”,”tech”,”ssga1″,”fnk1″,”fnk2″,”port”,”420″],”prstock”:”true”,”tickerbundle”:[“emerging-markets”,”mid-cap”,”technology”],”pr”:”sina”,”s”:”sina”,”ab_subscribe_color”:”test_v1″,”Paths”:”int”:”adsAPI”:”src”:””,”id”:”sa-ads-api”,”ext”:[“src”:””,”id”:”ie”,”src”:””,”id”:”gpt”,”src”:””,”id”:”sb”,”src”:””,”id”:”ga”,”src”:””,”id”:”facebook-jssdk”],”lastRequested”:”2018-12-06 14:10:40 -0500″,”SlugsPrices”:”disabled”:false,”proOpenHouse”:”active”:false,”end_date”:”2017-03-20T06:00:00.000-04:00″,”proFlashSale”:”active”:false,”end_date”:”2017-03-23T00:00:00.000-04:00″,”saSource”:null,”name”:”article”,”useSQuoteBackup”:null,”headerConfig”:”noNotificationsMenu”:null,”nonFixed”:null,”tabless”:null,”activeTab”:”stock-ideas”,”modules”:,”requires”:[],”trackq”:[],”exceptions”:[],”gptInit”:false;