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本文作者为多次撰文分析中概股的美国投资人TSG Capital创始人Jay Somaney,由格隆汇翻译整理。

Sina Corporation, the Chinese internet company, is currently trading at values that go beyond the absurd. Yes, the shouting on China trade has never been louder and daily we have negative articles and fake news coming out from almost every news source.

中国互联网公司新浪(Sina Corporation)目前的股价堪称荒谬。是的,有关对中贸易问题的呼声从未像现在这样大,每天我们都有负面的文章和来自几乎所有新闻来源的假新闻。

Sina also is the majority and controlling shareholder in Weibo, often called the Chinese Twitter.


Shedding light on the absurdity of the current valuation, here is a simple calculation for all of you to consider.


Sina Corporation has a current market capitalization of $5.95 billion, as of Friday's closing price per share of $83.26. It owns about 46% of Weibo. Weibo has a current market capitalization of $19.6 billion also based on Friday's closing price per share of $88.10.


So, Sina's 46% stake in Weibo is worth $9 billion given the current value being assigned to the latter by investors. If the market were to assign Sina a market value of only what its stake in Weibo is worth, shares of Sina should currently be trading at $125.94 per share. That is not even taking into account the $32 per share in net cash that Sina holds which would then make the shares worth around $178.


Most importantly, most investors do not realize that Sina not only owns 46% of Weibo but via a complicated ownership structure (Class A shares versus Class B shares), Sina controls 72% of the voting power in Weibo. Which basically means that Sina exercises almost total control over Weibo, whether its an acquisition maybe, even by Sina itself or another company or whether its anything else.


For 2018, current Street estimates are at $3.24 per share in earnings for Sina with revenues of $2.28 billion. For 2019, current Street consensus sits at $4.87 per share in earnings and $3 billion in revenues. Year-on year growth rate in earnings per share and revenues is 50% and 31% respectively.


For Weibo, the Street expects the company to earn $2.83 per share on revenues of $1.8 billion in 2018 and $4.06 per share on revenues of $2.5 billion for 2019. Growth rates are 43% and 39% respectively.


Any investor is going to be hard pressed to find those sort of growth rates in any company in the West.


In addition to the shouting on trade, there is a lot of screaming and sweaty-palmed hand wringing about the Chinese government letting the yuan decline in an attempt to offset the adverse effects of the tariffs levied by the US. Yes, the yuan is trading at one-year lows versus the greenback, however, an astute investors has to question whether the Chinese ADRS have been beaten up beyond reasonableness relative to the yuan weakness.


Take a look at the performance of the following Chinese ADRS since the shouting has intensified to deafening levels and since the companies reported their respective Q1 results:


Alibaba-down 5% or so from the post Q1 earnings highs


Baidu-shares are actually up 3% from where they were post Q1 results.


Sina-shares closed at $90 the day the company reported earnings for Q1, down from $100/share the day before Q1 results. Since the Q1 results, shares are down an additional 9%.


Weibo-shares closed at $110 the day the company reported earnings for Q1, down from $128/share the day before Q1 results. Since the Q1 results, shares are down an additional 38%.


Almost seems like investors are surmising that Sina and Weibo will be the most adversely impacted by the trade shouting and yuan devaluations, no?


Does that even make sense to a rational investor?


Trading at less than 11x estimated earnings for 2019, after factoring out net cash, Sina could be considered beyond cheap, no?


If one can look beyond the current screaming and hollering along with massive fake news/intense scare-mongering on a daily basis on Chinese investments, easing into Sina today could turn out to be one of the best investments one can make going forward.


Along with the rest of the Chinese ADRs as well.


After all, the trade war situation will end at some point and more than likely it will end relatively amicably compared to the end of the world scenario currently being painted by the ASNAL gang.


As they say, it's always darkest before dawn.


One word of advice. Don't look for Wall Street analysts to help out. They are busy taking cover under their desks as they almost always do, when times get tough, leaving their investors dangling in the wind so to speak.


Words to the wise.(long SINA, BIDU, BABA)