Investment Focus on Sina(CICC)

1. Investment Focus
March 1, 2011 Internet RESEARCH
JIN Yu
SFC CE Ref: ALU931
BUY
jinyu@cicc.com.cn
Sina (SINA.US)
Only the Beginning…
Financial highlights
(USD mn) 2008 2009 2010E 2011E 2012E
Gross Revenue 370 359 400 480 633
(+/- ) 50% -3% 12% 20% 32% Action:
Gross Profit 219 200 233 274 371
(+/-) 45% -9% 16% 18% 35% We believe Sina is at the early stage of 3-5 years re-valuation thanks
Operating Profit 75 37 92 109 157 to the massive popularity of micro-blog services. We set our new TP
(+/- ) 46% -50% 148% 18% 43%
Net Income 81 412 103 114 157 at US$104@ 1yr, 142@ 2yrs and 201@ 3yrs, by assigning 40x P/E
(+/- ) 40% 411% -75% 10% 38%
Fully Diluted EPS (US$) 1.23 6.26 1.57 1.73 2.38
to its next year’s earnings. Looking forward, we expect Sina’s
PE (x) 66.7 13.1 52.0 47.3 34.3 investment story to come from how long/sustainable, instead of how
Non-GAAP Earnings
Gross Revenue-Non GAAP 370 354 381 461 614
much it can be revalued.
(+/- ) 50% -4% 8% 21% 33%
Net Profit 102.3 69.9 107.2 122.6 170.9
(+/- ) 52% -32% 53% 14% 39% Reasoning:
Fully Diluted EPS (US$) 1.55 1.06 1.63 1.86 2.60
PE (x) 52.6 77.0 50.2 43.8 31.5
We agree with the market that Sina is the current leader in the
EV/EBITDA 42.3 81.7 41.6 35.4 24.6 micro-blog market, yet we have non-consensus views as follows:
ROA 11% 34% 6% 6% 0%
ROE 14% 45% 8% 8% 0%
Share information ► Micro-blog is not a short term phenomenon and Sina’s
N-Share
competitive advantage is sustainable.
Bloomberg code sina us equity ► We find three types and six models for potential monetization
Share price USD81.67 and more innovative models to follow as the platform scales.
Target price USD104
Daily turnover (mn) 2.81
► Micro-blog is not a single product, we expect them to play
52wk high/low USD95.29/32
critical roles in Sina’s transition from a content driven company
Market Cap (mn) 5,045
to one of the competitive internet platforms in China.
Issue shares (mn) 62
Free float 56 Valuation:
Major shareholders(%) New-wave Investment Holding(9.08%) We introduced 2012 non GAAP EPS @ US$2.6, implying 39% YoY
Recent price performance growth. We expect the earnings growth from 2013 to 2015 to
% Last week 1m 3m YTD accelerate by 5-10% thanks to the contribution from micro-blog
[SINA.US] +4.54 -1.67 +25.28 +18.67
[HSCEI Index] +1.24 -1.15 -2.98 -1.48
[NASDAQ Index] +0.94 +0.98 +10.18 +4.88 We don’t value micro-blogs separately as we view it as a part of
52wk performance Sina’s integrated platform.
SINA.com NASDAQ COMPOSITE We don’t suggest pair trading Sina with either Tencent or Sohu. We
250
230 rate BUY for both Sina and Tencent.
210
190
170 Risks:
150
130 Near term selling pressure due to less earnings upside in reporting
110 periods, though we regard any strong pullbacks, especially below
90
70 US$70, as buying opportunities. In the long term, investment risks
10-03 10-05 10-07 10-09 10-11 11-01 11-03 come from spam messages, over monetization and regulatory risks.
Source: Bloomberg, company data, CICC Research
Please read carefully the important disclosures at the end of this report

2. CICC Research: March 1, 2011
Contents
A brief introduction to the micro-blog service market ............................................................................... 3
Sina leads in China’s micro-blog service market ....................................................................................... 5
Monetization analysis: Three types & six models monetization potential ............................................... 7
Type I: Direct monetization....................................................................................................................... 7
Type II: Cross selling................................................................................................................................ 8
Type III: Open API ...................................................................................................................................11
Why micro-blogs are so popular in China, and will they be sustainable? ............................................. 13
Why Sina leads the market and its sustainability..................................................................................... 15
Micro-blog’s long term value to Sina......................................................................................................... 18
Earnings forecast ........................................................................................................................................ 20
Valuation and recommendation ................................................................................................................. 21
Re-valuation may be ahead of monetization .......................................................................................... 21
Three-year TPs based on scenario analysis .......................................................................................... 21
We don’t suggest pair trading: Sina vs. Tencent .................................................................................... 23
Long Sohu, short Sina may not work ..................................................................................................... 24
Investment risks .......................................................................................................................................... 25
Figures
Financial highlights .....................................................................................................................................................1
Share information........................................................................................................................................................1
Recent price performance ..........................................................................................................................................1
52wk performance ......................................................................................................................................................1
Figure 1: Monthly visitors on SNS and micro-blog websites (2010/03-11).................................................................3
Figure 2: A real case study on Sina’s micro-blog........................................................................................................4
Figure 3: Sina leads others in terms of number of active users and time length spent..............................................5
Figure 4: Model 1, relevant display ads......................................................................................................................7
Figure 5: Model 2, real time search ............................................................................................................................8
Figure 6: Model 3, bundled sales................................................................................................................................9
Figure 7: Model 4, cross selling with its own services ............................................................................................. 10
Figure 8: Model 5, traffic sharing with 3rd party websites..........................................................................................11
Figure 9: Model 6, open platform..............................................................................................................................11
Figure 10: Model evolves with scaling platform....................................................................................................... 12
Figure 11: Diversity of micro-blogger profiles .......................................................................................................... 14
Figure 12: The scaling micro-blog platform ............................................................................................................. 16
Figure 13: Micro-blog has become the second largest social sharing platform ...................................................... 16
Figure 14: Information social sharing stats by service platforms............................................................................. 17
Figure 15: Sina’s business model will include more community and platform features .......................................... 18
Figure 16: Sina quickly addressing iOs markets ..................................................................................................... 19
Figure 17: Tencent and Baidu get re-valued after Y2009 ........................................................................................ 22
Figure 18: Earnings forecast under different scenarios........................................................................................... 22
Figure 19: Sina outperformed Sohu despite high valuation .................................................................................... 24
Figure 20: Historical and forecasted financial data—Quarterly ............................................................................... 26
Figure 21: Major financial data and operating matrix .............................................................................................. 27
Figure 22: Valuations of comparables ..................................................................................................................... 28
Figure 23: Historical P/E and PEG bands ............................................................................................................... 28
Please read carefully the important disclosures at the end of this report
2

3. CICC Research: March 1, 2011
A brief introduction to the micro-blog service market
Micro-blog services became popular in China at the end of 2009. As it matched very well with the needs of Chinese internet
users, it acquired users at an astonishing speed, to some extent, at the expense of SNS websites. According to DCCI research,
the number of active micro-bloggers will reach 150mn in 2011. Given that Tencent had announced it has broken the 100mn
mile stone at the beginning of the year, we expect Sina may have acquired more than 80+mn active users. Despite the
potential overlap among different platforms, it seems that the number of active micro-bloggers may well exceed the previous
forecasts. We expect the micro-blog to become a scalable platform, which involves both media and community features.
Though investors tend to exaggerate the influence of celebrities, our research shows that celebrity accounts are less than
one-thousandth of all registered accounts, even for Sina.
Figure 1: Monthly visitors on SNS and micro-blog websites (2010/03-11)
Microblog monthly visitors and penetration rate SNS website daily covered users for Mar-Nov in 2010
monthly visitors penetration rate Daily coverage MoM
130 125 40% 40 10%
unit mn unit mn 9.2%
118 39
120 36.9%
7%
35% 38
110 38 37
110 106
103 31.5%34.0% 4%
30.5% 30.4% 30%
100 36 35 1%
-0.3%
90 25% 34 0.1% -1.0%
23.7% -2%
81 34 -2.8% 33 -2.8%
33 -3.1%
80
20%
6919.3% 32
32
-5%
70
32
14.7% 15% -8.4% -8%
60
53
30 -11%
50 10%
Mar Apr May Jun Jul Aug Sep Oct Nov
Mar Apr May Jun Jul Aug Sep Oct
Source: iResearch, CICC Research
Please read carefully the important disclosures at the end of this report
3

4. CICC Research: March 1, 2011
Figure 2: A real case study on Sina’s micro-blog
Interest Offline Applications Messages Friends Search
groups activities
Private messages
Former CEO of Google
China. Four million
followers, follows 170,
2,004 micro-blog entries
Bonus scheme to keep
user active
This message forwarded
2,868 times, 1,149
comments
Self introduction, interests,
background, etc.
Source: Company data, CICC Research
Please read carefully the important disclosures at the end of this report
4

5. CICC Research: March 1, 2011
Sina leads in China’s micro-blog service market
We view micro-blog as a kind of service platform which involves both media and community components. While the market
tends to agree that Sina’s micro-blog is the definite leader in terms of media influence, thanks to its wide celebrity coverage
and media expertise accumulated as the leading portal, investors have different views on whether Sina’s micro-blog leads
others from a community perspective. Given Sohu and Netease’s micro-blog services lag far behind, investors usually
compare Sina’s micro-blog with that of Tencent. Independent 3rd party and our own research show that Sina is also the leader
from the community perspective.
► There are at least four dimensions to evaluating the competitiveness of a micro-blog platform. The number of registered
accounts, the number of active users, the activeness of users and time length spent by users. For example, Tencent’s IM
has over 1 billion registered accounts, but only half of them are active on a quarterly basis, and PCU is less than 10% of
registrations despite Tencent’s un-paralleled cross-selling and service integration capability. Our channel check also
shows some leading SNS’s active accounts are only 10-20% of registrations even on a quarterly basis. Given that, we
think the last three dimensions are more important when we evaluate the competitive landscape, though the first
dimension implies the growth potential if the service provider can activate the dormant accounts by adding new and
attractive service features.
► Tencent, reaching over 100 million accounts in the year beginning, may have surpassed Sina in terms of the number of
registered accounts, but it lags far behind Sina in terms of number of active users and time length spent on the
micro-blog service. According to iResearch, Sina took 56.5% market share on an active user basis and 86.6% market
share on a browsing time basis in 2010’s micro-blog service market.
Figure 3: Sina leads others in terms of number of active users and time length spent
Market share on active user basis Market share on browsing time basis
2.5% 1.1% 1.1%
6.4%
2.2%
13.2% Tencent Tencent
21.5% 9.1%
Sina Sina
Baidu
Baidu
Sohu
Sohu
Netease
56.5% Netease 86.6%
Source: iResearch, CICC Research
Our bottom up research shows that Sina’s micro-blog users are several times more active than those of Tencent. We did our
research on a number of top celebrities (30+), well known official media (social, financial and entertainment) and famous
enterprises (ecommerce/banking…10+), who opened their official micro-blogs on both Sina and Tencent and have more than
100,000 followers. We looked at the number of re-twits and comments for the latest 20 messages which appeared on both
platforms. We have following findings: 1) Most of them have more followers on Tencent, usually 2-3 times that of Sina; (2)
Most of them post more messages on Sina than on Tencent; (3) Most of them follow others much more on Sina than on
Please read carefully the important disclosures at the end of this report
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6. CICC Research: March 1, 2011
Tencent; (4) Most of them post the same message first on Sina and they interact more with Sina followers; (5) The re-twits
and comments on the same message, such as social, economic and financial news, on Sina are 2-3 times higher than that on
Tencent, despite fewer followers. Even for entertainment news, which we expect Tencent users to be more active, the re-twits
and comments on Sina are still higher, though with narrowing gaps. Based on that, we can conclude at least two points: 1)
Sina is the primary micro-blog platform for those multi account celebrities; 2) As most followers, who contribute re-twits and
comments, are grass roots, their activeness provides Sina’s micro-blog great chances to evolve into an interactive platform
with more community features, which is critical for it to maintain its long term competitiveness.
Please read carefully the important disclosures at the end of this report
6

7. CICC Research: March 1, 2011
Monetization analysis: Three types & six models monetization potential
We have found at least three types and six models for potential monetization. We expect the monetization models to be
logically sound, aiming to serve the big markets (ecommerce: Rmb trillion, Display + Video + Search Ads: Rmb100bn,
Online/mobile Game: Rmb 40bn) with strong growth potential. Meanwhile, we realize that with the expansion and evolution
of the platform, there may be more innovative monetization models.
Type I: Direct monetization
Model 1: Relevant ads
This model is similar to that of Facebook ads (60+% of Facebook’s revenue). Compared to traditional portals, the community
feature of micro-blogs helps Sina to know much more about the user profiles and online behaviors, which certainly helps
advertisers to better address their potential customers.
Figure 4: Model 1, relevant display ads
A display ad
Source: Company data, CICC Research
Model 2: Real-time search
Real time information has both useful and spam messages. That is a challenge. But it is also a truth that a friend’s or a
celebrity’s suggestion is quite trustworthy. If the real time search can sort out those useful messages, it may bring great
monetization potential. We expect the micro-blog will be a major host for real time information, and Sina will benefit
whether it develops its own search engine or cooperates with third party leading search engine providers.
Please read carefully the important disclosures at the end of this report
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8. CICC Research: March 1, 2011
Figure 5: Model 2, real time search
Keyword-based pay
links, may be to iPad
sellers, application
developers, etc.
Source: Company data, CICC Research
Type II: Cross selling
Model 3: Bundled sales
Currently, there are already 5,000 enterprises which have opened their official micro-blogs on Sina for online promotion, PR
or recruitment purposes. Sina doesn’t charge any money for that and there is no indication that Sina will charge for the
service directly in the future. However, as an integrated solution provider for brand advertisers, we expect the opportunity for
bundled sales to increase which will help the company to gain higher market share in the online brand advertising market.
Please read carefully the important disclosures at the end of this report
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9. CICC Research: March 1, 2011
Figure 6: Model 3, bundled sales
Indicates real name
verified by China
Merchants Bank
Corporate Channel, for
PR or recruitment
Bundled sales: Thousands of verified
enterprise accounts. They may not
pay for micro-blogging directly, but
they buy more ads from Sina
(one-stop service)
Source: Company data, CICC Research
Model 4: Cross selling with Sina’s other services
From a monetization perspective, we think the major difference between Sina and Twitter actually lies in: Sina has already
built several of businesses which can easily monetize but lack enough traffic and users, such as the traditional portal, online
video, the webpage online games platform, and Sina’s shopping mall. And some of those business lines proved unsuccessful
in the past, but they may turn around if the company can cross sell those services with micro-blogs efficiently and effectively.
Please read carefully the important disclosures at the end of this report
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10. CICC Research: March 1, 2011
Figure 7: Model 4, cross selling with its own services
Sina Video:
Hundreds of thousands of
followers, hundreds of
forwards and comments
for each embedded video
message
Source: Company data, CICC Research
Model 5: Traffic sharing with 3rd party websites
Our channel check shows that Sina’s micro-blog is already a meaningful traffic provider to 3rd party independent websites,
especially for online e-commerce and online video. We expect at least three methods of traffic sharing connected to
micro-blogs: 1) the official micro-blog opened by third party websites, such as the official micro-blog of Taobao shopping
mall. 2) As an early adopter of open ecosystems, we expect the popularity of “shared to Sina” to increase and the value of
“return clicks” may have the potential to be monetized. 3) To allow third parties to establish e-commerce shopping malls, a
model similar to that of Facebook’s shopping mall.
Please read carefully the important disclosures at the end of this report
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11. CICC Research: March 1, 2011
Figure 8: Model 5, traffic sharing with 3rd party websites
Taobao.com
Shopping Mall
Micro connected e-commerce.
Customer acquisition not just
from micro-blog itself, but also
from forwards and comments
Promotions
Source: Company data, CICC Research
Type III: Open API
Model 6: Revenue sharing with APP developers or content providers
This model is similar to the open platform strategy of Facebook and Tencent. By open API, Sina welcomes thousands of third
party developers to develop apps for the platform. Currently, there are over 500 third party apps on the platform, covering
functionality client software to webpage games.
Figure 9: Model 6, open platform
Game application:
Sina Wanwan has
attracted >2mn users
Open API:
rd
3 party developers can
submit apps online
Source: Company data, CICC Research
Please read carefully the important disclosures at the end of this report
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12. CICC Research: March 1, 2011
Monetization may continue to evolve as platform scales. We realize that the most beautiful part of a user centric platform
is user stickiness and platform scalability. Despite the short operation period, it already demonstrates great potential to be
integrated with other emerging internet services, such as social buying/LBS, etc.
Figure 10: Model evolves with scaling platform
Sina Wei Tuan:
collective buying platform
Source: Company data, CICC Research
Please read carefully the important disclosures at the end of this report
12

13. CICC Research: March 1, 2011
Why are micro-blogs so popular in China, and will they be sustainable?
Micro-blogs are very popular in China. The micro-blog in China is more popular than Twitter in the US. Sina achieved its
first 50 million registrations within one year, while Twitter spent three years to achieve that figure. The market has concerns
on the sustainability of micro-blog services, especially for western investors, as they believe the Facebook (SNS) model is
superior. Our research tells us that in the internet industry, the underlying fundamental for all services is “User is King” and it
is meaningless to discuss models apart from its addressable market, and, very importantly, that Chinese society and Chinese
internet users are very different from western society/users.
► Facebook was revolutionary in western society as it is not only an online social channel, but also changed peoples’
behavior in forming social relationships, to some extent, by overcoming sensitive privacy issues. However, in Chinese
society, people are not that sensitive towards privacy and most online communication needs are already solved by
Tencent. That’s why Facebook became popular even without any other services, while Chinese SNS websites face
substantial challenges when the tides of casual games fade away.
► Micro-blogs are very much revolutionary to Chinese internet users. Despite the strong economic growth, China is still
an emerging country, which is sometimes described as a transition society. The Chinese government/SOE/Authority is
very powerful and gets deeply involved with many aspects of social, economic and cultural activities. Chinese people
deal more often with the government/authorities in their daily lives. Given that, China’s internet users usually pay more
attention to social reform/development. An interesting and relevant example is an idol of many young Chinese is Mr.
Hanhan, an independent book writer, blogger and race driver who comments on social affairs publicly and actively,
while Mark Zuckerberg seems to be the counterpart in the US. The difference gives Sina’s micro-blog a stronger media
nature, and Chinese society does need social media besides the official media. Besides the gossip on celebrities, there
are more mainstream topics discussed on Sina, which actually are triggers of micro-blog growth.
We expect the popularity of micro-blogs will not only be sustained, but also increase. China will remain an emerging
country and transition society for the foreseeable future, and we expect the micro-blog will become more popular and
powerful with more news or events circulated on the platform, unless it is interrupted by the authorities. We also believe
micro-blogs are very different from blog services, whose popularity has fizzled. If we compare these with the traditional
media industry, we see micro-blogs as pieces of a daily newspaper which can be read daily, though with less comprehensive
information in it. Blogs are more like a weekly magazine or even a book, only checked weekly, monthly or even yearly,
though they may have much higher quality content. The usage frequency and higher interactivity makes micro-blogs a
powerful media and strong cross selling platform, while the blog service remains as a kind of content-driven product.
Regulatory risks are controllable. Investors have concerns that micro-blog services could be shut down or disabled to a less
extent by the government. We expect the possibility for micro-blog services being shutdown to be very low. The history of
China’s internet industry in the past decade tells us that no single service is really disabled due to regulatory reasons, though
all of them, such as search, IM, portals and online video, are strictly regulated. We elaborate our arguments as follows:
► With over 10 years of portal operation, Sina has abundant experience in complying with government guidance and skills
in dealing with sensitive news and events which have helped it to win strong credit and recognition from regulators.
► We expect the central government needs some tools to efficiently balance the power of local governments, which seem
out of control on some issues such as property prices and brutal law enforcement. Internet media, including the
micro-blog, should be welcomed for their efficiency of news circulation.
► The diversity of micro-bloggers. Besides ordinary people and celebrities, we found most official media, province/city
level police bureaus and some local governors have also opened micro-blogs to effectively communicate with the public,
especially internet users. That may cause regulators to reconsider the social value of micro-blogs, though the authorities
as a whole are keen on social stability and information control.
► Last but not least, we believe regulators should well understand they can block Twitter and Facebook, but they can’t
fully limit access to the development of technology, especially with the escalating international pressure to open
Please read carefully the important disclosures at the end of this report
13

14. CICC Research: March 1, 2011
cyberspace. To have competitive local providers and keep users on local platforms, which have historically been proven
to be controllable, is a much better choice.
Figure 11: Diversity of micro-blogger profiles
Government entities
Local police bureau
NPC members
Official media such as Xinhua
News Agency and People’s Daily
Source: Company data, CICC Research
Please read carefully the important disclosures at the end of this report
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15. CICC Research: March 1, 2011
Why Sina leads the market and its sustainability
Sina’s deep understanding of online media helps it lead the micro-blog market: Sina has without doubt benefited from
circumstances including but not limited to the government shut down of several independent micro-blog sites to become the
leader of the micro-blog market, but we still need to ask why other leading internet players did not take the lead. This same
question is just as applicable when Tencent led the SNS market, Baidu led the search market or Alibaba group led the
e-commerce market. It must be something in the company’s core knowledge or its genetic make up that helps it to benefit
from these accidents and come out on top of the sector. As discussed above, we expect micro-blog services in China to
involve a stronger media nature, which is why Sina, as China’s leading online portal with its wealth of media expertise, were
the first to realize the value of micro-blogs and make the decisive strategic move to embrace them ahead of its peers.
We expect Sina to maintain, if not strengthen, its leading advantage. Sina is China’s leading internet portal, but it did not
expand as successfully as other portals in the past. Actually, Tencent caught up quickly with Sina and Sohu, thanks to their
higher investment in brand and content. Investors have concerns over Sina’s ability to maintain its current advantage, we
believe there is no such strong worry:
► Micro-blog is a combination of media and community: It is not only a content driven broadcasting service, but also
an interactive platform, which means the leaders usually enjoy first mover advantage and benefit from the network
effects. Tencent, leveraging on its scale and deep understanding over its community members, may remain competitive,
but it will be hard for them to challenge Sina’s leading position. Other platform operators, such as internet portals,
search platforms and SNS may have even fewer chances to catch them.
► In the name of Twitter, in the way of Facebook: Though we have become used to comparing Sina’s micro-blog with
Twitter, actually Sina’s micro-blog platform is evolving much faster than Twitter’s, by adding much more media and
community features. From a communication perspective, the micro-blog now efficiently supports one way broadcasting
messages, one-to-multi (micro group) and two-way one-to-one (private message). Our channel check reveals that many
MSN users are transferring their contacts to Sina’s micro-blog platform. From a media perspective, it has micro-blog
daily news, micro-blog interviews and micro-blog live broadcasting. Sina’s micro-blog services also lead Twitter on
improving user interactivity by facilitating more efficient re-tweets, comments and picture uploads.
► Early adopter of open platforms: Sina seems to well understand the potential competitive pressures. The company is a
pioneer in the Chinese internet industry by actively pursuing the open platform strategy. On one hand, users can share
third party contents on Sina’s micro-blog through the “Share to Sina’s micro-blog” button; on the other hand, the
company actively opened its API to third party vendors and now has >500 apps, which cover everything from improving
functions, to client software and games. The open platform strategy greatly alleviates Sina’s disadvantage on product
R&D, building a leading advantage in a short period of time. Looking forward, competitors don’t have to compete with
just Sina’s micro-blog itself, but its entire micro-blog ecosystem. According to social sharing toolbar provider,
Jiathis.com’s statistical analysis, the micro-blog service had the largest market share gain in terms of number of shared
messages in 2010. And Sina’s micro-blog also became China’s second largest social sharing platform, behind Qzone.
► Celebrities used to be Sina’s secret weapon, but no longer: It is the consensus view that celebrities are one of Sina’s
core advantages. We agree that celebrities helped Sina a lot with gaining users at the initial stage, but we believe it is the
scale and interactivity that is its real strength going forward. Our research shows that over 50% of top celebrity
micro-bloggers (entertainment or financial stars) open their real name accounts across multiple platforms and publish
the same messages across these different platforms. However, our research tells us >80% of celebrities who opened
multiple accounts used Sina as their primary account: meaning, on Sina they followed more people, posted more
messages and interacted more often with their followers. There are three reasons for this: Sina’s brand, its first mover
advantage and its better interactivity. With millions of active followers, we expect that celebrities depend on Sina more
than Sina leverages on them. We believe the opposite is true for Sina’s peers, which need make greater efforts to attract
and keep celebrities active on their platforms.
Please read carefully the important disclosures at the end of this report
15

16. CICC Research: March 1, 2011
Figure 12: The scaling micro-blog platform
Broadcasting, group messages, and private messages
Friends
Real name of account owner
verified
One-way follower
Two-way friends
Source: Company data, CICC Research
Figure 13: Micro-blog has become the second largest social sharing platform
Social media share
information growth rate in
2010
Social media market share in 2010
Microblog Tools media Bookmark media SNS media
33.0%
48.0%
6.0%
13.0%
Source: Jiathis, CICC Research
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16

17. CICC Research: March 1, 2011
Figure 14: Information social sharing stats by service platforms
Q-zone Sina microblog Baidu favourite Renren Kaixin
Sohu microblog Google buzz Tao Jianghu MSN Douban
Tencent microblog Tencent friends Netease microblog Sohu white society
2.3% 2.1%
3.0%
2.1%
3.2%
3.2%
3.2% 32.1%
3.3%
3.9%
5.8%
21.1%
6.3%
8.4%
Source: Jiathis, CICC Research
Please read carefully the important disclosures at the end of this report
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18. CICC Research: March 1, 2011
Micro-blog’s long term value to Sina
Portals are a content and brand driven businesses, not user driven platforms. That makes the portal business hard to
consolidate so it can enjoy the benefit of the network effect. Prior to the launch of its micro-blog service, Sina was facing
challenges from competing portals with deep pockets as well as the continuous threat of new internet services. We expect the
successful launch of their micro-blog platform may have greatly changed Sina’s competitive position in the Chinese internet
sector.
► Beneficiary of the strong growth of China’s mobile internet. One typical feature of mobile internet is fragmentation
in terms of time usage. Micro-blogs are well positioned to be a killer mobile application, and currently 40% of
micro-blog users log in through their mobile devices, despite the penetration of 3G and smart device users being <10%
of mobile users.
► Beneficiary of new internet service models. Sina has been criticized for missing opportunities in the new service
market. Besides strategic reasons, we realize the lack of a user-centric platform highlights Sina’s disadvantages. Taking
Tencent as an example, though the company has not a very successful game developer up to now, it has not affected the
company becoming China’s largest online game operator, leveraging on its community and multi user-centric platforms.
If Sina successfully evolves its micro-blog platform, we expect it will benefit from the development of online video and
e-commerce through traffic sharing or advertising models, even if the company doesn’t become a successful ecommerce
or online video operator. And it may provide Sina with one more chance to edge into the online game market, especially
the webpage game market. Our research tells us that Sina has already launched “Sina wei tuan” (social buying)”, “Sina
online payment” and “Sina wanwan-webpage game platform”.
► Successful micro-blog launch a morale boost for Sina’s employees. We believe it is people and execution which
determine whether a company can successfully transfer from a product driven to a platform company. Our channel
check shows Sina’s R&D capability improved significantly last year. Currently, the amount of apps sold at Apple’s app
store developed by Sina is close to that of Tencent, which is the indisputable leader of the client software sector.
Figure 15: Sina’s business model will include more community and platform features
Content Driven model
MVAS (25% of 3Q10 revenue) Advertising (75% of 3Q10 revenue)
News channel
Financial channel
Sports channel
wireless
Fee based Revenue Traffic Based Revenue
Portal, WAP portal UC client, Sina Space
Platform driven model
IVAS MVAS (25% of 3Q10 revenue) Advertising (75% of 3Q10 revenue) New initiatives
Webpage and casual games News channel Online video
Online shopping mall Financial channel Search
Mobile App store Sports channel E-commerce
wireless
Fee based Revenue Traffic Based Revenue
Portal, WAP portal UC client, Sina Space,
Micro Blog
Source: CICC Research
Please read carefully the important disclosures at the end of this report
18

19. CICC Research: March 1, 2011
Figure 16: Sina quickly addressing iOs markets
QQ QQ
Tencent Tencent QQ QQ QQ mobile
Tencent news QQ Q-zone QQ LLK Chinese QQlive Chinese Weixin
microblog friends Browser Assisytant token
chess poker
Application
Tencent
Iphone √ √ √ √ √ √ √ √ √ √ √ √
Ipad √ √ √ √
Sina Sina Sina
Sina portal Sina blog Sina video Sina USA. Sina auto Sina Books
microblog news reading
Application
Sina
Iphone √ √ √ √ √ √ √ √ √
Ipad √ √ √ √ √
Netease Netease Netease Netease Netease Netease Netease
Netease news Youdao dict
mobile email microblog blog lottery pulic class iMoney ladies
Application
Netease
Iphone √ √ √ √ √ √
Ipad √ √ √ √
Sohu Sohu Sohu video White Dapeng
microblog entertainment news society talkshow
Application
Sohu
Iphone √ √ √ √ √
Ipad √
Source: Company data, CICC Research
Please read carefully the important disclosures at the end of this report
19

20. CICC Research: March 1, 2011
Earnings forecast
Our 2011 non GAAP EPS forecast remain unchanged at US$1.86 and introduce our 2012 financials. We believe revenue will
grow 32% in 2012, (advertising to grow 38%, MVAS to grow 15%), net profits will rise 39%. Non-GAAP EPS forecast for
2012 is US$2.6. (Please refer to figure 20-21 for financials)
We expect the management to continue to focus on increasing the micro-blog scalability by introducing more functions and
contents as well as making the platform more efficient. And we expect the management will be careful regarding the
platform’s monetization in order not to hurt its user experience.
Despite the above, with the continued expansion of the platform, we expect some of the monetization models to be
commercialized as early as 2H11. We expect the contribution from micro-blog will be more meaningful from 2012 onwards.
With the contribution, we expect the growth of Sina’s advertising related business to increase to 35-40% in 2012 and 2013.
Besides direct monetization, the strong cross selling capability will help Sina gain more market share in the traditional portal
advertising markets (such as financials, auto and ITs), enhance its competitive edges in e-commerce and online video, as well
as addressing the long tail market.
Please read carefully the important disclosures at the end of this report
20

21. CICC Research: March 1, 2011
Valuation and recommendation
We expect the share price is still in the early stages of a 3-5 years revaluation. We set our TP at US$104@1 yr, 142@ 2yrs
and 201@ 3 yrs, by assigning 40x P/E to its next year earnings. We use single P/E multiple and expect the revaluation to be
ahead of micro-blog’s monetization. We don’t value the micro-blog separately as we believe it is a part of Sina’s integrated
platform (like IM is to Tencent). We believe any effort to value the micro-blog alone may underestimate its cross-selling
value, for both the internet services and mobile internet services.
Re-valuation may be ahead of monetization
► Changing market conditions: Though our research on Baidu and Tencent tells us that their revaluations did not happen
before they found suitable monetization models, we realize there is a big difference in the capital market between
2010~2012 and 2004~2006. In 2004~2006, the old economy performed very well and investors who got hurt in the IT
bubble remained cautious on the industry. We have to acknowledge that there is a golden period to invest internet in
stocks, which combines both high growth and low PE. The financial crisis changed the market and the company
fundamentals substantially. In 2010 onwards, we expect there will be massive liquidity in the market, as the recovery of
the “old economy” remains less encouraging, and the valuation premium of internet companies are expected to expand
(please check our 3Q10 report: US liquidity, China Internet). In fact, Baidu and Tencent were both substantially
revalued in 2010.
► The visibility of cross selling is higher than that of Twitter: The visibility of Baidu’s monetization seems higher to
investors than that of Tencent thanks to Google, which helped Baidu enjoys valuation premiums in the past. Tencent
monetized its users mainly through cross-selling, which meant investors consistently doubted Tencent’s monetization
outlook before they delivered. Tencent proved cross-selling is a very successful model. Facebook and Twitter faced the
same challenge in the US, but investors now give strong credits for cross-selling. Furthermore, we expect the visibility
of Sina’s micro-blog is better as it already has many monetized services (portal, e-commerce, webpage game platforms,
etc.) which are all hungry for traffic and user support.
► We expect Sina’s valuation premium to remain for the next 2-3 years unless there is a big change in market liquidity
or the micro-blog platform shows a sign of weakness, such as a slow down in customer acquisition or ineffective
monetization efforts.
Three-year TPs based on scenario analysis
► Base case: The development of the platform is well on track, with the number of micro-blog users growing to 150mn at
end-2010 and 240mn by end-2012. The monetization trend is positive, but the contribution is still small (5-10%
additional contribution to advertising growth in 2012). Under this scenario we expect Sina to achieve 40% CAGR from
2012~2015 and may enjoy 3~4 years revaluation, which means its P/E multiple will not narrow, instead remaining
consistent going forwards. And we don’t expect investors to discount Sina’s growth.With 1.0x PEG, we expect the
consistent multiple to be around 40 x forward P/E.
► Bull case: The platform may have up to 300mn users in 2012 with monetization on the upside, which means it not only
makes money from its advertising model (direct monetization + cross selling), but also successfully monetizes through a
revenue sharing model (open API), which helps the earnings growth CAGR of 2012~2015 easily surpass 40%. That
growth acceleration may boost the P/E multiple well above 40x with higher than expected earnings.
► Bear case: The popularity of micro-blogs fade. The monetization of Sina returns to the traditional portal model. With
25~30% year on year growth and fewer new initiatives, the company will face de-valuation pressure, trading back to
25~30x forward P/E.
Please read carefully the important disclosures at the end of this report
21

22. CICC Research: March 1, 2011
Figure 17: Tencent and Baidu get re-valued after Y2009
2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10E 1Q11E
250 300%
2005.06 QQ 2006.03 2006.10 QQ 2007.01 QQ 2007.11 QQ 2008.06 QQ
pet online Soso online; video online; label online; pinyin type schoolmate
online; online
250%
2005.09 2006.12 QQ combined
200 Qqlive, doctor with Q-zone;
Tencent online;
Paipai, 200%
Tenpay
online;
150
150%
100%
100
Tencent
microblog 50%
online;
50
2010.07
0%
Group 2010.11
purchase Tencent vs
online; 360;
0 -50%
05-03 05-06 05-09 05-12 06-03 06-06 06-09 06-12 07-03 07-06 07-09 07-12 08-03 08-06 08-09 08-12 09-03 09-06 09-09 09-12 10-03 10-06 10-09 10-12 11-03
Px Last 15X 22X 30X 40X net profit YoY growth rate
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11E
150 180%
2007.01 Achieve 2007.09 Baidu 2008.01 Baidu 2008.08 Badidu 2009.03 National 2009.08 Baidu
agreement with EMI game platform entertainment CPA ad. platform channel agencies open "Box
online; computing" 160%
music; channel online; online; upgrade plan;
125 platform;
2007.03 Baidu 2007.10 Baidu 2008.06 Baidu e- 2008.09 Baifubao 2009.06 Baidu 140%
Japanese SE onlie; advanced in e- commerce platform online; began to shut 2009.10 Baidu
commerce; starts business; down part of paid ad.housekeeper,
100 2007.04 Baidu blind 2008.10 Baidu listing system; net union 120%
online; 2007.11Baidu Youa online; promotion online;
statistics online;
100%
2009.12 Totally
75 transfer to
Phoenix mew 80%
system
2010.01 Baidu
50 60%
build up
independent online
video company; 40%
2010.10 Baidu
25 type, Baidu
2010.04 Baidu experience and 20%
map openned Baidu rakuten
API； online;
0 0%
06-12 07-03 07-06 07-09 07-12 08-03 08-06 08-09 08-12 09-03 09-06 09-09 09-12 10-03 10-06 10-09 10-12 11-03
Px Last 20X 40X 60X net profit YoY growth rate
Source: Company data, CICC Research
Figure 18: Earnings forecast under different scenarios
Scenario analysis non GAAP EPS (US$) CAGR (2012-2015) PE multiple PEG Price Target for NTM
2011 1.86
2012 2.60 104.0
Base case 2013 3.55 40% 40 1.0 142.0
2014 5.03 201.2
2015 7.00 280.0
2011 2.00
2012 2.70 129.6
Bull case 2013 3.78 48% 48 1.0 181.4
2014 5.48 263.1
2015 8.22 394.6
2011 1.63
2012 2.09 53.4
Bear case 2013 2.75 32% 26 0.8 70.5
2014 3.72 95.2
2015 4.83 123.7
Source: CICC Research
Please read carefully the important disclosures at the end of this report
22

23. CICC Research: March 1, 2011
We don’t suggest pair trading: Sina vs. Tencent
We buy both Tencent and Sina. We expect Sina to lead in the micro-blog market, while Tencent will benefit from its open
platform strategy in the next two years. And together they will push forward the development of open ecosystems and benefit
from the more sustained secular growth.
We never think it is a feasible strategy to build pair-trades simply based on valuations or on the simple judgment of a single
service. This is especially true in the internet industry, where we expect 50%, if not higher, investment stories built on secular
growth, which is driven by the general trend: offline to online, low penetration to high penetration, PC to mobile, online
gaming to e-commerce. The leading companies can actually growth together with differing competitive strengths and growth
focuses.
We expect Sina will lead the micro-blog sector, which will likely transform Sina from a content driven portal to a platform
company. Together with other money making businesses, there is a chance Sina will join other online giants - Baidu, Alibaba
Group and Tencent.
Tencent is currently, and we expect it will remain, the largest internet community in China, leading others with multiple and
integrated platforms, including SNS, IM, client software, and so on. The company successfully monetized its users/traffic
mostly from its online entertainment services (membership, avatar & online gaming). As the online gaming business is very
much product driven, investors have been concerned with the company’s growth visibility and sustainability, which have
been the major factors limiting the company’s PE multiples. Though Tencent is the largest and most profitable internet
company in China, we think the value of Tencent’s platform/community is yet to be fully utilized. We feel positive towards
Tencent’s open platform strategy, which will upgrade Tencent’s model from platform-centric to ecosystem-centric (more
similar to that of Facebook). This strategy will better position Tencent to benefit from the secular growth of China’s internet
industry. Before the strategy, Tencent was the competitor of most internet companies, after the strategy, Tencent will continue
to compete with other leading internet platforms, but it will not be a competitor, but a facilitator to most SMEs (content and
service providers). As the ecosystem expands, so does Tencent’s chance of maintaining their leading position in the mobile
internet and making breakthroughs in the search and e-commerce sectors. Together with the solid near term growth driven by
IVAS, we expect there is a potential revaluation ahead for Tencent.
Please read carefully the important disclosures at the end of this report
23

24. CICC Research: March 1, 2011
Long Sohu, short Sina may not work
The logic of building this pair trade seems to be that the two stocks share similar business structures and Sohu’s valuation is
much cheaper than that of Sina. We believe that the only way the pair trade will work is if the micro-blog services are shut
down by the government, which in our view is very unlikely. Our arguments are:
► Sina may gain market share from Sohu in the traditional portal advertising market. Without micro-blog, the
competitive landscape may remain largely stable for the next few years. However, if we agree that micro-blog is
strongly media in nature and has cross selling capabilities, it will highly likely accelerate the restructuring of the portal’s
competitive landscape.
► The online video business is pretty much content driven and user stickiness is much lower than that of platform
driven services. Sohu was an early mover on the online video business and established competitive advantages over
Sina and Tencent. However, we expect the online video services are somewhat similar to that of the online gaming
business. Platform companies, such as Tencent, Sina and Baidu, have a great chance of catching up when they put
efforts on this front. In summary, the competitive landscape of online video is far from stable and those first movers’
advantages are not secure.
► Sina’s share price outperformed Sohu in the past, with consistently higher multiples.
Figure 19: Sina outperformed Sohu despite high valuation
Sina Sohu Sina vs Sohu PE premium
350 3.50
Sina promoted microblog Sina promoted Sina group Sina microblog users
in Sep 2009 purchase platform in Jul, amount surpassed 50mn
2010 in Nov, 2010
300 3.00
250 2.50
200 2.00
Average Sina/Sohu PE
1.90
150 1.50
100 1.00
50 0.50
Sohu seprated Sogou as Sohu online video market
Copyright protrction union
independent company in share achieved 13.4% in
sued Youku in Sep, 2009
Oct, 2010 4Q10
0 0.00
09-07 09-09 09-10 10-01 10-04 10-07 10-10 11-01
Source: Company data, CICC Research
Please read carefully the important disclosures at the end of this report
24

25. CICC Research: March 1, 2011
Investment risks
Near term earnings pressure. A massive platform like micro-blog certainly demands strong investment in advance, which
may lead to a mis-match between investment and monetization. There may be selling pressure due to less earnings upside in
the reporting period, though we regard any strong pull back—especially below US$70—as a good chance to buy.
Spam messages: Given its fantastic distribution efficiency, there are many different interest group trying to leverage the
micro-blog platform, spam message publishers are one of them. We believe improving user experience will be a long-term
issue for Sina, and will continue to challenge its R&D capability, which is to some extent inferior to that of major competitors,
Tencent and Baidu.
Over or early monetization: The market’s high expectations may lead Sina’s management to feel more pressure to figure
out monetization models. As the market is still very competitive on traffic and user acquisition, the one who monetizes their
users/traffic first must be very careful to not damage its user experience. Especially as major competitors, Tencent, Sohu,
Netease and Baidu, will face much less pressure to monetize their micro-blog services.
Regulatory risks: Though we don’t worry about the regulatory risks in the same way as the market does, we agree that
micro-blogs are very different from traditional portals, as they involve millions of UGM (user generated messages) per day,
which exposes the platform to higher regulatory risks.
Please read carefully the important disclosures at the end of this report
25

26. CICC Research: March 1, 2011
Figure 20: Historical and forecasted financial data—Quarterly
Income Statement (USD mn) 2009 1Q10 2Q10 3Q10 4Q10E 2010E 1Q11E 2Q11E 3Q10E 4Q11E 2011E 2012E
Gross Revenue 359 85 99 108 107 400 99 119 131 130 480 633
Non-GAAP gross revenue 354 80 95 104 103 381 95 115 126 125 461 614
Advertising 228 54 73 81 82 290 69 93 103 102 367 506
Non-advertising 131 31 26 27 26 110 30 26 28 28 113 127
MVAS Services 119 25 20 21 20 85 24 20 22 22 87 100
Others 11 6 6 7 6 25 7 7 7 7 26 27
Cost of revenue (158) (37) (41) (44) (45) (167) (45) (53) (53) (55) (205) (262)
Gross profit 200 48 58 65 62 233 55 66 78 75 274 371
Sales and marketing (85) (17) (20) (21) (22) (80) (19) (23) (26) (25) (94) (123)
Product development (34) (8) (8) (9) (10) (34) (8) (10) (11) (12) (41) (54)
General and administrative (40) (6) (4) (6) (7) (23) (6) (7) (8) (8) (29) (37)
Amortization of intangible assets (4) (3) (0) (0) (0) (3) (0) (0) (0) (0) (1) (1)
Income (loss) from operations 37 15 26 29 23 92 21 26 33 29 109 157
Other income,net 8 2 2 5 2 10 2 2 2 2 9 10
Profit Before Tax 421 16 28 33 25 103 23 28 36 31 118 167
Provision for Taxation (8) (2) (2) (2) (3) (10) (3) (4) (5) (4) (16) (25)
Equity income in Affiliates - 10 (0) 0 1 11 3 3 3 3 12 15
Net Income/Loss 411.9 24.3 25.2 31.3 22.7 103.5 22.4 27.2 33.7 30.2 113.6 156.5
Fully diluted EPS(USD) 6.26 0.37 0.38 0.48 0.34 1.57 0.34 0.41 0.51 0.46 1.73 2.38
Non-GAAP EPS(USD) 1.06 0.34 0.42 0.50 0.36 1.63 0.36 0.45 0.55 0.50 1.86 2.60
Growth Analysis
Revenue-YoY -3.0% 15.2% 10.1% 12.3% 9.4% 11.6% 16.8% 20.0% 21.1% 21.0% 19.9% 538.0%
Revenue-QoQ -13.4% 17.0% 8.9% -0.8% -7.6% 20.2% 9.9% -0.8%
Net Profit-YoY 410.8% 149.0% 89.0% 87.5% -93.9% -74.9% -7.6% 8.0% 7.7% 33.3% 9.8% 597.7%
Net Profit-QoQ -93.5% 3.8% 24.2% -27.6% -1.0% 21.3% 23.9% -10.4%
Margins Analysis
Gross margin 55.9% 56.6% 58.4% 59.6% 57.9% 58.2% 55.1% 55.7% 59.5% 57.9% 57.2% 58.6%
Total expenses /Revenue (%) 44.3% 36.4% 31.9% 33.0% 36.0% 34.3% 33.8% 33.8% 33.8% 35.0% 34.1% 33.7%
Sales and marketing (%) 23.7% 20.1% 19.7% 19.5% 20.5% 19.9% 19.5% 19.5% 19.5% 19.5% 19.5% 19.4%
Product development (%) 9.4% 9.0% 8.0% 8.0% 9.0% 8.5% 8.5% 8.5% 8.5% 9.0% 8.6% 8.5%
General and administrative (%) 11.2% 7.3% 4.2% 5.5% 6.5% 5.8% 5.8% 5.8% 5.8% 6.5% 6.0% 5.8%
Operating margin 10.4% 17.2% 26.2% 26.4% 21.6% 23.1% 21.0% 21.6% 25.4% 22.7% 22.8% 24.7%
Net margin 114.9% 28.6% 25.4% 28.9% 21.1% 25.9% 22.6% 22.8% 25.7% 23.2% 23.7% 24.7%
Effective tax rate 2.0% 11.7% 8.6% 6.7% 13.0% 9.5% 13.5% 13.5% 13.5% 13.5% 13.5% 15.0%
Source: Company data, CICC Research
Please read carefully the important disclosures at the end of this report
26

27. CICC Research: March 1, 2011
Figure 21: Major financial data and operating matrix
Income Statement (USD mn) 2008 2009 2010E 2011E 2012E Growth & Margins (%) 2008 2009 2010E 2011E 2012E
Gross Revenue 370 359 400 480 633 Growth Analysis
Non-GAAP gross revenue 370 354 381 461 614 Gross Revenue 50.2% -3.0% 11.6% 19.9% 32.0%
Advertising 258 228 290 367 506 Advertising 53.0% -11.8% 27.2% 26.4% 38.0%
Non-advertising 111 131 110 113 127 Non-advertising 43.9% 17.6% -15.7% 2.6% 12.7%
MVAS Services 103 119 85 87 100 MVAS Services 46.6% 15.5% -28.6% 2.2% 15.0%
Others 8 11 25 26 27
Margin Analysis
Cost of revenue (150) (158) (167) (205) (262) Gross Margin % 59.3% 55.9% 58.2% 57.2% 58.6%
Gross profit 219 200 233 274 371
Selling expense(% of Revenue) 21.6% 23.7% 19.9% 19.5% 19.4%
Sales and marketing (80) (85) (80) (94) (123) Product development (% of Revenue) 8.2% 9.4% 8.5% 8.6% 8.5%
Product development (30) (34) (34) (41) (54) G&A (%) 9.0% 11.2% 5.8% 6.0% 5.8%
General and administrative (33) (40) (23) (29) (37)
Amortization of intangible assets (1) (4) (3) (1) (1) Operating Margin % 20.2% 10.4% 23.1% 22.8% 24.7%
Income (loss) from operations 75 37 92 109 157
EBITDA Margin (%) 24.9% 15.9% 27.9% 27.4% 29.8%
Other income,net 21 8 10 9 10 EBIT Margin (%) 20.2% 10.4% 23.1% 22.8% 24.7%
Profit Before Tax 95 46 103 118 167 Effective tax rate 14.7% 2.0% 9.5% 13.5% 15.0%
Provision for Taxation (14) (8) (10) (16) (25)
Equity income in Affiliates - - 11 12 15 Net Margin % 21.8% 114.9% 25.9% 23.7% 24.7%
Net Income/Loss 81 37 103 114 157
Fully diluted EPS(USD) 1.23 6.26 1.57 1.73 2.38
Non-GAAP EPS(USD) 1.55 1.06 1.63 1.86 2.60
Balance Sheet (USD mn) 2008 2009 2010E 2011E 2012E Ratios 2008 2009 2010E 2011E 2012E
Cash&cash equivalents 383 746 826 901 1,001 ROE % 14.4% 44.6% 8.1% 8.2% 0.0%
ST investments 221 75 75 75 75 ROA % 10.9% 33.8% 6.2% 6.4% 0.0%
Accounts & Notes Receivable 79 75 86 103 136
Current Assets 692 919 1,010 1,102 1,235 Net Cash/Equity 61.4% 61.1% 62.4% 62.8% 63.0%
Net Fixed Assets 34 23 35 48 61 Liability/Asset 24.1% 24.2% 23.1% 21.7% 20.2%
Intangible Assets and Goodwill 95 88 92 101 112
Non-current Assets 130 695 712 733 758 Current ratio 7.3 7.3 7.7 8.3 9.1
Total Assets 822 1,614 1,721 1,835 1,992
Accounts Payable 1 2 8 10 12
Accrued Liabilities 76 109 109 109 109
Current Liabilities 95 125 131 133 136
Convertible Debt 99 99 99 99 99
Non-currnet Liabilities 103 266 266 266 266
Total Shareholders' Equity 625 1,222 1,323 1,435 1,589
Total Liabilities and Equity 822 1,613 1,720 1,834 1,991
Cash Flow Statement (USD mn) 2008 2009 2010E 2011E 2012E
Net Income 81 412 103 114 157
Depreciation & Amortization 18 20 19 22 32
Changes in Working Capital 2 (1) (5) (15) (30)
Cash From Operations 114 98 118 120 159
Capex (19) (5) (36) (43) (57)
Cash from Investing Activities (24) 112 (36) (43) (57)
Cash from Financing Activities 12 155 - - -
Effect of Foreign Exchange 9 (2) (2) (2) (2)
Net Changes in Cash 112 363 80 75 100
Source: Company data, CICC Research
Please read carefully the important disclosures at the end of this report
27