Wednesday, 19 August 2015

Sina, Weibo and a Chinese sum-of-the-parts

I last had a go at the Sina/Weibo sum-of-the-parts analysis in a two part analysis here and here concluding back then that:

'...essentially all the value in Sina was derived from its holding in the micro-blogger (aka "Twitter-esque") Weibo...(but) Weibo may be closer to its lows than its highs but I am leaving it to the experts. Good luck to all shareholders'

Since then both shares participated in the Q2 Chinese shares rally...and the subsequent Q3 bust.  On a six month odd view they are little changed.


First the Sina numbers. A few things strike me:

'Net income attributable to SINA for the second quarter of 2015 was $11.7 million, compared to $16.6 million for the same period last year. 

Non-GAAP net income attributable to SINA for the second quarter of 2015 was $4.0 million, compared to $12.1 million for the same period last year. 

Online advertising revenues for the second quarter of 2015 were $176.3 million, compared to $155.8 million for the same period last year. The year-over-year growth in online advertising revenues resulted from an increase of $28.3 million in Weibo advertising and marketing revenues, offset by a decline of $7.9 million in portal advertising revenues'

Yes, once again the only part of the business of Sina really worth worrying about is Weibo.  

To update the numbers from earlier in the year:

At Weibo's current market cap, Sina's 54% stake is worth US$1.66bn   US$1.26bn

And their own market cap?  US$2.2bn currently or an EV (after adjusting for net cash held) of...just under US$900m.  US$1.03bn

Hmm!

Of course it is not that easy.  There is a US$800m convertible bond so I think a fairer adjusted EV is about US$1.15bn or basically close to the value of the Weibo stake.

Whilst there are some positives including a share repurchase scheme  (US$300m out of US$500m authorised having been undertaken), it is still all about Weibo.  

And what about one of China's Twitter equivalents?  The qualitative comments sounded quite good: 

'Our Weibo platform continued to make strong progress in growing our user community with 212 million people accessing Weibo each month and 93 million people using Weibo every day.

On the monetization front, our Weibo's financial performance grew nicely with the solid execution on the operational side. Total revenues for Weibo grew by 39% for the second quarter and year-over-year basis, driven by growth in advertising business. Advertising revenues grew by 47% in the second quarter on yearly comparison, driven by increased spendings in promoted feeds and on mobile terminals. Mobile advertising revenues accounted for 62% of total revenues in Q2, up from 58% in the first quarter of 2015 and 39% in the second quarter of last year'.

The trouble still comes with the underlying lack of proper, real ebitda as shown by the observations: 

'Net income attributable to Weibo's ordinary shareholders was $4.2 million, or $0.02 diluted net income per share, compared to a net loss of $15.5 million for the same period last year, or diluted net loss per share of $0.08.

Non-GAAP net income attributable to Weibo's ordinary shareholders was $10.9 million, or non-GAAP diluted net income per share of $0.05, compared to a non-GAAP net loss of $5.1 million for the same period last year, or non-GAAP diluted net loss per share of $0.03.

Non-GAAP adjusted EBITDA was $15.4 million, compared to a non-GAAP adjusted EBITDA of negative $1.8 million for the same period last year'.


Yes there is some progress but even if you looked at the non-GAAP adjusted ebitda line (so many qualifications to this!) is this really worth US$2.3bn?

As I noted back in May: 'one for the experts' (especially as I can buy stocks like Alibaba with real cash flows etc. - link here). 

No comments:

Post a Comment