How much is Sina's share price undervalued?

Sina Weibo's first-day IPO hit $20.16 trillion, with a market value of $4.1 billion, which did not meet the top Wall Street analyst's forecast of $8 billion trillion, but also higher than the market's widely expected $4 billion trillion. Sina Weibo can be listed at this point in time, naturally gratifying, but behind its market capitalisation to see that its parent company Sina's valuation has been seriously underestimated.

Based on Sina's current valuation of 3.5 billion U.S. dollars, only its 57% share of Sina Weibo equity value, has been able to buy the entire Sina. This is a strange paradox, Sina's 3.5 billion dollar valuation, but one of its many investments in Sina Weibo, its ownership of Sina's equity value is equivalent to Sina's value. If Sina Weibo could buy its parent company in reverse, and then privatize it, the following scenario would emerge.

Sina Weibo will have 1.9 billion of billions of dollars in book and short-term deposits, which do not include the $500 million in cash sold to Alibaba Group after the listing, and Sina Weibo's $200 million trillion in cash to repay the parent company. In addition, Sina Weibo will also receive the following several investment interests, Youku potatoes, easy to live in China, Wheat forest, state group, digital, Alibaba, etc., the total value of investment of about 1 billion U.S. dollars.

In addition, Sina Weibo will receive more than 600 million U.S. dollars in annual revenue, more than 80 million dollars in annual profits. In the revenue, only 44% for the Sina Weibo business itself, while in the profit, 100% of the Sina net, Sina Weibo itself did not contribute. Sina Weibo can increase from less than 300 million dollars a year, from loss to profit of nearly billion, in the stock price, how the performance, naturally is self-evident,

Of course, the account can not be counted, Sina Weibo reverse takeover is not realistic. It is even more true that the actual value of Sina is based on figures. Sina's growth rate has slowed in the past few years, but it has not slipped, at least for the past three years, with net profit remaining at $80 million trillion.

Sina's existing assets include $1.9 billion trillion in cash and a short deposit of $1 billion of other equity investments at least 2.3 billion US dollar Sina Weibo equity portal. Not even the portal, Sina's overall valuation should be 5.2 billion U.S. dollars, the portal even if the low can not be lower 10 times times PE, at least can be worth 800 million of dollars, will add in, Sina is at least 6 billion U.S. dollars, Sina's market value than the actual value of at least underestimate 40%.

In addition, Sina network is the most valuable brand in China's network media, its basic users for the one or two-line urban white-collar, government, schools, and industry practitioners, in the user has a strong appeal. From the point of view of network media, Sina is the leader in the industry and should enjoy a certain degree of brand premium. According to the American popular valuation method, companies that occupy the first place in the industry can float a 25% premium on the real value base. If so, Sina's actual valuation should be 7.5 billion dollars.

But the problem that has caused Sina's valuations to be grossly underestimated is two, is the portal really so sibuzuxi? Should the display of advertising growth slow down, should the value of its valuations be wiped out sharply, or even a big discount? I think the actual situation is not the case, the media value of the portal has long been recognized by the market, online display advertising in China does not develop outdoor contour advertising policy background, there is a certain industrial advantage. Brand Marketing is also a part of market demand, the excessive denial of the positive significance of the market is irrational. Wall Street's failure to see the portal is nothing more than a short-term catharsis of irrational sentiment, and the market will gradually revise this view.

Sina Weibo's successful listing can not be separated from Sina's business delivery, the past Chao said that the left and right mutual fight is this meaning. In the case of sending advertisers to Twitter, Sina's traditional business can still maintain growth, itself, if said that the past three portals bite very tight, in the overall downturn in the portal advertising market, Sina instead occupy the initiative, will be a large part of the market into the bag, into the microblog income. In the portal business, Sina's competitiveness is visible, the key is to do a good job of transformation. With money and resources, there is hope for the transformation of Sina's portal, which concerns the entire industry, not the Sina family.

Sina recently announced a 500 million dollar share repurchase plan, which will buy up $500 million worth of shares through two-tier markets and over-the-counter consultations. This first shows that Sina's share price is undervalued has become a constraint on its development, Sina intends to reverse it.

However, after the listing of Sina Weibo, the resource support from Sina may be gradually reduced, so as to foster the ability to independently obtain revenue. The portal will not be unrestrained to drive advertisers to the past, both in the advertiser's problem, it is possible to form a competitive relationship. After all, both are independent public companies, and after putting the little brother on the horse, Sina should turn its back on its own undervalued valuations.

===================================================

I am a micro-letter public account gejia021 independent operators, 90% of the original technology and life sentiment article, independent point of view, disdain Low-brow. In order to explain and explain the essence of Internet in China.

Micro-signal gejia021, which covers 10 million users, is one of China's largest wemedia members of the Media Alliance. Also is the 2013 top ten from the media, science and technology, one of 30 original force.

Sina Weibo, my user name is @ Gockai, Sina, Sohu Blog, Eric Column, today's headlines and other media platforms from the user name is Gockai, welcome to subscribe.