Maintain a buying rating on Sina's shares, with the target price raised from 89 to 101 dollars

The following is a summary of the report:

Revenue and non-US General Accounting (GAAP) earnings per share far exceeded Wall Street expectations, according to Sina's second-quarter 2013 earnings. The company's third-quarter performance guideline also exceeded the average forecast. Second-quarter results and third-quarter guidance were boosted by micro-blogging. In our view, as China's most unique and irreplaceable social media platform, Weibo also has great potential, especially to benefit from Alibaba's E-commerce technology. We expect strong growth in the quarter with Alibaba. Given Sina Weibo's second-quarter performance, we think Sina Weibo could make a profit in the second half of the year. In our view, the current price of Sina is still undervalued. We maintain the buy rating and set the target share price from 89 US dollars to 101 dollars.

-Sina Weibo has finally seen its results. In the second quarter of 2013, Sina Weibo finally realized its realization. We think it has great potential. Sina Weibo, for example, has a total revenue of $38 million, with Weibo advertising revenue up 209% per cent year-on-year, to $30 million trillion, and microblogging games and affiliate revenues rising 186% per cent year-on-year to $7.7 million. We believe that this strong momentum will continue to increase. We expect Sina Weibo advertising revenue to grow 145% in the third quarter to 47 million U.S. dollars, up 182% to 60 million dollars in the fourth quarter. Although Alibaba's intervention could create some revenue for the third quarter, we expect the fourth quarter to be more impressive because the quarter is the season for E-commerce. Based on our forecasts and progress, Sina Weibo is likely to make a profit in the near future, as early as possible in the second half of this year. We expect Sina Weibo's operating profit for 2014 and 2015 to be 75 million U.S. dollars and 144 million dollars respectively.

-Sina Weibo has stabilized its activity, lifting concerns about micro-credit. Some worry that micro-credit may reduce Sina's microblogging activity, but according to our proprietary data, Sina Weibo has been remarkably active over the past year, even though it has become a major social networking platform for the duration of the micro-credit. Since its release in the second quarter of 2012, micro-mail has been rapidly popular with its social networking features. Some Sina Weibo users ' time has been divided into micro-letters. But so far, we think there is a clear line between Sina Weibo and micro-credit: Sina Weibo is used as social media and personal media, and micro-credits are personal contacts and communications. We believe that Sina Weibo will gradually show its commercial value.

-The third-quarter guideline significantly exceeded the average forecast. Sina's third-quarter guidance results, net revenue of 176 million to 180 million U.S. dollars, the chain growth of 15% to 18%, year-on-year growth of 19% to 22%, higher than the Wall Street forecast of 165.5 million U.S. dollars and our forecast of 161.6 million dollars. Among them, advertising revenue for 151 million U.S. dollars to 153 million U.S. dollars, an increase of 25% to 27%, our forecast is 135.4 million U.S. dollars (up 12%). We expect Sina Weibo's total revenue to be 55 million U.S. dollars, with advertising revenue of 47 million dollars and other revenue of 7.9 million dollars.

-second-quarter results exceeded Wall Street expectations. Sina's net revenue in the second quarter was 152.8 million dollars, higher than its top guideline and Wall Street's average forecast (USD 145.2 million). Advertising revenue for the quarter of 120.6 million U.S. dollars, higher than our forecast of 111.7 million U.S. dollars, outside the advertising revenue of 32.2 million U.S. dollars, more than the forecast of 26.6 million dollars. According to management, Alibaba's revenue generated in the quarter was about $5 million trillion. The non-GAAP earnings per share is $0.231 trillion, and much more than the average Wall Street forecast of $0.12 trillion.

-Increase the forecast value. We raised the forecast for the third quarter, with revenue and non-GAAP earnings rising from $161.6 million and $0.27 to $177.9 million and $0.31 respectively. We raised our revenue forecasts for 2013 to $640.6 million from $596.6 million trillion, and non-GAAP earnings rose from $0.84 to $0.99 per share. Revenue forecasts for 2014 rose from $745.3 million trillion to $768.8 million, and non-GAAP earnings per share remained unchanged at $1.96.

-Reaffirm the Buy rating and increase the target stock price. We reiterated the Buy rating and set the target share price from USD 89 to $101, based on Sina Weibo's valuation. Alibaba, the first acquisition of Sina Weibo 18% stake in the value of 3.26 billion U.S. dollars, the second acquisition of 12% of the shares valued at 6.51 billion U.S. dollars, it is known that Sina's shares of Sina Weibo 66%, attributable to the Sina account of the microblog valuation of 4.3 billion U.S. dollars, equivalent to 64 U.S. dollars per share. In addition to Sina Weibo, we expect Sina 2014 non-GAAP earnings per share of at least 0.75 U.S. dollars, multiplied by 12 times times the current earnings per share of 18.43 U.S. dollars and Alibaba per share of 10 yuan of cash new investment, the existing business corresponding to the share price of 37 U.S. dollars. The two parts add up to the target price of 101 dollars.

-Risk: 1 The cooperation between Sina Weibo and Alibaba has progressed more slowly than we expected, not as successful as expected; 2. The balance of user experience and liquidity; 3 The company may lack senior IT talent that leads Weibo to the next level; 4 competition for other mobile applications or Internet applications may divide user time; 5) China's macroeconomic recovery is not as stable as we expected and may not support the growth of Sina Weibo. (Darcy)

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