Maintain Qihoo 360 Equity neutral rating

The following is a summary of the contents of the report:

Qihoo 2013 's quarterly results exceeded market expectations. Total revenue of $222 million, up 115% from a year earlier, is consistent with our expectations, 6% higher than the average estimate of analysts surveyed by Bloomberg. Based on non-US general accounting standards, diluted earnings per share of $0.70 trillion, 0.26 US dollars higher than we expected, is 0.27 dollars higher than the average estimate of analysts surveyed by Bloomberg. Qihoo expects revenue to reach $226 million to $228 million in the first quarter of fiscal year 2014, with median growth of 107% per cent year-on-year, 9% higher than our forecast, and 12% per cent higher than the average estimate of analysts surveyed by Bloomberg.

Analysis：

1) Search: CNZZ data showed that Qihoo's PC search market share was 23%. In the quarter, the search for Qihoo contributed 17% of the revenue, while the first two quarters were 15% and 10%, meaning the chain growth of 37%, the increase is much higher than the competitors. We expect the tiger to speed up the recruitment of sales staff to support continued commercialization promotion. We expect this year's search will contribute 23% of the revenue to Qihoo. At present, Qihoo mobile search application has begun to test.

2) Mobile: Qihoo Management revealed that 360 of mobile phone assistant cumulative application downloads accounted for in the total number of mobile phone application download 40%. The quarter, mobile business for Qihoo contributed 17% of the Revenue (50% for the game, 50% for advertising). We expect the move to contribute 26% of the revenue this year.

3 profit margin: By pre-installed and brand promotion of the drag, we expect Qihoo 2014 operating profit margin will fall 1.7%. But we believe that these investments are highly strategic.

4) Adjustment Expectations: We will be the odd tigers in 2014 and 2015 per share of diluted earnings expected to increase by 20% and 19% respectively.

Valuation: We continue to maintain the "neutral" rating of Qihoo shares and set the target share price from 99 US dollars to $108.