Morgan Stanley to give micro-bo shareholding wait-and-see initial rating target price 21.4 USD

Morgan Stanley today released its research report, giving the initial stock rating of Weibo (NASDAQ:WB) "Hold-see" (equal-weight) and the 21.4 dollar target share price.

The following is a summary of the report:

We are bullish on Weibo's leadership in online social media and its diverse commercial opportunities. As the commercialization of new services is faster than expected and the visibility of profit margins improves, we will be more optimistic about the company's expectations.

Give a "hold-see" initial rating, the target price of 21.4 U.S. dollars: The unit corresponds to our 2015 and 2016 earnings per share of the expected earnings ratio of 62 times times and 29 times times respectively, the value seems to be fully reflected. We expect Weibo to continue to lose money in 2014 as a result of large investments. But if implemented, 2015 will begin to achieve positive profit margins with business leverage, which will benefit from the continued development of commercial projects.

China's leading network media distribution platform: Weibo creates a broadcast platform for the public and is often used as a source of media content. Opinion leaders, celebrities and government officials use micro-bleomycin to disseminate content. So far, Weibo has attracted about 770,000 certified users, about 80,000 of which belong to Chinese government agencies.

Mobile platform popularization to promote the healthy growth of users: in the first quarter of 2014, microblogging month active users and daily active users grew 34% and 37% respectively, to 143.8 million and 66.6 million. The user participation rate was increased from 34% in the end of 2011 to 46% per cent for active users per month. The growth of China Mobile's internet penetration has become a key growth driver for Weibo, contributing more than 70% of total traffic.

Commercial opportunities varied, but unconfirmed: Key account/Brand advertising sales still accounted for more than 60% of the total income of Weibo. We believe that promotional messages for small businesses and the implementation of E-COMMERCE projects are essential to enhance the commercial capabilities of the mobile side.

Other risks: The competition for user time on mobile devices is becoming more and more intense; huge investments to boost user access and participation have led to weak short-term margins; uncertainty about China's content regulatory outlook. (PEI)