Qihoo Q2 Performance continues to grow at a high rate, even beyond the market and our optimistic expectations

The user base is steadily increasing, second only to "BAT". Qihoo's main products are PC-side security guards, browser and mobile security guard, mobile phone assistant, as of June 2013, its PC-side products more than 461 million months active users, navigation page Average daily hits about 590 million times, up 100%, while the number of mobile end users has reached 338 million, A net increase of 220 million new users has been achieved in the past year. In user size and user activity, Qihoo with Tencent, Baidu, Alibaba ("BAT") together has stabilized the domestic Internet industry's first camp.

Revenue from gaming platforms continues to grow strongly. We expect the Q2 domestic page tour market to be larger than 2 billion, with more than 2 million paid players. Qihoo's revenue share in the page-tour platform is 25%, with a pay-for-player share of about 20%, which is growing faster than the industry average. We expect that there will still be more than 1 time times the revenue growth in the domestic page tour market in the next two years. In addition, mobile gaming from the mobile app Store will become another revenue growth engine for its gaming platform, from more than 91 quarterly earnings and this year, many of the company's data, 2013 is the first of the first mobile game market outbreak, and in the next period of time, 360, Tencent, Baidu (91) will be in one of the mobile game distribution channels in the field of three points.

The search share is steadily rising, and revenue will follow a big increase in the next two years. After the 2012 launch of the search, 360 of the search traffic share has gradually risen to nearly 20%, we expect 2013 search will contribute at least 100 million U.S. dollars of revenue. Even conservatively estimated, by the end of 2014, its share of traffic will be over 25%, with a revenue share of nearly 7% to $350 million. By the end of 2015, 360 of the search traffic will reach 30%, with a revenue share of 10%, about 700 million dollars.

Maintain a "buy" rating and sharply raise the target price to 104 dollars. On the basis of securing a large user base, considering the growth momentum of the page tour market and the revenue increment of mobile game distribution and search engines, we believe that 360 of the growth prospects in the next two years will be the best in the Internet industry, with revenue expected to reach 6.8, 13.0 and 2.15 billion 13/14/15 years. At the same time, the platform strategy will keep its net profit margin rising to nearly 30%, and if it is based on NON-GAAP, this number will be close to 40%. So the target price was raised to $104 trillion, 40 times times the 2014 forecast earnings ratio.