Sina aims to increase its share price from $66 to $78

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

Sina recently released its second quarter of fiscal year 2013, net revenue grew 20% per cent year-on-year, beyond the initial guidance expected. Sina Weibo has played a positive role in boosting revenue growth, suggesting that Sina is making a commercial success of micro-blogging. Given the strong second-quarter results, we set Sina's target share price from $66 trillion to $78.

The commercialization of micro-blogging strengthens:

The popularity of Weibo and the increased commercialization measures have boosted the growth of Weibo revenue, which is also the main reason for us to increase the share price of Sina. In the second quarter, Twitter's advertising revenue rose 209% from a year earlier, which was encouraging. We believe that, thanks to the cooperation with Alibaba, this revenue growth trend will continue. The deal will also bring 380 million of dollars in advertising and other revenue to Weibo over the next three years.

We believe that with the commercialization of micro-blogging platform growth, Sina's advertising revenue will rise to reach the overall level of China's online display advertising.

Weibo will drive profit growth:

We believe that the Sina display advertising gross margin will exceed our expectations, because Sina is strengthening the advertising business, and Alibaba's strategic cooperation will also play a role in promoting.

In addition, we believe that in the long run, Sina's share of sales, general and administrative expenses (SG&A) and research and development costs will also fall, as revenues and gross profits are growing faster than these costs. In the past, Sina has invested heavily in Weibo, and we believe that the commercialization of Weibo will bring more profits to Sina.

But in the next two to three years, Sina may need to continue to maintain higher costs, because it will also invest in mobile platform development and marketing to address competition from other social networks. In addition, for Alibaba businesses to develop products in the short term also requires a certain cost. (Li Ming)