This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Sina Could Be the Value Way to Invest in Chinese Internet Growth

NEW YORK (TheStreet) -- Investors shouldn't forget Sina (SINA - Get Report) amid all of the hoopla surrounding's (JD - Get Report) initial public offering this week.

Congratulations are definitely in order for, the Chinese e-commerce company that price its shares at $19 each, above the expected range of $16-$18, and then saw them close Thursday's session even higher, at $20.90.

This strength contrasted markedly with the sharp falls suffered by two other Chinese Internet stocks: Sina and Weibo (WB).

Sina has a fully diluted 54% percent stake in Weibo, which China's second largest micro-blogging site. Sina's shares have performed poorly so far during 2014, falling about 50% from their January high.

Both Sina and the recently listed Weibo reported first-quarter results after the close Wednesday. Although revenue grew 38% and 161%, respectively, second-quarter guidance failed to match analysts' expectations.

A decision by the Chinese government to revoke some literature publishing and online video transmission licenses caused uncertainty for Sina while Weibo -- just like Twitter (TWTR) in its latest quarterly announcement -- struggled to show as rapid a monetization of its micro-blogging service as hoped.

Sina's stake in Weibo is currently worth slightly more than $2 billion. Although there is certainly a very active debate about the valuation of micro-blogging stocks (for example, Twitter) it is also worth noting that just prior to Weibo's listing, Alibaba -- part-owned by Yahoo! (YHOO) and poised for its own IPO in the U.S. -- took up an option to increase its own Weibo stake to 30%. Alibaba sees much greater value than the market currently does.

This is good news for Sina, which has a market capitalization of nearly $2.9 billion. As the company noted on its conference call following its quarterly report: "...following Weibo's IPO, SINA's own cash balance exceeded $1.6 billion, which does not include the inter-company loan of approximately $250 million it expects to receive from Weibo."

So some simple math tells us the current value of Sina's stake in Weibo plus the anticipated cash level on its balance sheet is more than 25% greater than its current stock price.

Additionally, Sina is not standing still. It approved a share repurchase program of up to $500 million in April and has $520 million in book value of other Chinese Internet and related assets on its balance sheet after using its cash in the past to make strategic investments to "strengthen their online media ecosystem as well as take stake in product and technology companies where we do not have core expertise."

Given how fast the Chinese Internet and related markets are growing, this stock has some promise, even if further investment from the current cash balance is highly likely.

Sina has been horribly volatile in 2014, but it's likely to have a much better second half this year.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

At the time of publication, Bailey had positions in Sina and Twitter.

>>Read More: It's Time to Look Abroad to Enhance Your ETF Portfolio

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
JD $24.22 -0.74%
SINA $50.48 1.24%
AAPL $94.19 -1.04%
FB $118.06 0.54%
GOOG $695.70 0.48%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs