China Mobile Internet Top Picks: Tencent, Qihoo, Sofun, Says J.P. Morgan - Emerging Markets Daily

September 13, 2013 – 09:21
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By Shuli Ren

China mobile Internet sector has already collected enough users and mobile gaming is the most direct way to make money, says J.P. Morgan.

The broker picks Tencent (HK:700) and Qihoo (QIHU) because they have already amassed large mobile platforms. Analysts Alex Yao, Doug Anmuth, and James R. Sullivan wrote:

We expect Tencent to capture 30-35% mobile game share by end-2014 through content development and distribution, while Qihoo could take 10% through distribution.

From a financial perspective, Qihoo would benefit significantly more than Tencent due to its much smaller P&L. Both companies should continue to capitalize on China’s booming mobile economy over the next 1-2 years.

We have heard a lot about Tencent’s WeChat, but the company’s core business is games, where more than half of the revenue is generated. Tencent has a price target of 433 Hong Kong dollars and Qihoo has a price target of $94.

Qihoo has had a fantastic run this year, gaining 163% so far, but analysts say it has more room to grow. Its P/E-to-growth ratio is still low.

J.P.Morgan also likes online real estate services platform Soufun (SFUN) for its market leading position. Users seem sticky and barrier to entry seems high:

SouFun has built strong brand equity among Chinese internet users, especially those real estate sensitive users. According to iResearch, SouFun has maintained clear lead against all other major peer companies (including Sina Leju, and Sohu’s in terms of daily/monthly user coverage and daily/monthly user time spent.

As of 1Q13, SouFun has accumulated property information across 320 cities in China. The company operates 100 branch offices in major economy hubs or provincial cities in China, with over 3, 300 sales persons. There are over 10m properties listed on SouFun’s portal.

Soufun has a price target of $49. It gained 67% this year.



2001-07-20 18:17:32 by jobsdrop

Company Name Status Action
Online grocery and delivery service Closely held; backed by Hong Kong tycoon Jimmy Lai In December 2000, announced plans to shut down, lay off 334 employees
Online ad firm
Baltimore Closely held; backed by AOL and Reuters, among others In January 2001 announced plans to lay off 72 employees, or 25% of its staff
Internet consultant
New York Public In December 2000, laid off about 190 employees
Online marketer
Hayward, Calif. Closely held; pulled IPO in June 2000 Laid off 100 in September 2000; shut down its services in January 2001
Search engine
Palo Alto, Calif. Unit of CMGI Set plans in mid-September 2000 to lay off 200, or about...

SK hynix expects fire-damaged China chip plant to be fully operational next month  — GlobalPost
The facility produces dynamic random access memory (DRAM) chips, used to store data on personal computers and mobile devices such as smartphones and tablets.

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