Ali And Micro-Blog Will Be Listed As The Best Choice For Sina.

As an electricity supplier company, Alibaba It is called the mixture of Amazon, eBay and PayPal, but also has some Google elements. Alibaba's IPO will be the largest IPO of Chinese companies in the US stock market, with a possible financing of $15 billion and a valuation of more than $130 billion.

Micro-blog, a highly growing social media company, is considered a combination of Facebook and Twitter. Similar to Twitter and Facebook, micro-blog is expected to get a high valuation multiplier. The company's 12 month revenue is $188 million, and its total financing is estimated at $500 million, and its market value will be close to $5 billion.

　　 Alibaba and micro-blog Is the value reasonable?

It is difficult to accurately judge the value of Alibaba and micro-blog, but compared with some other companies, Alibaba and micro-blog have attractive stock prices.

Most of Alibaba's revenues and profits come from advertising services for 7 million sellers, who sold 163 billion dollars last year. In the third quarter of last year, Alibaba had a profit margin of 44.6% and a net profit of 792 million dollars. Net profit in 2014 is expected to reach US $3 billion 500 million.

In contrast, eBay's net profit last year was $2 billion 860 million, while the current P / E ratio was 26 times. If the price of Alibaba is expected to be 26 times the 2014 profit, then the market value will be US $91 billion, which is still far from the general valuation. However, the growth ability of the two companies is different. EBay's annual market growth is only 12%, but Alibaba is 50%. This means that Alibaba's higher valuation is based on future growth rather than current performance.

For micro-blog, its annual revenue of $188 million represents a 26.5 fold valuation. In contrast, the Twitter sale rate is 42.5 times. Twitter's revenue growth last year was 110%, while micro-blog grew nearly 3 times over the same period last year.

　　 Two pens IPO Will bring a lot of cash.

Taking all this into consideration, the growth value of Alibaba and micro-blog means that the stock of the two companies will still rise sharply on the first day of IPO. If the first day's rise is 25%, then the market value of Alibaba and micro-blog will be 150 billion US dollars and 6 billion 250 million US dollars respectively. This is very good for YAHOO and Sina. Deducting the tax amount, YAHOO's Alibaba shares can bring us $23 billion 400 million net cash, while Sina's micro-blog shares can bring us $3 billion 320 million net cash.

YAHOO and sina will sell part of their shares in Alibaba and micro-blog's IPO. If we consider the cash held by the two companies, we can see that cash will account for 67.5% of YAHOO's market value and account for 112% of sina's market value.

　　 YAHOO and Sina: investing in the future?

Alibaba and micro-blog's IPO will bring a lot of cash to YAHOO and Sina. But investors still question this.

For YAHOO, last year's operating profit was only $590 million. As a result, more than half of its net profit of 1 billion 366 million dollars comes from the investment income of Alibaba and Japanese assets. As YAHOO's revenue growth in 2014 is expected to be only 1.4%, some investors worry that Alibaba's contribution to YAHOO's stock price has been fully reflected.

Sina's revenue last quarter was $197 million, an increase of 43% over the same period last year. Of the $58 million in revenue growth, $43 million came from micro-blog.

　 Simple answer

For investors like YAHOO and Sina, the answer is very simple: cash!

The two companies will have sufficient funds to achieve growth. Sina can buy a similar company. For YAHOO, net profit growth will decline year by year, and profit margins will also decline. But YAHOO's market capitalization is only $12 billion 900 million, minus 21.8 of its operating profit.

Investors need to note that cash accounts for more than 70% of the market value of listed companies are not many. This means that sina and YAHOO can continue to invest in acquiring start-ups or similar AOL counterparts, buying shares or making large dividend payments. Ultimately, these initiatives will bring new value to the company.

　　 Final conclusion

YAHOO and sina will no doubt benefit from Alibaba and micro-blog's investments. But if YAHOO and Sina share prices rise after Alibaba and micro-blog IPO, sina is a better investment option for the two companies.

Sina's future cash will exceed its market value, which is unprecedented. This means that sina can achieve rapid growth through acquisitions and investments and bring higher security to investors.