Sina profit rises 18pc on boom in advertising
Sina Corp, operator of China's most popular internet portal, said its third-quarter profit rose 18 per cent while sales grew faster than expected, helped by the mainland's strong advertising market.
Net profit rose to US$10.7 million in the three months ended September from US$9.1 million in the same period last year while turnover grew 13 per cent to US$56.1 million, exceeding its guidance of between US$51 million and US$54 million.
'Sina's sales were boosted by strong growth in China's advertising market, which is expected to increase about 35 per cent this year,' JP Morgan analyst Dick Wei said.
Advertising revenues, which accounted for 58 per cent of Sina's sales, gained 42 per cent to US$32.7 million in the third quarter from a year ago, contributed by more online advertisements from customers such as Lenovo Group and Bank of Communications.
'The advertising market is growing very fast; online adoption is actually faster,' said Charles Chao, Sina's chief executive.
'We are confident but in terms of absolute percentage, it's hard to say; 30 per cent probably is a comfortable number.'
However, mobile value-added service business fell 10 per cent to US$21.8 million from a year earlier because the mainland government tightened regulations on ring tones and other mobile-telephone services in the second quarter.
Shanghai-based Sina warned of further declines in the mobile business in the fourth quarter, although some analysts expect the market to rebound slightly next year.
Citigroup analyst Jason Brueschke said Sina has decided against a major restructuring in the near term because of the better than expected advertising and mobile revenue, a move that will remove the overhang on the stock.
Sina's stock rose 4.1 per cent to US$27.78 in after-hours trading in New York on Thursday after the announcement.
The stock has gained 10 per cent this year.
