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T. H. Data Flash – ’s Mobile January 24, 2014 Weibo and News Market - January 2014 Sina Dominates Weibo; Portal Vendors Lead the Market Companies Mentioned: SINA Corporation (SINA, Buy, January 2014 Data Highlights: PT $101)  Sina dominates Weibo apps market with 83% of market share measured with cumulative downloads. We believe it’s clearer that Sina Weibo has become one of the most important mass media channels for news distribution Sohu.com Inc. (SOHU, Hold) and acquisition. According our proprietary data and measured by the total accumulated number of app downloads, Sina leads this market with 83% market share, followed by Tencent with 16%. Other Weibo providers have Inc. (BIDU, Hold) almost disappeared from this part of the market (Figure 1).  Portal vendors lead the mobile news market – Based on our proprietary NetEase Inc. (NTES, Buy, PT data, for news acquisition, major portals in PC are still users’ top choices in $75) Android app market. Among them, Sohu, Tencent, Netease and Sina lead the market with roughly 23%, 19%, 15% and 6% app download shares, Tencent Holding Ltd. (700-HK, respectively, followed by Baidu at 5.8% and ifeng at 5.3%. Beside them, mobile only vendors like Toutiao.com, Flipboard and Zaker are also making Not Rated) inroad into mobile new market with more attention to user interests and personalized media (Figure 2). Toutiao.com: It is ranked #4 among all mobile Ifeng.com (Feng, Not Rated) news apps with focus of headline news. It’s well known for tailored news recommendations based on users’ interests. Flipboard and Zaker: They provide a wider range of information besides tradition news. Users can Sungy Mobile Limited (GOMO, customize and select news that suit their personal interests from diverse Not Rated) channels, like news, magazines, weibos, videos, sales promotion and others.  Sina lead financial and sports mobile news app market – For two most popular vertical news channels including financial news and sport news, Sina Data in this report is extracted from takes the leadership. It leads the financial news app market with ~71% publicly available sources and processed download shares, followed by apps from Caijing Magazine, Caixin Media, The Economist and others (Figure 3). Sina also is the leading player in sports news with our proprietary methodology.

app market, holding about 49% of download shares, followed by Hupu sports at 20% shares (Figure 4). Among all the news apps, the general www.thcapital-china.com comprehensive news apps are about 96% of download shares, while vertical www.thdata.com news app account for about 4% of the total download market (Figure 5). Figure 1: Market share of mobile Weibo by download by company Tian X. Hou Tencent, +86 10 8568 0989 16.4% [email protected] Sohu, 0.2% Quentin Luo +86 10 8567 0787 [email protected] Sina, Netease, 83.0% 0.2% Gina Chen (646) 389-8528 Source: T.H. DATA (www.thdata.com) [email protected]

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Figure 1: Market share of mobile Weibo by download by company, 1/24/2014*

Sohu, No. Company Ticker Total Downloads Market Share Tencent, Netease, 0.2% 16.4% 0.2% 1 Sina SINA 1,016,956,741 83.0% 2 Tencent 700-HK 201,015,734 16.4% 3 Sohu SOHU 2,521,917 0.2%

Sina, 4 Netease NTES 2,447,669 0.2% 83.0% 5 Hexun.com Private 203,461 0.0% Others 2,451,193 0.2% Total 1,225,596,715 100.0%

*Our data comes from 13 major Android app stores in China, including Qihoo, Anzhi, Baidu, Mu Ma Yi, Nduoa, Tencent, Android market (91 Wireless), Eoemarket, Lenovo, Appchina, Hiapk, Sina and Wan Dou Jia Source: T. H. DATA (www.thdata.com)

Figure 2: Market share of mobile news vendors by download, 1/24/2014

No. Company Ticker Total Downloads Market Share Zarker, Flipboard, 1 Sohu SOHU 162,127,860 23.0% 4.9% 3.9% Feng, 2 Tencent 700-HK 130,131,999 18.5% 5.3% Sohu, 3 Netease NTES 106,839,350 15.2% 23.2% Baidu, 4 Toutiao.com Private 54,335,251 7.7% 5.9% 5 Sina SINA 41,945,533 6.0% Tencent, 6 Baidu BIDU 41,156,266 5.8% 18.6% 7 Feng Feng 37,011,523 5.3% Netease, 8 Flipboard Private 34,298,199 4.9% Sina, 15.3% 9 Zarker Private 26,959,553 3.8% 6.0% 10 CCTV Private 15,934,655 2.3% Toutiao. Others 53,746,808 7.6% om, 7.8% Total 704,486,997 100.0%

Source: T. H. DATA (www.thdata.com)

Figure 3: Market share of financial news app vendors by download, 1/24/2014

Company Ticker Total Downloads % Hexun.co English Chinese m, 13% Sina 新浪 SINA 10,371,441 71% Sina， Hexun.com 和讯网 Private 1,837,218 13% 71% Caijing 财经网 Private 1,253,421 9% Caijing, 财新传媒 9% Caixin Media Private 404,603 3% SMG 上海东方传媒集团有限公司 600832-SH 238,216 2% Caixin The Economist 经济学人 Private 193,444 1% Media, 3% AASTOCKS 大智慧-阿斯达克财经网 601519-SH 164,897 1% p5w.net 全景网 Private 75,031 1% SMG, 2% Palmtrends 重庆掌迈科技 Private 33,659 0% ce.cn 中国经济网传播中心 Private 28,363 0% Total 14,600,293 100%

Source: T. H. DATA (www.thdata.com)

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Figure 4: Market share of sports news app vendors by download, 1/24/2014

Hexun, Company 13% Ticker Total Downloads % English Chinese 新浪 Moblie Sina SINA 7,040,084 49% CCTV, 9% Studio, Hupu 虎扑体育 Private 2,897,039 20% 9% CCTV 央视国际网络有限公司 Private 1,333,178 9% Moblie Studio 移动技术工作室 Private 1,289,810 9% Sungy Mobile 广州市久邦数码科技有限公司 GOMO 1,152,478 8% SINA， Wuhan Rui Bai Xin Xi 武汉睿柏信息 Private 278,287 2% 71% Sungy Hunan Ti Tan Chuan Mei 湖南体坛文化传播有限责任公司 Private 135,581 1% Mobile, 8% CCTV 央视国际网络有限公司 Private 115,523 1% Shang Wang Wen Hua 广州市晌网文化传播有限公司 Private 5,717 0% Beijing Xiao Guo Wu Xian 北京效果无限 Private 5,125 0% Total 14,252,822 100% Source: T. H. DATA (www.thdata.com)

Figure 5: Market share of mobile news apps by cumulative download, 1/24/2014

Total No. App Name Market Share Company Ticker English Chinese Downloads1 English Chinese 1 Sohu News 搜狐新闻 162,127,860 23.014% Sohu 北京搜狐新媒体信息技术有限公司 SOHU 2 Tencent News 腾讯新闻 130,131,999 18.472% Tencent 腾讯科技（深圳）有限公司 700-HK 3 Netease News 网易新闻 106,839,350 15.166% Netease 网易 NTES 4 Headline Today 今日头条 54,335,251 7.713% Toutiao.com 北京字节跳动科技有限公司 Private 5 Baidu News 百度新闻 41,156,266 5.842% Baidu 百度 BIDU 6 Phoenix News 凤凰新闻 37,011,523 5.254% Feng 凤凰新媒体 FENG 7 Flipboard Chinese Version Flipboard中国版 34,298,199 4.869% Flipboard N/A Private 8 ZAKER ZAKER 26,959,553 3.827% Zarker 广州坚和网络科技有限公司 Private 9 Sina News 新浪新闻 23,287,544 3.306% Sina 新浪 SINA 10 CCTV News 央视新闻 15,934,655 2.262% CCTV 央视国际网络有限公司 Private 11 Sina Finance 新浪财经 10,371,441 1.472% Sina 新浪 SINA 12 Jike News 即刻新闻 8,286,548 1.176% People's Daily Online 人民网股份有限公司 603000-SH 13 Sina Sports 新浪体育 7,040,084 0.999% Sina 新浪 SINA 14 People's News 人民新闻 4,515,285 0.641% People's Daily Online 人民网股份有限公司 603000-SH 15 Exciting News 激动新闻 3,944,924 0.560% Joy.cn 上海激动网络股份有限公司 Private 16 Southern Weekly 南方周末 2,818,304 0.400% Southern Weekly 广东南方周末新媒体有限公司 Private 17 Chong Lang Kuai Xun 冲浪快讯 2,461,102 0.349% 中国移动 941-HK 18 Wu Mi News 无觅阅读 2,430,754 0.345% Wumii Technology 深圳无觅科技有限公司 Private 19 Hupu Kan Qiu 虎扑看球 2,342,965 0.333% Hupu 虎扑体育 Private 20 Moregood News 蘑菇新闻 2,332,254 0.331% Moregoodmobile.com 蘑菇移动 Private 21 Meixun 每讯 2,030,490 0.288% Meixun.com 北京每讯捷报信息技术有限公司 Private 22 Hexun Finance 和讯财经 1,837,218 0.261% Hexun.com 和讯网 Private 23 People Daily 人民日报 1,410,197 0.200% People's Daily Online 人民网股份有限公司 603000-SH 24 CCTV Sports 央视体育 1,333,178 0.189% CCTV 央视国际网络有限公司 Private 25 Sports Live 体育直播 1,289,810 0.183% N/A 移动技术工作室 Private 26 BBC News BBC新闻 1,253,994 0.178% BBC BBC Private 27 Caijing Magazine 财经杂志 1,253,421 0.178% Caijing 财经杂志 Private 28 Lan Ren Ting Xin Wen 懒人听新闻 1,157,177 0.164% Na Li Hui Ju Wang Luo Ke Ji 北京那里汇聚网络科技有限公司 Private 29 Sports 3G门户体育 1,152,478 0.164% Sungy Mobile 广州市久邦数码科技有限公司 GOMO 30 Bee News 蜜蜂新闻 810,254 0.115% 播思通讯 Private 31 Tou Ban 头版 662,190 0.094% China Telecom 中国电信 728-HK 32 Today Toutiao News 今日头条新闻 620,142 0.088% Wumii Technology 深圳无觅科技有限公司 Private 33 Hupu Sports 虎扑体育 479,406 0.068% Hupu 虎扑体育 Private 34 China Daily 中国日报 472,415 0.067% Yixinlian Consulting 北京英信联信息咨询公司 Private 35 Caixin 财新网 404,603 0.057% Caixin Media 财新传媒 Private 36 People Daily News 人民日报新闻 333,356 0.047% Palmtrends 重庆掌脉科技有限公司 Private 37 Ti Yu Feng 体育疯 278,287 0.040% Wuhan Rui Bai Xin Xi 武汉睿柏信息 Private 38 CBNweekly 第一财经周刊 238,216 0.034% SMG 上海东方传媒集团有限公司 600832-SH 39 Ting Hui Zao News 听会早新闻 221,898 0.031% Dayiyouxun Technology 成都市大易游讯科技有限公司 Private 40 360 News 360新闻 210,523 0.030% Qihoo 奇虎 QIHU 41 The Economist 经济学人 193,444 0.027% The Economist 经济学人 Private 42 Zhang Shang Finance 掌上财经 164,897 0.023% AASTOCKS 大智慧-阿斯达克财经网 601519-SH 43 Headline News 头条新闻 155,292 0.022% Aspire 卓望信息技术（北京）有限公司 Private 44 3G News 3G门户新闻 150,000 0.021% Sungy Mobile 广州市久邦数码科技有限公司 GOMO 45 Reuters Chinese News 路透中文新闻 139,269 0.020% Thomson Reuters 路透社 TRI 46 Titan Sports 体坛周报 135,581 0.019% Hunan Ti Tan Chuan Mei 湖南体坛文化传播有限责任公司 Private 47 CCTV Sports Client CCTV体育客户端 115,523 0.016% CCTV 央视国际网络有限公司 Private 48 Quan Jing Cai Jing 全景财经 75,031 0.011% p5w.net 全景网 Private 49 Hupu Xin Sheng 虎扑新声 74,668 0.011% Hupu 虎扑体育 Private 50 Appy Geek MR极客快讯 59,242 0.008% Mobiles Republic N/A Private 51 Quan Qiu Cai Jing Bo Bao 全球财经播报 33,659 0.005% Palmtrends 重庆掌脉科技有限公司 Private 52 Shan Bei News 扇贝新闻 31,202 0.004% Bei Wan Jiao Yu Ke Ji 南京贝湾教育科技有限公司 Private 53 Cai Jing Zhong Guo 财经中国 28,363 0.004% ce.cn 中国经济网传播中心 Private 54 U Sports U体育 5,717 0.001% Shang Wang Wen Hua 广州市晌网文化传播有限公司 Private 55 Ti Yu Zi Xun 体育资讯 5,125 0.001% Beijing Xiao Guo Wu Xian 北京效果无限 Private Others 其他 7,044,870 1.000% N/A N/A N/A Total 704,486,997 100.000% Note: 1. includes HD version for android Pad if applicable. Source: T. H. DATA (www.thdata.com)

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Valuation for SINA:

 Maintain Buy and PT – We maintain our Buy rating and our price target of $101.00, which is based on our valuation for Weibo. Alibaba’s first tranche of investment in Weibo at 18% valued Weibo at $3.26B; however we believe Alibaba’s second tranche investment of another 12% could be at about 2X of the last valuation at $6.51B. Assuming by then, SINA owns about 66% of Weibo, the value of Weibo under SINA could be at $4.3B or $64 per SINA share. In addition to Weibo, we believe Sina could make at least $0.75 non-GAAP EPS before cash in 2014. We use a 12X PE multiple to our EPS projection to the non-Weibo business, plus $18.23 cash per share to get ~$37.00 for the existing business. Putting the two parts together, we arrive at a price target of $101.00. On a PE basis, excluding cash, our price target indicates 25X our 2015 estimated non- GAAP EPS at $3.33. However, we will review our estimates and valuation post earnings.

 Risks – 1) Weibo’s cooperation with Alibaba is slower or not as successful and smooth as we expect; 2) balancing user experience and monetization inventory; 3) the company may lack sophisticated IT personnel to carry Weibo to a newer level; 4) competition from other forms of mobile or internet apps could diverge users’ time; and 5) the recovery in China’s macro economy may not be as steady as we expect and may not be able to support Weibo monetization growth.

Valuation for NTES:

 Maintain Buy – Even though NTES’s 3Q13 results were disappointing, it has a strong advantage in game content, which we believe can be utilized by NTES to generate new sources of revenue, including exporting to other counties and turning to mobile games. In addition, it is a cash rich company that generates significant amounts of cash flow each quarter. As such, we are maintaining our Buy rating and price target of $75.00. Our price target is based on a 12.5X P/E multiple to our 2014E EPS estimate at $5.85. The company has cash per share of ~$23.50. However, we will review our estimates and valuation post earnings.  Risks to our price target – 1) In the last 2+ years, NTES has added more item based games, which has become a major growth driver for the business. We believe it would be negative to the long term growth as proven by many other Chinese game companies; 2) Blizzard’s game, mainly WOW, starts to decline sharply and in-house games cannot offset the decline; 3) Failure to launch new hit games on a timely basis; 4) Gamers turn to web or mobile games faster than expected; 5) Regulatory changes; 6) Intense competition; 7) Slowdown in China’s economy.

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