DANG

Baidu Dollars Likely Shifting to Alibaba Near Term; Raising Our Fair Value of Yahoo

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Valuentum previewed the valuation of Chinese e-commerce giant Alibaba in October 2013. Today, we’ve updated our analysis of the company in the table below and have raised our intrinsic value estimate to approximately $100 billion from $75 billion previously. This revision has had a relatively large per-share upward re-valuation of the shares of 24%-owner Yahoo (YHOO) in its 16-page report. Softbank, which owns more than 35% of Alibaba, will also see a more optimistic slant towards its own valuation in coming periods. Our updated valuation details of Alibaba are shown below. The previous table had a typo regarding the long-term growth rate of the perpetuity calculation, which has been corrected in the table above. Though we think our forecasts are … Read more

SEC Proposes Barring the Chinese Units of the Big 4 Accounting Firms for 6 Months; A Washington-Beijing Scuffle; Neither Firm-Specific, Nor Is It “New” News

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On Thursday, Reuters reported that SEC Administrative Law Judge Cameron Elliot believes “Chinese units of the global ‘Big Four’ accounting firms (KPMG, Deloitte & Touche, PricewaterhouseCoopers and Ernst and Young) should be suspended from auditing U.S.-listed companies for six months in an escalation in a long-running dispute over regulators’ access to documents.” Though the accounting firms have indicated that they intend to appeal against the ruling, the article did unnerve investors in many US-listed Chinese stocks, including Baidu (BIDU), which notes Ernst & Young Hua Ming LLP as its principal external auditor. This is not “new” news. Baidu goes to great lengths to highlight this scenario as a risk in its 20-F on page 32, with potential de-listing (not bankruptcy or … Read more

Plenty of Growth Ahead for Chinese Internet Companies

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The Chinese Internet space has been a fantastic growth story through the course of 2013. Shares of Best Ideas Newsletter portfolio holding Baidu (click ticker for report: ), Qihoo (QIHU), Sohu.com (click ticker for report: ), and Tencent (click ticker for report: ) are all up at least 50% year-to-date. What do all of these companies have in common? They all have exposure to China’s rapidly-growing Internet usage as well as the country’s Internet search market. Search growth in China is phenomenal. Image Source: China Internet Watch In the second quarter of 2013, the value of the Chinese search market surged approximately 35% year-over-year (shown above), lapping a very robust growth rate well above 50% during the same period of 2012. Chinese search … Read more