Why HSBC Hiked SINA's Price Target Today
In a report issued Thursday, HSBC analysts Chi Tsang and Alice Cai boosted their price target on shares of SINA Corp (NASDAQ: SINA) from $47 to $67, while reiterating their Buy rating.
According to the note, the stock is a “hidden treasure.” The analysts feel particularly encouraged by the binding agreement in which CEO Charles Chao recently entered, by which he committed to invest $456 million in cash for 11 million newly issued shares. The transaction is expected to be closed by the end of the third quarter, with the CEO’s stake surging from 2 percent to 18 percent.
The experts interpret the move as a significant vote of confidence, since the Chinese Internet company does not seem to be in need of cash. In fact, they say they believe “this move is a reflection of the value of SINA’s portfolio of assets (…) [and that] management is moving aggressively to enhance the value of its verticals.”
While the stock has already traded up from the $41 per share that the CEO paid, HSBC still sees upside left. The firm finds SINA attractive from a sum-of-parts perspective, “with the current share price assigning negative value to the portal.”
The analysts mention three main variables in their sum-of-parts valuation:
1) The value of Weibo (majority-controlled by SINA), which they estimate at $35 per SINA share.
2) The value of the company’s core business, estimated at, at least, $4 per share, based on a conservative revenue estimates.
3) 30 percent conglomerate discount, which they now “remove in anticipation of announcements of spin-offs and jvs as management moves to unlock value.”
Shares of SINA rose more than 1.5 percent on Thursday trading, and roughly 61 percent in the past three months.
Latest Ratings for SINA
|Sep 2016||Brean Capital||Maintains||Buy|
|Aug 2016||JP Morgan||Assumes||Overweight|
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