China's mobile Internet market is expected to double to about 300 billion yuan ($48 billion) in 2014 from 150 billion yuan in 2012, with the number of active mobile Internet users rising to 749 million from 521 million during the same period, according to research firm Analysys International.
The growth potential in the mobile market has boosted total acquisitions, inclusive of net debt, in China's Internet sector to $1.6 billion so far this year, which is more than the $1.1 billion in the whole of 2012 and $900 million in 2011, according to Thomson Reuters data.
Potential targets like Sohu.com Inc, Kingsoft Corp Ltd, Jiayuan.com International Ltd and Ctrip.com International Ltd are also enjoying a boost to their valuations.
The average twelve-month forward price-to-earnings ratio for the four companies was 24.35, compared to the Chinese Internet sector's average of 19.24, Thomson Reuters data showed.
Last week, Baidu said it would buy app store 91 Wireless for $1.9 billion from NetDragon Websoft Inc and other shareholders. [ID:nL4N0FM0V5] In May, it said it would buy the online video business of PPS Net TV for $370 million.
Chinese rivals Tencent Holdings Ltd and Alibaba Group are also investing to stimulate revenue growth.
Tencent is eyeing Western game developers to create games for its popular WeChat app, said Steve Grey, an executive in charge of game production.
Alibaba this year bought stakes in Sina Corp's social-networking website Weibo and in navigation and maps firm AutoNavi Holdings Ltd. Qihoo 360, which also has an app store, is in talks to acquire Sohu's search engine in a deal that could give it almost one quarter of China's search market.
"They're all moving in the same direction, but on mobile they don't know what the proven business model is," said Elinor Leung, an analyst at brokerage CLSA. "So the way to do it is do everything and see which works out eventually."
The rush to expand into mobile means some companies may be overpaying for acquisitions, RedTech Advisors' Clendenin said.
He estimates Alibaba paid ten to eleven times Sina Weibo's projected 2014 sales for its share while the cost to Baidu could be 18 to 19 times the projected sales of 91 Wireless.
"With Baidu there wasn't really much left on the table. I think NetDragon knew they had an advantage," Clendenin said.
"They were one of the few girls left at the dance willing to go out with Baidu."
(Additional reporting by Pete Sweeney in Shanghai; Editing by Miral Fahmy)
- Link this
- Share this
- Digg this
- Email
- Reprints
0 comments:
Post a Comment