Friday, December 18, 2015

360 behind privatization Chinese TMT industry speculation or values

360 behind privatization: Chinese TMT industry speculation or values reconstruction?

Following the millet, letv continued after the war drew sustained attention, ultra-low-cost smartphones recently launched 399 Yuan 360 announced privatization of once again becoming the focus of the industry. Actually entered this year, including the China hand, jiayuan, e-House China, rice, State digital, including number of shares announced privatisation offer, according to statistics from related agencies, so far this year, so far, 11 Chinese companies listed in the US announced plans from the United States Delist deals totaled US $ 13.4 billion. Why so many in the United States China TMT listed companies announced privatization? Here, we might as well take the 360 simple analysis of Chinese enterprises from the United States exit select the main reasons behind the privatization.

According to Zhou, Chairman of qihoo 360 internal mail interpretation, from the United States, privatization, back the main reason is that its market value is not consistent with the company's values, implying that the 360 is currently around US $ 8 billion market value is underestimated. But if we will find a little observation, starting from the second half of last year, especially since August 2014, 360 shares fell from more than 100 dollars, hit a 52-week low of $ 44.56 and maintained ever since, 360 shares almost halved compared with the peak.

Can say 360 in the United States capital markets, represents part of China TMT companies in the United States market situation. Which do not rule out the United States for some short body for China-related companies of bias and short of malicious behavior (which is part of the choice of Chinese enterprises from the United States, one of the main reasons behind, back).

But we also should see, many China enterprise to United States tone listed zhihou stock price had once soaring, but zhihou due to these enterprise general lack innovation sex, profit means relative single, financial not transparent, until fraud, so, investors soon abandoned these enterprise of stock, some China concept stock price even below price, and meanwhile, like to Amazon, and Facebook, for representative of enterprise although profit level not high, However, since these enterprises have grown governance structure as well as innovation and broad development prospects, therefore, companies in the United States are still sought after by investors. Of course, we are not here to deny China TMT companies lack of innovation or profit means single, just look at China TMT companies (including 360) delisting when privatization must be objective and comprehensive.

After all, Chinese companies delisting, since there is no innovation and broad market prospects and are forced to retreat alone.

In addition, this wave of privatization of China TMT companies delisting and the present Chinese Government policies (for example, advocating the Internet) and the a-share market news also has something to do with, I believe these factors for the delisting decision 360 privatization has also played an important role. In this regard, some analysts believe that the 360 after privatization options listed on the domestic a-share market, and listed the market value prior to the delisting is much higher than the United States's market cap. Of course, a higher market value means the injection of additional funds (including corporate and shareholder), so in that sense, not only is 360, most of this round to choose Chinese companies delisting should have this vision and plan, there's no shame in denial. Key question, whether injection of funds can really get the rewards? This and future development of enterprise strategy and business model are inseparable.

Specific to the 360, from the perspective of its recent initiatives, the mobile market is undoubtedly the focus of its future business strategy, from their smart phones at super low prices cut into fashion, its copy to the PC anti-virus software business model's intent is obvious. Scale through low-cost, until the software or hardware as carrier or portal free of charge.

https://www.youtube.com/watch?v=mq6ATF8Bpi0

However, we believe that the 360 PC antivirus software the free market policy, to smart phone hardware as the entrance of the mobile Internet market will struggle to be successful or variable is large.

First with compared to the one-time cost of the software, as Smartphone hardware cost is assessed, that is, each sold a cell phone must pay the appropriate cost, although as the number increases, costs will be reduced, but the cost of hardware has always been there.

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Secondly as software, applications, services and distribution channels profitable way with software application quality, price and uniqueness of the distribution channel (distributed application vendor and user access), diversity (friends of business channels of distribution) and other factors. To accurately calculate the hardware free 360 is in the future (for example, smart phone) strategy's break-even point is almost impossible. Of course owners may take those friends we have not weakened the factors which effect the strategy into account.

But there is a comparative calculation methods should be relatively simple, it is the biggest Google Android as the current mobile ecosystem (the same size as an advantage).

As we all know, Google Android dominates the global smartphone market share of close to 90%, close to 1 billion users, so it must be worthy of the greatest mobile ecosystem. Even so, according to from Goldman of estimates displayed, Google 2014 mobile search business revenue for 11.8 billion dollars, which 75% of revenue (8.9 billion dollars) from using iPhone and iPad of website search, so Google 2014 in Android equipment Shang of search business revenue should for 3 billion dollars around, coupled with Google Play created of 7 billion dollars of revenue, Android ecological system to Google brings of annual revenue in 10.5 billion dollars around As each ecosystem of Android users to Google an annual revenues of around $ 10.5. Of course, Google is not free of cell phones. That is Google and its ecosystem size mobile phone hardware costs.

Also cannot ignore the fact, is compared to the 360 and Google, in the ecological system on the volume and quality of how big is the gap?

Because it determines the 360 build the ultimate profitability of the mobile eco-system in the future. And from Zhou hongyi of internal mail in the learned that of last year 360 revenue for 8.6 billion Yuan Yuan, PC and mobile active user number for 1.2 billion around calculation, its each user for 360 created of revenue for 7.16 Yuan, only is Google of 1/10 around, and industry know, currently 360 of revenue main also is from PC end, and PC end of revenue efficiency to far above mobile end, with future 360 gradually will gravity from PC moved to mobile end, its revenue of efficiency will will reduced, Combined with the previous analysis for 360 hardware low cost, even free shortcomings of mobile business models and faces uncertainty, future development of the 360 and just how much profit? How to combine with valuation? Is the industry had to seriously consider and weigh.

Before delisting through 360 price fluctuations and simple analysis of development strategies after privatization, we believe that, in the present Chinese companies delisting in the privatization, although market is undervalued and returned home to find a reasonable market value of the enterprise, there are business models are not clear or competitive enough to rely on speculation and fickle business. So this delisting is privatized, the TMT corporate speculation and impetuous, China was dominant is the true business value of refactoring, enterprise with its own practical action was needed to prove that. Paul Frank iPhone 6 Case

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