Notes from the Piper Conference

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Includes: CTRP, JOBS, JRJC, KZ, LONG, LTON, NCTY, NTES, SINA, SNDA, SOHU, TOMOY, WZEN
by: Ezra Marbach

Piper Jaffray held an investment conference in Beijing last week. Here are some key points from this week's Piper report:


Summary:

  • Advertising, gaming, and travel showing solid growth.
  • Online gaming companies continue to show greatest potential.
  • Wireless - The industry is still unstable. The hope is that China Mobile's
    (ticker: CHL) upcoming decisions on the format and overall framework of
    relationships with service providers may bring some stability.
  • Piper believes that expectations for advertising growth are modest.

Online Advertising:

  • Industry likely to grow at a rate of 40%,
    despite cautious guidance of 30% by the three portals.
  • While
    some sectors like autos and real estate were slightly overheated last
    year, new segments are starting to replenish growth in the
    sector.
  • Prices are expected to increase 10-20% a year, given the strong
    demand.
  • The front pages of most portals are usually sold out well in
    advance. The smaller web sites are gaining market share
    as advertisers start to use a wider range of online destinations.

Internet Search:

  • Dominated by Baidu.com and Google.com (ticker: GOOG).
  • Other online destinations
    have yet to establish a strong brand.
  • No clear winner yet.

e-Commerce:

  • Online transactions remain minimal.
  • But listing services and auction sites (which do
    the vast majority of their transactions offline) are growing.

eBay (ticker: EBAY) and Alibaba:

  • Increasing competition between the two.
  • eBay's strong global power cannot be
    underestimated and the company's focus on China makes it even clearer
    that they intend to win.
  • Here too, a clear winner has yet to be determined.

Wireless Sector:

  • Sector remains unstable.
  • China Mobile has yet to
    finalize its framework for using service providers.
  • China Unicom (ticker: CHU) had positive comments about its relationship with service providers. It does not
    intend to increase its revenue shares.
  • Growth in 2.5G and IVR looks promising.

Quick thought: If any readers attended the Piper conference, we would appreciate your thoughts.