Netease, Sina report strong results

Top Chinese portals Netease and Sina have both reported strong second quarter results. Beijing-based Netease, now the country's largest online gaming operator, said second quarter revenues reached US$72 million up 8.6 percent up quarter-on-quarter 38 percent year-on-year. Net profits were up 29 percent year-on-year to US$39.3 million or 28 US cents per diluted American depository share.

Netease's now core online gaming business grew by 8 percent quarter-on-quarter to US$60.80 million while the company's advertising business grew slightly faster at 11.7 percent to US$8.6 million. Mobile added value services and other revenue grew 16 percent to US$2.6 million. Netease was also able to report profit margins on its game business up 90.7 percent over the three months to the end of June.The company put this down to its strong in-house game development capability. The results are considered by some to be better than expected. However, market reaction to the results was one of concern. In particular there are fears about Netease's new game Datang, which has only attracted around 30,000 players since its launch a month ago.

Meanwhile, rival portal Sina Corp reported net profits up US$10.4 million over the second quarter compared to Rmb7.04 million in the previous quarter. The increase was put down to strong advertising revenue growth. Diluted earnings per share in the second quarter stood at US$0.18 , compared to US$0.12 in the previous quarter. Revenues were reported at US53.7 million up from US$46.7 million in the previous quarter with Sina advertising revenues up 33 percent quarter-on-quarter to US$29.5 million. Advertising growth was particularly strong due to the Sina's coverage of the FIFA World Cup which is reported to have brought 57.6 million unique visitors to Sina's World Cup website.

CMI - 22/8/06