We recommend that investors short sell Asian portals across the board. Asia s publicly listed portals are unlikely acquisition targets. But there is big downside for Asia s home-grown portals which are too poor, small, and generalist to differentiate themselves from the multinational new media players. The new media stocks that we all know and love were new age faiths that had to be proselytized to a wary but greedy investing public. As if these guys really knew what the size of the Asian e-commerce market would be in 2005.
Analysts are divided on whether the new age valuations still make sense.
Others argue for a buy on Chinese portals, citing their low or negative enterprise value and rapid revenue growth. No, not even they dip below the value of the cash on their balance sheets. Chances are, you re not going to see your money or the wino again. Sohu trades at 13x, Netease 18x, Sina 25x. We think not.