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Strategies & Market Trends : Value Investing

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To: Graham Osborn who wrote (55493)	6/19/2015 4:23:36 AM
From: MNTNH	Read Replies (1) of 78659

Re:QIHU I dont think you missed anything. Its pretty hard to use their 360 softwares with those annoying "behind the scenes" action and toolbars that you wouldnt have realized until you cant find your other programmes. I do agree with the Citron and Anonymous folks that something just doesn't smell quite right. The links are non tracking which means its hard for them to track the revenues from clicks (they are a ads firm and earn 0 from antivirus). How do they then earn and record sales? Your guess is as good as mine. The lack of analytics in a software company is shocking to say the least. Also valuations are currently $9B for a firm with $1.39B sales and $0.2B npat. Off hand, earnings quality for 1Q2015 numbers looks a little poor. Theres significant gains from long term investment of $27m which led to a $55m npat, despite an overall jump from the $40m npat in 1Q2014. Npat doubling has been occurring since 2012 but recent 1Q2015 there are significant slow down in growth numbers. Returns on capital is also quite low for the "dominant position" they are claiming. The part I don't get is the large convertible bonds raised more than once, yet it has been languishing without use and negative carry. I think more clarity is needed on its "long term investments" and "revenue" portions. Close examination on a quarter to quarter basis would be ideal. Besides, management taking it over doesn't necessarily mean you are wrong. Probably means they have temporary bullets to take it private and relist it in China, then it might become a $90B firm in a few days! Citron writeup Actual issues QIHU made AA on QIHU 1 AA on QIHU 2

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