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Qihoo rises on Google pact to fuel sales

Updated: 2013-01-07 10:35
By Bloomberg News in New York ( China Daily)

Beijing-based search engine ends 2012 at highest level since April 27

Qihoo 360 Technology Co surged in New York, driving the benchmark index of Chinese US-listed stocks to a seven-month high on prospects a partnership with Google Inc will bolster revenue this year.

Qihoo rises on Google pact to fuel sales

Zhou Hongyi, chief executive officer of Qihoo 360 Technology Co, speaking at the company's annual conference in December. The Beijing-based private company, which offers anti-virus programs as well as the most-used web browser in China, saw its New York shares jump 89 percent in 2012, the biggest gainer of the China-US gauge's 55 stocks. [Photo/China Daily] 

The Bloomberg China-US Equity Index of the most-traded Chinese shares in New York jumped 2.4 percent to 99.17 on Dec 31, bringing its 2012 advance to 10 percent. Qihoo, a Beijing-based private company that started its Internet search engine in August, closed at the highest level since April 27, while web data-center operator 21Vianet Group Inc climbed the most in four months. China Life Insurance Co traded at a premium to its Hong Kong stock for the first time in six days after the regulator said insurers can set up mutual funds.

Qihoo rises on Google pact to fuel sales

Qihoo, which offers anti-virus programs as well as the most-used web browser in China, jumped 89 percent in 2012, the biggest gainer of the China-US gauge's 55 stocks. The company's tie-up with Google will start soon and contribute $140 million in revenue this year, Juan Lin, an analyst at Wedge Partners Corp wrote in a report. Data showing Chinese factory output grew at the fastest pace in 19 months in December also boosted stocks traded in the United States.

"There will be more growth in Qihoo and now with this cooperation with Google revenues and earnings need to go up a bit in 2013," Kirk Adams, a director of research at Wedge Partners, said by phone from Greenwood Village, Colorado. "As its cooperation with Google will add cash to Qihoo, the market will continue to price in the revenue growth in 2013."

ETF climbs

The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the US, added 2.3 percent to $40.45, extending its 2012 climb to 16 percent.

Qihoo's American depositary receipts surged 8.6 percent to $29.69. Chief Financial Officer Alex Xu didn't respond to an e-mail seeking confirmation on the effect of cooperation with Google on revenue.

The company is considering partnering with Google's advertising system, Chief Executive Officer Zhou Hongyi said, according to a Sept 11 report on Sina News.

Qihoo's tie-up with Google's China unit will probably start at the beginning of 2013, Wedge Partners' Lin wrote in the note. The company will continue to build its own advertising system to profit from online search queries, she wrote.

An advance in Alerican Depositary Receipts sent valuations to 34 times estimated earnings, up from a multiple of 17 on Aug 15, the day before Qihoo started its search service, according to data compiled by Bloomberg. Qihoo's valuation compares with a ratio of 17 times expected earnings for Baidu Inc, its bigger competitor.

Baidu, owner of China's most-used search engine, added 1.3 percent to $100.29 in New York, halting a two-day slump and trimming its 2012 slide to 14 percent.

Wallace Cheung, a Hong Kong-based analyst at Credit Suisse Group AG, cut his price estimate for Bejing-based Baidu to $80 from $82, maintaining a rating equivalent to sell on the stock.

21Vianet, also based in Beijing, jumped 8.5 percent to $9.61 in US trading to gain 5 percent in the year. Trading volumes were almost triple the daily average over the past three months, data compiled by Bloomberg showed.

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