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Investment Thesis - Focus on Consumer Value will Drive Shareholder Value ................................................................... 3
China Internet Trends ............................................................................................................................................................ 4
1 - Growing Faster Than Other Markets…with More Potential.............................................................................................. 4
2 - Internet Brings About Cultural Evolution ......................................................................................................................... 5
3 - Unlike the Rest of the World, China Internet is Mobile-centric Rather Than PC-centric ................................................. 5
4 - Foreign Interests Accelerating ......................................................................................................................................... 6
5 - Hotspot for Mergers and Acquisitions ............................................................................................................................... 7
6 - A League of Big Players…............................................................................................................................................... 8
7 - Leadership Position May Not Necessarily be Secure......................................................................................................... 9
8 - Purer Plays Tend to Have Higher Market Share ................................................................................................................ 9
9 - Regional Focus Can Vary ............................................................................................................................................... 10
10 - Content Becoming King................................................................................................................................................ 11
China Internet Mysteries....................................................................................................................................................... 13
1 - Chinese Internet Players at Valuation Discounts to Global Internet Peers ...................................................................... 14
2 - Real Revenue Perhaps Significantly Higher than the Headline Revenue ....................................................................... 14
3 - Chinese Internet Players Have Much Higher Margins than Global Peers........................................................................ 14
4 - Ecommerce Ready to Take Off? ..................................................................................................................................... 15
5 - Why Can ‘Click Plus Brick’ Outcompete? ...................................................................................................................... 16
6 - State-Owned Enterprises (SOEs) - Referees and Players?............................................................................................... 17
7 - Why Are Foreign Players Especially Challenged in China? ........................................................................................... 18
China Internet Challenges / Risks......................................................................................................................................... 24
1 - Economic Hard landing or Soft Landing?....................................................................................................................... 24
2 - Expect the Unexpected! .................................................................................................................................................. 25
3 - SOE-Friendly versus Entrepreneur-Friendly.................................................................................................................... 25
4 - Too Much Capital, Too Few Good Ideas......................................................................................................................... 26
5 - To Buy or to Build? ........................................................................................................................................................ 27
6 - Long-Term Value versus Short-Term Profit .................................................................................................................... 27
7 - Dearth of Innovation ....................................................................................................................................................... 28
8 - Founder Mentality........................................................................................................................................................... 28
9 - Hollowing of Management Teams.................................................................................................................................. 29
China Internet Investment Framework – Business / Competence / Price.......................................................................... 33
China Internet Industry Analysis - Close to Consumers, Focus on Growth ...................................................................... 34
Mobile Value Added Services (MVAS) - Light at the End of the Tunnel ............................................................................. 37
Online Advertising - A Race for Eyeballs and Performance.................................................................................................. 46
Online Gaming - Pipeline and Distribution Fuel Hypergrowth.............................................................................................. 53
Online Commerce – Solid Outlook… ................................................................................................................................... 62
Global Internet Companies’ Price Performance .................................................................................................................. 72
Summary Slide Presentation ...............................................................................................................................