IPO Pick of the Week: Qihoo 360 Tech

IPOdesktop submits:

Qihoo 360 Tech (QIHU) is scheduling a $139 million IPO with a market capitalization of $1.348 billion at the ADR price range mid-point of $11.5, for Wednesday March 30, 2011. QIHU is based in Beijing, China.

Conclusion: As the No. 3 internet company in China, QIHU offers a way to participate in the growth of the internet in China. QIHU itself is on a rapid growth path.

  • Sales were up 82% in 2010 to $58 million from $32 million in 2009
  • Gross margin increased to 88% from 74%
  • Net income increased 125% to $9 million from $4 million

In the December 2010 quarter the annualized sales rate was $80 million, with 71% of revenue generated from advertising. The December quarter profits of $4 million equaled all the profits generated in 2009.

Reasonable Price: Annualizing December quarter's profits, a QIHU IPO at the price range mid-point of $11.50 has a P/E


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