Sina Gains on Upgrade as Melco Advances: China Overnight

Sina Corp. rose for a seventh day in New York, driving gains in the benchmark gauge of Chinese U.S.- listed equities, after Jefferies Group Inc. upgraded the stock on its e-commerce alliance with Alibaba Group Holding Ltd.

The Bloomberg China-US Equity Index of the most-traded Chinese equities in the U.S. climbed 1 percent to 93.03 yesterday, rising 0.9 percent in April. Sina, which sold a stake in its Twitter-like Weibo service to Alibaba, China’s biggest e-commerce company, posted the longest stretch of gains since June 2011, rising 2.3 percent to $56.32. Vipshop Holdings Ltd. advanced to the highest in three weeks and Melco Crown Entertainment Ltd. traded at a premium over Hong Kong for the first time in three days.

Sina surged 16 percent last month, the biggest rally since August, after the deal with Hangzhou, China-based Alibaba. Jefferies lifted its stock to buy from hold yesterday, citing revenue synergy from the partnership. Piper Jaffray & Co. raised Sina’s price target by 15 percent, and at least six other analysts reiterated buy recommendations.

“It’s a perfect situation, and the deal enhances the outlook for Weibo’s monetization,” Tan Chiheng, an analyst at Granite Point Capital Inc. in Boston, which invests in Chinese equities, said by phone. “Sina’s stock price still has upside room to reach $70 at least, to match the valuation reflected in the deal. The value also has the potential to go beyond the initial financial investment.”

The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., added 0.9 percent to $37.74 in New York, rallying 2.2 percent in April after retreating in March and February. The Standard & Poor’s 500 Index rose 0.2 percent to 1,597.57.

Manufacturing Data

China’s Purchasing Managers’ Index for manufacturing dropped to 50.7 last month, according to the median estimate of 31 economists surveyed by Bloomberg before a government data release today. The gauge rose to 50.9 in March, the first increase this year.

The Hang Seng China Enterprises Index in Hong Kong climbed

1.2 percent to a one-month high of 10,917.97 yesterday. Markets in Hong Kong and Shanghai are closed today for a holiday.

Alibaba, which runs the Taobao online shopping platform and Alipay Internet payments, agreed to acquire about 18 percent of Weibo from Sina for $586 million, with an option to increase the stake to 30 percent, Sina said in an April 29 statement.

Jefferies analyst Cynthia Meng raised her sales projection for Sina’s Weibo to $300 million in 2013 and $552 million in 2014, an increase of more than 100 percent from her previous forecasts, according to a note yesterday. She also lifted the price target for Sina’s shares to $75 from $50.

Weibo Valuation

Nomura Holding Inc. analyst Jin Yoon said Sina’s stock, based on the Alibaba deal and an estimate of Sina’s stake in Weibo, would be worth $71 per share, according to a research report issued yesterday. Oppenheimer & Co. analyst Andy Yeung said Sina’s share price should be trading in the range of $70 to $100 given the new Weibo valuation in a note yesterday.

Vipshop, an online fashion discounter based in Guangzhou, advanced 3.3 percent to $30.79 in New York, the highest price since April 8. Inc. climbed 1.5 percent to $51.44 after Goldman Sachs Group Inc. analysts lifted its price target by $2 to $57, while Piper Jaffray raised the goal to $45 from $37.

Melco’s Premium

Melco, which operates casinos in the Chinese territory of Macau, climbed for the first time in three days, adding 1.7 percent to a record-high $24.61 in New York. The American depositary receipts, each representing three underlying shares in the company, traded 2.4 percent above Melco’s Hong Kong-traded stock, after posting discounts in the previous two days.

Craig-Hallum Capital Group LP issued a new buy rating to Melco yesterday, setting a price goal of $31.

ADRs of Yanzhou, China’s fourth-largest coal mining company, slipped 1.1 percent to a four-year low of $10.51. The company, based in Shandong province, said first-quarter net income tumbled 77 percent to 480.6 million yuan ($78 million) in a statement to the Hong Kong Stock Exchange April 25.

China’s Bohai-Rim Steam-Coal Index, which tracks power-station coal prices at six Chinese ports, fell 0.3 percent to 613 yuan a ton in the week through April 24, according to the Qinhuangdao Seaborne Coal Market website.

Before it's here, it's on the Bloomberg Terminal.