Sky-Mobi: The App Store of China?

April 8, 2011
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Labeling Chinese companies with the names of the U.S. companies that they most resemble is a mixed blessing. Sure, Baidu (BIDU) may really qualify as “the Google of China,” and Sina.com’s (SINA) Weibo service is a good ringer for “the Facebook (or Twitter, or TwitBook) of China.”

But does it do justice to a tiny, young company like Sky-Mobi (MOBI), incorporated only as far back as 1997 and booking just $96 million in revenue in 2010, to call it the App Store of China?

After all, Apple’s market cap is over $300 billion, and the Apple App Store has officially booked its 10 billionth download.

Maybe not, but stock investors, especially those with a taste for the accelerated pace of growth in emerging markets, are always looking ahead a little farther than most observers. And investors see a company whose Maopao mobile application store is being pre-installed on more and more handsets sold in China.

It’s also a company that signed an advertising deal with Sohu.com (SOHU), one of the most popular websites in China, which will allow Sohu’s clients to publish ads on Sky-Mobi’s MRP ad network.

Maopao software is already pre-installed in over 6,600 handset models in China and Sky-Mobi’s partners offer an enormous range of games, books, music, payment services and social networking opportunities.

What everyone really knows about Sky-Mobi is that the enormous population of China has embraced mobile phones, smart phones and life online with great enthusiasm and that revenue has jumped from $2.7 million in 2008 to $80 million in 2010. That’s huge growth, and the potential has only begun to be tapped.

The combination of a fertile sector and an attractive business model has pushed MOBI, which debuted at 8 last December, but quickly dipped below 5.5 in January, to near 14 in recent trading. The stock is still thinly traded, and the company has just one profitable quarter under its belt.

But for those who appreciate potential and like to get bets down early, MOBI is a great speculation.

Editor’s Note: To learn more about high-potential emerging markets stocks like BIDU, SINA, SOHU and MOBI, and the proper way to handle them, click here. Cabot China & Emerging Markets Report is the place to discover the top stocks in these fast-growing markets.

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