Nothing But Net 2009 Internet Investment Guide 13. Leading . Morgan Internet industry analyst Imran Khan provides a comprehensive look at key Internet industry characteristics, drivers, and trends in his seminal industry outlook, Nothing But Net. Geared toward Internet investing novices and experienced professionals, this book provides a detailed look at data points and trends that should be considered when investing in the Internet space. With almost 8 years of technology banking and investing experience, Khan provides a detailed analysis of multiple Internet sectors including online advertising, e-commerce, online travel, and social networking. This book is a must have for. | Morgan Imran Khan 1-212 622-6693 Global Equity Research 05 January 2009 4 Tighter Credit to Reduce Account Receivables Risk In general all portals have a tighter credit control policy regarding smaller or riskier advertisers. For example large companies such as China Mobile can maintain prior credit terms. For smaller companies with shorter credit histories portals like Sina would likely require prepayment. Regulatory Risk Remains Lower than Other Online Sectors We believe the regulatory risk remains lower for the portal online ad business compared to other segments in China such as WVAS online music or online games. Online advertising is the most established online business in China since the late 90s and regulations and boundaries are well understood by industry players. We believe the leading portals have strict internal compliance departments and automated content scans to ensure contents are in compliance with government standards. While Web content such as music video and blogs has come to the government s attention we believe if there is further regulatory tightening for Web content leading portals should be less impacted than pure Web companies. Leading portals are the most trusted by the government among Internet companies and have the best compliance procedures further the financial impact would be less significant because still only a small portion of their revenues is from Web content. 121 Morgan Imran Khan 1-212 622-6693 Global Equity Research 05 January 2009 Online search Still in Early High-Growth Stage The online search advertising market in China is expected to grow 64 Y Y in 2008 as per our estimates to reach Rmb US 676M . Within this the PPC search segment is expected to grow 74 Y Y to reach Rmb or in US terms grow 90 Y Y to reach US 623M . We believe online search advertising is still in an early high-growth stage in China driven by 1 rising Internet .
