China's Google has actually been one of my top picks to play the stunning growth in China's Internet-using population. Currently, China's netizens are numbered at about 338 million, or more than the entire population of the United States.
And this company remains the undisputed Internet champ in Asia. Despite Google's best efforts, this company claims a great majority of Internet searches and China's online advertising market. In fact, 75% of all Internet searches in China are performed by this company -- a stark contrast to the less than 20% that Google claims in China. And as the largest search engine in China, it also recently passed Yahoo.com to become the second-largest search engine in the world.
Considering the company's firm grasp on the Internet search market in China, its business has simply boomed in recent years. In fact, just this year, China's Google delivered impressive second-quarter financial results -- net income popped 45% year-on-year to $56.1 million, and sales rose 37% -- with sales numbers topping the average prediction of $158 million.
Much of the company's ability to beat analysts' expectations in the second quarter was likely due to the 12% increase in active online-marketing customers to a new high of 203,000 as well as the 23% jump in spending per customer.
Looking ahead, the company forecast that the speedy economic recovery in China would continue to help boost sales in advertising and in turn lift the company's revenue to record levels. Third-quarter revenue was forecast to reach between $184 million to $189 million, which exceeds previous analysts' projections of $182 million.
Given the company's robust results and positive outlook, shares popped more than 7% on the day the company reported second quarter results. And now's your chance to pocket a nice short-term profit in China's Google -- the company reports third-quarter earnings Monday, October 26.
As a result of the increase in forecast and the continued strong demand and recovery in China, I've been expecting a very strong second half of the year for this company -- and we'll see just how strong after next week's report.
As I mentioned last month, the Google of China has another major project in the works that could be incredibly beneficial -- they're poised to profit from the growing trend of e-commerce in China. If the company can leverage their current market share, this could be a powerful new profit-maker for the company.
And the company also just inked a major deal that will expand its presence into the mobile market in China to provide wireless search for 3G mobile subscribers. The company's products -- including web, image, news and MP3 search -- will come pre-installed on Apple's iPhone and other smartphones in China. This is also a new growth market for the company that will only add to their bottom line.
So far this year, shares are up around 217% -- and I'm expecting the company to continue its surge higher.
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