NetQin Mobile (proposed NQ) is scheduling a $75 million IPO with a market capitalization of $475 million at a price range mid-point of $10.50 for Thursday, May 5, 2011.

SUMMARY & CONCLUSION

Base in Beijing, China, NQ provides security for mobile Internet services. Sales were up 21% to $80 million in 2010 from $66 million in 2090. NQ sequentially increased revenue for the past s five quarters while showing erratic gross margins and operating margins.

Annualizing the adjusted December 2010 quarter the P/E multiple is 87, which is high for a company with somewhat erratic sequential quarterly income statements. And competitors are increasingly targeting NQ’s market.

On other hand, if NQ can stabilize its gross margin and operating margin while increasing sequential quarterly revenue, the stock could do well.

Quarterly results	Sep-09	Dec 2009	March 2010	June 2010*	Sept, 2010	Dec, 2010
Revenues ($mm)	$1.5	$1.5	$2.4	$3.6	$5.4	$6.3
Gross margin %	53%	52%	66%	71%	75%	68%
Operating income % of rev	-91%	-100%	-23%	4%	23%	-167%
Income/loss ($mm)	-$1.3	-$1.4	-$0.4	$0.01	$1.0	-$10.5
% income of revenue	-87%	-93%	-17%	0%	19%	-167%
Note: Dec 2010 quarter includes non-cash stock comp expense of $12.2mm
Excluding the non-cash stock comp pre-tax income would be						$1.7
Taxes in China can be between 20 & 25%. Apply a 20% tax rate to get after tax income of ($mm)						$1.36
Valuation Ratios	IPO Mrkt	Price /	Price /	Price /	Price /	% offered
Annualize adjusted Dec qtr	Cap (mm)	Sales	Earnings	BookValue	TangibleBV	in IPO
NetQin Mobile (NQ)	$475	22.0	87	4.2	4.2	16%

BUSINESS

NQ is a leading software-as-a-service (SaaS) provider of consumer-centric mobile Internet services focusing on security and productivity.

According to a January 2011 Frost & Sullivan report, NQ is the dominant provider in the mobile security industry in China with a 67.7% market share as of December 31, 2010, as measured by the number of registered user accounts.

NQ provides a comprehensive suite of mobile Internet services that protect mobile users from security threats and enhance their productivity.

As of December 31, 2010, the number of registered user accounts for our services reached approximately 72 million in over 100 countries, representing a sizeable share of the fast-growing market for mobile Internet services.

COMPETITION

On the mobile security front, NQ competes directly with . domestic PC/mobile security vendors such as Qihoo 360 and Kingsoft, . overseas security software providers such as Symantec, McAfee, Trend Micro and Kaspersky, and . other emerging companies offering mobile security products, such as Lookout. Most of NQ’s competitors are traditional PC anti-virus providers who recently entered into the mobile security market. NQ has focused on providing mobile security services since the founding of the company.

On the mobile productivity front, NQ competes with services such as Apple MobileMe, although we are not in direct competition with them because NQ is manufacturer-neutral and platform neutral, whereas products and services such as Apple MobileMe are largely limited by platform or mobile device manufacturer.

EMPLOYEES – 378 as of December 31, 2010

USE OF PROCEEDS

$66 million from sale of 7.14 million ADSs

. $25.0 million for the expansion of sales and marketing efforts;

. $15.0 million for investments in technology, infrastructure and research and development activities; and

. Balance for other general corporate purposes, including working capital needs

NetQin Mobile	NQ, C+, 7					Post ADS equivalents: 45mm
Mobile security					% change
Beijing, China		2008	2009	2010	2010 vs 2009	IPO Mkt
Revenues ($mm)		$4.0	$5.3	$17.7	234%	Cap (mm)
Gross margin		48%	47%	71%		$475
Share related non-cash exp				$12.5		@$10.50
Operating income % of rev		-95%	-102%	-54%
Net income (loss)		$4	-$5	-$10
Quarterly results	Sep-09	Dec 2009	March 2010	June 2010*	Sept, 2010	Dec, 2010
Revenues ($mm)	$1.5	$1.5	$2.4	$3.6	$5.4	$6.3
Gross margin %	53%	52%	66%	71%	75%	68%
Operating income % of rev	-91%	-100%	-23%	4%	23%	-167%
Income/loss ($mm)	-$1.3	-$1.4	-$0.4	$0.01	$1.0	-$10.5
% income of revenue	-87%	-93%	-17%	0%	19%	-167%
Note: Dec 2010 quarter includes non-cash stock comp expense of $12.2mm
Excluding the non-cash stock comp pre-tax income would be						$1.7
Taxes in China can be between 20 & 25%. Apply a 20% tax rate to get after tax income of						$1.36
Valuation Ratios	IPO Mrkt	Price /	Price /	Price /	Price /	% offered
Annualize adjusted Dec qtr	Cap (mm)	Sales	Earnings	BookValue	TangibleBV	in IPO
NetQin Mobile (NQ)	$475	22.0	87	4.2	4.2	16%
SCORECARD		Mgt	Market	Market Do-	Proprie-	Total
1-5, 5 is high			Growth	mination	tary	rating
20 is perfect		2	2	2	1	7