It seems as if China's SINA (NASDAQ:SINA) is getting back into a good groove with investors. After a disastrous 2005 that found the online media company missing two of its four quarterly earnings targets and simply nailing the other two, SINA is back to its market-thumping ways in 2006.

During last week's second-quarter report, SINA earned $0.18 a share -- or $0.21 a share before stock-based compensation expenses and the amortization of intangible assets. On that basis, SINA was flat with last year's $0.21-per-share showing, but came in comfortably ahead of the $0.18 a share that Wall Street was expecting.

SINA also came through on the top line. Net revenues inched 16% higher, to hit $53.7 million. The company had originally projected between $47.5 million and $49.5 million in net revenues. Flat profit growth and a top-line advance in the teens may not seem like the kind of high-octane oomph that investors buying into the China story are craving, but for SINA, it's a monumental achievement. The company had been mostly talking down its guidance since the fourth quarter of 2004, but now it's notably ratcheting up its outlook.

For the current quarter, SINA now expects to produce net revenues between $51 million and $54 million. Analysts were perched at the $49.2 million mark. The company now needs to commit itself to shoring up its bottom line. Gross margins have slipped over the past year, even if SINA did show some sequential improvement on that front.

Advertising continues to be the key driver at SINA. That's why thinner margins are problematic. Ad revenue now accounts for more than half of the company's business. That segment grew at a healthy 45% clip for the June quarter, helping to offset a decline in SINA's non-advertising revenue. Online advertising is a high-margin business, so the company should be squeezing more out of every incremental ad dollar it receives.

As a Motley Fool Stock Advisor newsletter recommendation, SINA won David Gardner's nod of approval in the summer of 2004, and again late last year. The company is part of a trio of Chinese growth stocks that mesmerized the market with stellar returns. Then SINA, (NASDAQ:SOHU), and NetEase (NASDAQ:NTES) went in different strategic directions, after the Chinese government's regulatory forces cracked down on their mobile-entertainment strongholds. SINA and Sohu now bank on new-media advertising while NetEase has become a major player in online gaming.

SINA's turnaround is starting, and the company has the luxury of time to see it through. It is blessed with a cash-rich balance sheet, sporting more than $5 a share. It's clearly drumming up more business than most of us had been expecting. Now it's time for SINA to make sure that it delivers on the margins front, too.

NetEase was recommended to Motley Fool Rule Breakers newsletter service subscribers 20 months ago. SINA has been singled out to Motley Fool Stock Advisor readers.

Longtime Fool contributor Rick Munarriz has been a fan of China's high-margin online stocks for a long time. He does not own shares in any of the companies in this story. T he Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.