Jaffray to increase the target price to 113 dollars during the gathering period

Beijing Time August 7 Evening News, the U.S. investment company sent Jay today released a study to maintain the "overweight" rating of the Nasdaq:yy stock, and the target share price from 105 U.S. dollars to 113 dollars.

The following is the full report:

Conclusion

In the second quarter of 2014, when the gathering was reported, revenues were 11% higher than analysts ' average forecasts, while the third-quarter outlook was 15% higher than the average analyst forecast. This was mainly due to the strong performance of the music business, as well as the rapid development of streaming live media and online dating business. We believe that with the rapid development of education, streaming media and online dating business, the goal of gathering time to become a talent market is gradually realized. We expect that in 2015 these operations will greatly contribute to the development of the gathering era. We are satisfied with the current investment theme, that the company has a strong proprietary technology model, and that a number of potential revenue sources are emerging that will deliver strong results in the foreseeable future. We maintain the "overweight" rating of the stock of the gathering period and give us a 113 dollar target share price.

The quarterly results of the gathering time again exceed expectations

The gathering Times reported that revenue for the second quarter and earnings per share that were not based on US GAAP were $135.6 million trillion and 0.70 U.S. dollars respectively, exceeding analysts ' average forecast of $122.2 million and $0.58. Music and entertainment accounted for 61.4% of total revenue, up from 57.5% in the last quarter. Revenue for this business grew by 202.7% per cent year-on-year. Gross profit margin fell 290 basic points, to 49.5%, in line with our view that the transfer to the music business will have an impact on profitability, the future will be maintained at about 50%. The year-long forecast, the third-quarter revenue growth rate will be 90% to 92%, that is 151.2 million to 152.8 million U.S. dollars, the middle point than the analyst average estimated 132 million U.S. dollars high 15%.

The era of gathering has become the talent market

We believe that some new investors may find it difficult to understand the business of the gathering era. In the conference call, the gathering time describes itself as a talent market. In essence, the gathering age focuses on putting talented people in front of tens of millions of of users, helping the talented to gain income through their users. We think this is a good way to look at the gathering time education, video streaming and online dating business. These businesses are growing fast and making greater contributions to the business model of the era.

In Google's acquisition of Twitch rumors, the game streaming live media business will be a real opportunity

At the end of July, VentureBeat, the US technology blog, reported that Google had reached an agreement to buy the American game streaming live media company Twitch at a price of 1 billion dollars. Although the revenue figures are not disclosed, we believe that Twitch's annual revenue is likely to be $ tens of millions of trillion. The gathering Times reported that the game live business revenue of 31 million yuan (5 million U.S. dollars), so the annual revenue operating rate is likely to be less than Twitch, but the growth rate is fast (240%). On the earnings call, the company's management said that the game live service brought 400 million pages of page traffic every day. We do not believe that the streaming media service of the gathering time has a similar valuation multiples with Twitch, but we believe that Twitch's success is a sign that similar services in China will also bring value.

Adjust the valuation model

Based on the strong performance of the gathering time education, live streaming and online dating vertical business, we adjusted the company's 2015-year performance expectations. All revenue-raising expectations are coming from music and other businesses, and the game and advertising business is largely unchanged. We are expected to raise the revenue forecast for 2015 years by 30%, to increase the earnings per share by 25%, however, as the gathering era gradually shifted to the music business, we slightly reduced its gross margin forecast for 2015 years.

Target share price and valuation

We maintain the "overweight" rating of the stock-gathering period and raise the target share price from 105 US dollars to $113. Our target stock price is based on the 2015 forward earnings ratio of 35 times times, as well as net cash per share of 6.85 US dollars. The valuation was 40 times times higher than previously given. This is because, in our view, this will better reflect the long-term growth potential of earnings per share (the expected year-on-year growth in earnings per share in the 2015 gathering period will reach 35%). (D-Gold)