Deutsche Bank to maintain a gathering time to buy a rating target price reduced to 86 U.S. dollars

Beijing Time May 6 Evening News, Deutsche Bank released its investment report today, maintaining the Nasdaq:yy "buy" rating, the target share price from 90 U.S. dollars to 86 dollars.

The following is a summary of the contents of the report:

Performance exceeding expectations: 2014 in the first quarter of the fiscal year, the total revenue for the period of 666 million yuan, 112% year-on-year growth of 9%. A 4% higher than our forecast, the average forecast for analysts surveyed by Bloomberg is 3% higher, 5% higher than the company's guidance forecast. We believe that this is mainly due to the strong performance of the music business. The first quarter, music business revenue growth of 228% Year-on-year, the chain growth of 14%. Thanks mainly to operating leverage, the operating profit margin for the first quarter was 31%, an increase of 10% per cent year-on-year, 4% higher than our forecast and 3% higher than Bloomberg forecast. Based on non-US GAAP, the earnings per share is 0.55 dollars, 7% higher than our forecast and 12% higher than Bloomberg forecast. In the gathering era, revenue for the second quarter was expected to grow 82% to 85% year-on-year, 6% higher than our forecast and 14% higher than Bloomberg forecast. To this end, we continue to maintain the stock "buy" rating.

The Government's content control has little influence on the gathering time: We believe that in the context of content control, the gathering time has always complied with the relevant government regulations. In addition, the gathering time also set up a special content control team. We believe that the strong second-quarter revenue forecasts also show that the government's content-control policies have little impact on the gathering time.

Mobile commercialization accelerated: In the 96 million months of gathering time users, mobile users accounted for 30%, accounting for music business total revenue of 8%. In addition, 24% of paid music users used the mobile platform to pay, of which 1/3 were fully paid through the mobile platform. But the ARPU (average revenue per user) of mobile users still lags behind PC users, which, we believe, is one of the major challenges to be faced in the era of gathering. As for the new business strategy, we anticipate: 1 this year YY education will still improve the user experience mainly, 2 female idol group 1931 is to expand the gathering time online entertainment business to the line of a good experiment.

Adjusted performance expectations: We will be gathered in the 2014 fiscal year revenue forecast to increase 4.5% to 3.06 billion yuan, but the 2015 fiscal year revenue forecast lower 1%, mainly because the same time adjusted the revenue expectations of the portal advertising. Based on non-US general accounting standards, the projected earnings per share of fiscal year 2014 will be lowered by 3%, and the projected earnings per share of fiscal year 2015 will be lowered by 4%.

Valuation: We maintain a "buy" rating for the time period, bringing the target share price from $90 to $86.