Give Cheetah mobile Overweight initial rating and 25.1 dollar target share price

Morgan Stanley today released its research report, giving the Cheetah Mobile (NYSE:CMCM) An initial rating of "overweight" (overweight) and a 25.1 dollar target share price.

The following is a summary of the report:

Cheetah Mobile has a group of popular mobile apps and has a sticky user that offers a variety of commercial opportunities (including advertising and gaming channels). The company has effectively launched overseas expansion, with more than 60% active subscribers coming from overseas.

Give an initial rating of "overweight" with a target price of 25.1 USD: Our target share price for the 2015 Non-gaap (non-US GAAP) is 34 times times the value of the cash Flow discount method (DCF), and it is 45 times times earnings. Thanks to the growth in PC sales. Cheetah Mobile has been profitable, with a net profit of 62 million yuan in 2013. We expect a 2014-2015 annual revenue increase of 90% to 100%, mainly by increased mobile and overseas commercialization opportunities (including advertising and gaming channels).

Large and interactive user base: In the first quarter of 2014, Cheetah Mobile claimed to have 362 million-month active users (up 80%), mobile month active users grew nearly 4 times times, to 223 million, accounting for the total number of users 62%, higher than a year ago 23%. The company's daily active users accounted for 40% to 50% of active users, indicating a high user stickiness.

The leading global mobile utility provider: According to App Annie's data, this March, the Cheetah's flagship mobile app, "Cheetah Cleanup Guru", was ranked fourth in Google Play's game-free app. Cheetah Cleanup Master can also be used as a communication channel for other applications ――CM security has not been too much promotion and has 23 million months of active users.

Partnering with Web companies: Alibaba (rolling information), Baidu and Tencent contributed about 60% of the revenue to cheetah movements in 2013. In addition, Lei also serves as the chairman of Cheetah Mobile and millet.

Investment risks include fierce competition in the PC and mobile markets, inadequate commercialization of overseas (1% per cent revenue in 2013), and increased investment to attract users, resulting in lower margins. (PEI)