J.P. Morgan's Thursday report to maintain an overweight rating at the time of the gathering

Summary: View the latest quotes Beijing time, August 8 Morning News, J.P. Morgan published a Thursday study, the NASDAQ:YY share rating in the overweight unchanged, and its target price from 108 U.S. dollars to 118. The following is the latest quote

In the early morning of August 8, Beijing time, J.P. Morgan released its Thursday study, keeping the Nasdaq:yy stock rating at "overweight" (overweight) unchanged and raising its target price from $108 to $118.

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

New business shows platform scalability; raise target price to 118 dollars

The second-quarter results of the gathering period further demonstrated the scalability of the business model, with evidence of growth in new businesses such as live game live and online dating, while incremental costs remained at very low levels. In view of the increasing billing relationship between the gathering times and users, we are more optimistic about their future growth prospects. We will keep the stock rating of the gathering period unchanged at "overweight".

-second-quarter results exceeded expectations, mainly due to the strong performance of YY music:

Earnings per share in the second quarter of the gathering (not in accordance with US GAAP) were 15% and 18% higher than our expectations and Wall Street analysts ' average, with revenue growing strongly in the quarter, driven by the strong performance of YY music revenues (25% higher than we expected). Affected by operating leverage, the second quarter of the gathering era operating profit margin (not according to the United States General accounting standards) than our expectations 2.1% higher.

-New business shows the scalability of the YY platform:

We believe that, as a real-time interactive communication platform, YY platform has the potential to host a wide range of activities, such as: 1 based on audio/video activities, 2 real-time activities: 3 large-scale activities. From YY music to live games, online dating and education, we think the YY platform has shown this scalability and will evolve into an online marketplace for user-generated content (UGC). In addition, we believe that the gathering-era billing business model may be applicable to most of these activities and will drive it towards sustainable revenue growth.

-Deepen billing relationship with users:

We estimate that the new business (game live and online dating) represents 19% of users of the second-quarter legacy ivas (Internet value-added services), which pushes the YY platform's pay ratio from 2% a year earlier to 3%.

-Maintain an "overweight" rating and raise the target price from USD 108 to $118:

The hypothetical basis for the target price we set for the gathering time is: 2015-per-share U.S. depository receipts fully diluted earnings (not in accordance with the United States General Accounting standards) for 4.53 U.S. dollars, 2015 to 2017 per share of the United States depository receipts of the composite annual growth rate of 29%, as well as peg value (city surplus growth rate) 0.9 times times. The target price we set for the gathering period means that it is 26 times times the earnings per share expected in 2015.

-Investment Theme:

Strong second-quarter results further demonstrate that the business model of the era is scalable, with evidence of growth in new businesses such as live game live and online dating, while incremental costs remain at very low levels. In view of the increasing billing relationship between the gathering times and users, we are more optimistic about their future growth prospects. We will keep the stock rating of the gathering period unchanged at "overweight".

Valuation：

We maintain the "overweight" rating of the stock of the gathering period unchanged and raise its target price from 108 US dollars to $118. We have used the 2015-year price-to-earnings ratio and the growth rate between 2015 and 2017 to value the gathered-time stock because we believe it will better reflect the long-term growth potential of the gathering era. We use the peg (the market growth ratio) as the main valuation method because it balances the growth outlook with the price/earnings ratio.

The hypothetical basis for the target price we set for the gathering time is: 2015-per-share U.S. depository receipts fully diluted earnings (not in accordance with the United States General Accounting standards) for 4.53 U.S. dollars, 2015 to 2017 per share of the United States depository receipts of the composite annual growth rate of 29%, and peg value of 0.9 times times. The target price we set for the gathering period means that it is 26 times times the earnings per share expected in 2015.

We also used the cash flow discount method to estimate the time of the gathering, with a target price of USD 116. In the use of this valuation method, we make the main assumptions include: 1 long-term risk-free discount rate of 4%; 2 in the Chinese market, the equity risk premium is 7%;3) The 1.1;4 discount rate is 12%;5) The final growth rate of 3%.

-Target price downside risk: execution risk; increased competition from other platforms; marketing spending is higher than expected. (Tangfeng)