Maintain an overweight rating on the stock of the gathering period

Beijing time May 7 afternoon news, JPMorgan released a study today to maintain a "overweight" rating of the Nasdaq:yy stock, and to raise the target share price from 105 U.S. dollars to 108 U.S. dollars.

The following is the full report:

As the music business was performing better than expected, the gathering era released strong first-quarter results. Investors are concerned that the music business of the time is likely to be adversely affected by the Chinese government's online anti-vice campaign, but we think the impact is small, and the recent suspension of several music features in the gathering era has been more of a product's self-regulation. Although the web game business of the gathering era is facing the overall weakness of the page tour market, we believe that it will be possible to compensate for this adverse effect by starting the client-game combined transport during the gathering time. Therefore, we are still optimistic about the 2014-year growth prospects of the gathering era, to maintain the "overweight" rating of the stock.

First-quarter revenue and operating indicators were strong. Due to strong revenue growth and operating conditions, non-US GAAP per share earnings are 8% higher than our expectations. Strong revenue growth was mainly due to a better-than-expected performance of the music business, which had a revenue of 383 million yuan, a higher than the estimated 336 million yuan by JPMorgan.

The music business remains strong. We are still bullish on the growth of the music business in the next few quarters. We believe that the government's network of anti-Vice action on the time of the gathering has little impact. This is due to: 1 The content of the Self-censorship, 2 and the effective communication with the regulatory department. At the same time, through the "1931" project, the Gathering time plan from grassroots performers gradually shifted to professional performers, eventually attracting star participation. In the long run, this is likely to broaden the potential user base and business scope of the gathering era.

Due to the impact of investment, the second quarter of the gathering period is expected to face some pressure on profit margins. We expect that, due to the growth in marketing spending, non-US GAAP operating margins will be 3% lower in the second quarter than in the first quarter. Throughout 2014, we estimate that the operating profit margin for non-US GAAP in the Gathering era was 32%, below 2013 's 33%.

Maintain an "overweight" rating, raising the December 2014 target share price from $105 to $108. Our target share price is based on the 2015 non-US General accounting standards for ads per share earnings are expected to 3.92 U.S. dollars, 2015-2017 per share of ads shares earnings of the annual composite growth rate of 30.5%, the city surplus growth ratio (PEG) 0.9 times times. Our target share price is equivalent to 27 times times the 2015 forward earnings ratio.