Raise the stock rating of the house to buy

The following is the full report:

We are going to raise the stock rating from "neutral" to "buy". Prices have fallen 33% per cent since the March 6 highs, while the Nasdaq index has fallen 7% per cent over the same period. This is mainly due to weak real estate turnover and the overall industry valuation cut. At present, the 2015-year prospective price-to-earnings ratio is 12 times times, below the industry average of 20 times times. So we think that house search has been one of the most defensive vertical market leaders in a company that has faced challenges, especially in the electricity market. Search House Marketing and listing services remain dominant. Regardless of the cyclical nature of the real estate industry, these two services are benefiting from the real estate industry from offline to online transfer of structural benefits. We estimate that the annual compound growth rate of earnings per share from 2014 to 2017 is 21%, while the current market surplus is 0.6 times times higher than (PEG).

Stock price Catalyst

Search Room 3 of the two of the source of the camp is aperiodic.

Marketing Business: The penetration rate of online advertising in the Chinese market is 24%. Despite the slowdown in growth, the year-on-year growth rate has recently accelerated to 5%, up from 3% in 2010. This is mainly due to the advertising budget to the online advertising and mobile advertising transfer, and advertisers to seek higher returns channels. These factors also apply to the real estate vertical market. From 2009 to 2012, the annual compound growth rate of online marketing spending was 53%, according to Iris. We believe that the coverage of house searches in first-tier cities and the low penetration rate of online advertising mean that marketing revenues can double in the long run.

Listing business: As of the end of 2013, the house has 200,000 paid accounts, while China's real estate intermediary number of more than 1 million. This means that even if the fees charged remain unchanged, the current revenue base of the search house still has a growth potential of 5 to 6 times times.

Trading-driven electric business is likely to be affected by the cyclical impact of the real estate market. We estimate that in 2014, the year-on-year growth rate of the electricity business revenue will be 38%, lower than the 2013 84%. In view of the recent decline in the real estate market volume and price, the business will face downside risks in the future.

Valuation

We maintain a 12-month target stock price of 16.20 dollars. This is based on 0.75 times times the peg and a composite growth rate of 21% for each earnings year from 2014 to 2017.

Critical risk

The macro environment of a hard landing, the electricity market competition.