Research Reports

Today, BABA announced that it is entering into an agreement with Suning for the exchange of their stakes after BABA’s investment in Intime Retail last year. We believe that as China is going beyond a pure online commerce and marching into online-and-offline integration, BABA’s investments in leading offline retail vendors have put it in the leading position in a new phase of commerce. While it can be one of the most important developments for BABA’s future, it has no effect on FY1Q16 earnings. BABA is going to report its FY1Q16 this Wed. before the markets open, and we most likely won’t see any positive surprises in its earnings as it is still dealing with issues including converting mobile users to Tmall and increasing mobile take rate. Based on our data, we believe BABA’s FY1Q16 can be b……

SFUN reported strong 2Q15 results with both revenue and EPS beating consensus, which was mainly driven by the e-commerce business as well as the rebound in the listing business benefiting from the market recovery. Going forward, we believe SFUN is well-positioned to gain more market share from traditional offline agencies in brokerage service in the secondary housing market since internet has revolutionized traditional industries. Since we believe the secondary market in China still has significant upside potentials, SFUN’s aggressive investments in such area are highly likely to pay off. While the margin compression because of the investment can be negative, we believe SFUN has it under control as proven by last quarter’s results. Therefore, we maintain our Buy rating and raise our price ……

NTES will report 2Q15 results on Wed., August 12 after the close of the market followed by a 9pm EST conference call. We are expecting another solid quarter from NTES driven by the strong performance of its mobile games. We believe that NTES is well positioned for the booming mobile game market in China due to its R&D capability. While its new business, cross-border ecommerce Kaola.com, may present a certain level of risk to the company’s general margin, we believe it does not affect the valuation of its core business. As such, we maintain our Buy rating and we will revisit out model and valuation after earnings.……

We are initiating on JD with a BUY rating due to its foreseeable growth and profitability outlook as well as its upcoming 2Q15 results. The company will report 2Q15 results on Friday, August 7th before the markets open with a 7:30am EST conference call. JD’s 2Q results are highly likely to be better than consensus driven mainly by its June 18th Anniversary Sale promotion as well as ongoing expansion in general merchandise. Longer term-wise, new category expansion in general merchandise can serve as another growth driver for years to come. Also, as JD is developing faster in its general merchandise and marketplace businesses, which have higher margin profiles, we believe the profitability is foreseeable and is only a matter of time. We are initiating our coverage on JD with a Buy and a pric……

SFUN will report 2Q15 results before the U.S. markets open on August 7, 2015 with an 8:00AM ET conference call. Benefiting from the market recovery in 2Q15, we believe the company may deliver 2Q15 revenue better than consensus primarily driven by its e-commerce business in the primary housing area. And we believe its investment in the secondary housing business is paying off. SFUN has expanded into 13 cities and gained more market share from traditional offline agencies with lower commission rate and the company is on its way into more cities. As we believe that SFUN is going to cover most of the tier 1 and tier 2 cities by 3Q15, the investment may reach its peak level. Therefore, we upgrade the stock from Hold to BUY with a price target of $8.00. ……

Ctrip will report 2Q15 results on Monday, August 3, 2015 after the close of the market followed by an 8pm EST conference call. We are expecting better 2Q15 top line driven by strong travel momentum as well as CTRP’s ability to execute. We believe the volumes of both hotel room nights and air are likely to be better than the company’s guidance driven by its aggressive expansion in the hotel and air ticketing businesses. In terms of the bottom line, we believe Ctrip may perform better than consensus expectations on less participation in price competition in the quarter. We maintain our Buy rating as we believe Ctrip is well positioned to capture China's travel demands.……

•Steady growth in paying dealers for both ATHM and BITA - According to our proprietary data, total registered dealers for 2Q15 were stable at around 23K and 25K for ATHM and BITA, respectively. In June, ATHM’s dealer subscriptions reached 18.4K from 17.3K in May, vs. BITA at 18.1K from 18.2K in May (Figure 1). In 2Q15, the total number of paying dealers for ATHM reached 53.3K from 51.9K in 1Q15 and BITA reached 54.5K from 53K last quarter.……

SOHU will report 2Q15 results on Monday, July 27th before the markets open with an 8:30am ET conference call. We expect 2Q15 results to come in inline with consensus driven by strong growth of mobile games. While SOHU makes improvements in mobile games, the whole business is still in the phase of searching for a new growth engine. Therefore, we maintain our Hold rating on the stock. ……

CYOU will report 2Q15 results on Monday, July 27th before the market open with a 7am EST conference call. We believe the quarter may be in line with consensus driven largely by strong growth of the company’s mobile games, while its MMO segment is stable with flat server growth coupled with slight ACU decline. Over the last few quarters, CYOU has been dedicating a lot of resources and focus on this area. However, to maintain leadership in mobile games, CYOU needs more than one or two hit games; it needs solid R&D capability. As such, we maintain our Hold rating as CYOU still needs to demonstrate such capability for its sustainable long term growth. ……

April 1 - June 30, 2015 Operating Data Highlights:Data in this report is extracted from publicly available sources and processed with our proprietary methodology.•Significant increase in mobile downloads – By the end of 06/30/2015, mobile app downloads for Youku Tudou increased to 3,411M from 2,860M at the end of 03/31/2015 with 551M new additions (Figure 1). YOKU’s downloads are catching up with iQiyi/PPS at about 3,582M by the end of 06/30/2015.……

BIDU will report 2Q15 results on Monday, July 27th after the close of the market followed by an 8pm EST conference call. We are expecting the company to report at least in line 2Q15 results, driven by its core search business, particularly strong mobile search. We believe its strength in mobile search can continue. For other businesses such as Nuomi, we believe its newly committed investment is likely to result in the rapid growth in GMVs as well as registered mobile users. As such, we maintain our Buy rating on the stock. In addition, we believe it makes sense for BIDU to provide a separate P&L for its search and other businesses that are in the stage of heavy investing including iQiyi and Nuomi. If the company does so, BIDU can benefit from a potentially new valuation method such as ……

April 1 - June 30, 2015 Operating Data Highlights:Data in this report is extracted from publicly available sources and processed with our proprietary methodology. •Strong momentum in mobile game downloads - As of 2Q15, the cumulative number of downloads of NTES's major mobile games was 173.2M, up significantly from 97.0M at the end of March 2015 with a net add of 76.2M. The growth continues to be mainly driven by LDXY (乱斗西游）and FWWJ (梦幻西游手游) and to a lesser extent Ninja Must Die 2 (忍者必须死2) and Mini WWJ (迷你西游) (Figure 1). ……

April 1 - May 31, 2015 Operating Data Highlights:Data in this report is extracted from publicly available sources and processed with our proprietary methodology. Please contact us for detailed information.•GMV of curated sales jumped in May driven by Jumei Global – According to our proprietary data, the GMV of 1P curated sales grew 28.5% M/M in May from April (Figure 1). The growth was driven by Jumei Global’s newly launched Mom & Baby and light luxury categories. The new categories led to the growth in volume, which increased 26.4% M/M (Figure 2 & 3). In May, we believe GMV from Jumei Global contributed 33% of curated sales GMV, up from 17% in March (Figure 4). ……

March 1, 2015 – May 31, 2015 Data Highlights:Data in this report is extracted from public resources and processed with our proprietary methodology.•Less total course offerings due to course restructuring – In an effort to be more content centric instead of teacher centric, EDU moved its course offerings toward more standardization. As such, in FY4Q15 (03/2015-05/2015), the company consolidated small courses into bigger courses and shorter courses into longer courses. According to our proprietary data, total number of courses offered was 44.1K or 8.9% Y/Y decrease from 48.4K in FY4Q14 (Figure 1). ……

•Utilization rate decreased in May compared with 1Q15 – CAR achieved higher utilization and rental rates during the Labor Day holiday in May 2015 compared with the same period last year (Figure 1). For the month of May, the utilization rate declined to 55% from 60% in April 2015 and 59.6% in 1Q15, which we believe was due to store expansion. The rental rate in May remained stable at RMB286 on a month-to-month basis and increased from RMB278 in 1Q15 (Figure 2). ……

We upgrade YY stock to BUY from HOLD, mainly due to the strong performance in musical show business. According to our proprietary data, we believe there was strong growth in both active users and the number of hosts. In addition, the company started to monetize its education sector starting in 2Q15. Since we believe most of the negatives are out, we upgrade the stock to BUY from HOLD with a price target of $94.00. ……

We upgrade XRS to BUY from Hold as we believe there was significant growth in both the number of courses and enrollments in FY1Q16, according to our proprietary data. We believe such growth is mainly driven by its expansion into other cities. As such, we upgrade the stock to BUY from HOLD with a price target of $44.00.   ……

JMEI will report its 1Q15 results on Thursday, May 21st after the market close with a conference call Friday morning at 8:30am ET. JMEI is likely to report 1Q15 results better than consensus due to higher than expected GMV growth driven by Jumei Global, as it has been taking effect since 1Q15. Going forward, we believe the trend of higher growth can continue as Jumei Global is just at its beginning and the company is starting to branch out from initial cosmetics to other categories such as baby and maternity products. Jumei Global is a new way of product sourcing, which captures a big untapped consumer market in China with demands of branded foreign goods at a better price. As such, we are initiating our coverage of JMEI with a Buy and a price target of $30.00. ……