Research Reports

Weibo will report 1Q15 results on Thursday, May 14 after the close of the market followed by a 9pm ET conference call. We are expecting 1Q15 results and 2Q15 guidance to be at least in line with the Street. We believe the company is making significant improvement in its monetization initiatives, which is driving fundamental growth. Mobile continues its strong growth trajectory. Going forward, we think Weibo is well positioned for long term revenue and earnings growth, even though we believe WB still needs to invest for the future. Therefore, we maintain our BUY rating and price target of $24.00.……

SFUN will report 1Q15 results before the U.S. markets open on May 20, 2015 with an 8:00AM ET conference call. While we don’t expect any surprises from its 1Q15 results and the 2015 full year guidance, we are positive about SFUN’s growth outlook as it is benefiting from the recovery of the underlying market driven by stimulus policies. In particular, we believe both of its membership and direct sales e-commerce businesses can benefit from such recovery immediately. However, in the long run, we believe SFUN’s secondary housing business can serve as another growth driver along with the market growth. Even though this business is quite new, SFUN was able to quickly gain market share with its lower commission rate. As the development of its new business still needs more upfront investments, we ……

NTES will report 1Q15 results on Wed., May 13 after the close of the market followed by a 9pm EST conference call. We believe it is highly likely that NTES will report 1Q15 revenue above Street consensus with upside coming from its mobile games and to a certain extent, its PC MMO games. With its market expertise and game R&D know-how, we believe NTES is well positioned to capture millions of new mobile gamers. The mobile game market is just beginning its run.  As such, we maintain our Buy rating and raise our price target to $146.00.……

January 1 – March 31, 2015 Operation Data Highlights:Data in this report is extracted from publicly available sources and processed with our proprietary methodology.•Hotel room nights might grow 63.7% Y/Y in 1Q15 – Hotel room nights of CTRP could reach ~20.9M in 1Q15, representing ~63.7% Y/Y growth, following ~53% Y/Y growth in 4Q14. The higher growth may come from both 5 star hotels (driven by higher volume per hotel) and lower star-rated hotels (driven by wider hotel coverage). For the month of March, hotel room nights might grow ~69.4% Y/Y to 8.3M (Figure 1).……

BABA will report its FY4Q15 results on Thursday, May 7th before the market opens. We believe that we most likely won’t see any positive surprises in its FY4Q15 earnings as it is facing pressure from both short term negatives and fundamental changes. While we are echoing other’s bearish view on BABA, we want to analyze the underlying issues as well as lay out BABA’s strategies and changes to cope with these issues. While the near term impact can be short lived, the fundamental changes may take longer. Therefore, we are cautious near term, but optimistic on its long term outlook. We are initiating our coverage on BABA with a HOLD rating. ……

Beyond BIDU’s mixed 1Q15 result and soft 2Q15 guidance, we believe its search business has significant potential to resume high growth toward 2H2015 driven by its new mobile initiatives, mainly its distance proximity bidding, which allows businesses to conduct search marketing in a locally defined territory. BIDU plans to introduce it to the market in 2Q15. We believe it has the potential to capture customers’ needs for location based services and to become a new engine for the company’s future growth. As for its earnings, the weakness in 1H15 can be a result of seasonality and business transition. We believe BIDU’s continuous efforts in mobile initiatives may ultimately position the company to resume past growth. As such, we upgrade the stock from a Hold to BUY rating with a price target ……

•Y/Y growth of direct sales GMV may decelerate in 1Q15 due to late CNY – Our proprietary data showed that JD’s GMV of online direct sales may reach RMB49.0B or 56.8% Y/Y and 1.1% Q/Q growth in 1Q15 (Figure 1). Of that, GMV for electronics and home appliance may grow 58.1% Y/Y to RMB 42.5B, while general merchandise and others grew 49.5% Y/Y to RMB6.4B. The deceleration in the GMV growth we believe was due to a later Chinese New Year in 2015, which negatively led to no Valentine’s Day promotions in 1Q15 as 2/14 was close to CNY on 2/19, while there was such promotion last year since CNY was in January. For the month of March 2015, direct sales GMV increased 30.2% M/M as a result of strong volume growth at 47.8% M/M offset by ASP decline of 11.9% M/M (Figure 2, 3 & 4). ……

January – March 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.•Number of flash sales events and SKUs continued to increase Y/Y in 1Q15 – For 1Q, the number of SKUs increased 102.6% Y/Y and 7.6% Q/Q (Figure 1), while the number of flash sales events increased 103.9% Y/Y and 6.1% Q/Q (Figure 2). For the month of March 2015, the number of flash sales events increased 66.8% Y/Y and 17.5% M/M, while the number of SKUs increased 63.3% Y/Y and 6.8% M/M (Figure 1 & 2).……

LONG will report 1Q15 results on Thursday, April 30th after the close of the market followed by a 9pm EST conference call. We believe LONG is unlikely to provide upbeat results as the company is fighting for market share of hotel room nights. To achieve the near term goal, LONG has to spend aggressively on App download promotions and product sourcing, including pre-purchase model. We believe LONG's strategy is positive for market position, but it won’t be positive to its near term margin. As such, we maintain our Hold rating.……

BIDU will report 1Q15 results on Wednesday, April 29th after the close of the market followed by an 8pm EST conference call. We are expecting BIDU to report 1Q revenue in line with the Street on strong mobile performance, and 2Q15 guidance to be at least in line with consensus. However, 2015 will be another investment year focused on rolling out new initiatives such as O2O, LBS, group-buy and food delivery, and continuing to promote its video business. While we believe these initiatives may help position Baidu for long term growth, margins may be pressured. As such, we maintain our Hold rating.……

CYOU reported 1Q15 results that significantly outperformed consensus expectations. For 2Q15 guidance, CYOU guided revenue below the Street due to the slowdown in TLBB as a result of lower marketing promotions in 2Q15 and divestiture of 7Road, whose revenue will not be factored into guidance. Currently, CYOU is still struggling to find long term sustainable growth as its MMO games age and newer MMO and mobile games are not generating enough revenue to offset such slowdown. As such, we maintain our Hold rating.……

We believe that NTES has the expertise in developing, launching and marketing a game in a very efficient manner. Such expertise applies to mobile games. As such, we believe its mobile games under operation and in its pipeline are highly likely to drive upside to its performance. Based on our proprietary data, we believe such upside can be shown in 1Q15 as its newly released games have been strong. We maintain our Buy rating and our price target of $125.00.……

EDU reported FY3Q15 results with both revenue and EPS beating consensus. It also provided FY4Q15 guidance above consensus. We attribute the solid results to the growth in the K-12 sector, especially for the strong performance of U-can middle school and the revamped Pop-kids classes. We believe K-12 may continue to serve as the growth driver in the future. We also believe the margin may expand gradually since the company has passed its significant investment phase in the last several quarters. In addition, we also believe EDU’s initiatives in internet education can add more upsides to its financials. Therefore, we maintain our Buy rating and our price target price of $29.00.……

January 1 – March 31, 2015 Operating Data Highlights:Data in this report is extracted from publicly available sources and processed with our proprietary methodology.•Hourly ACU (average concurrent users) for musical shows were up, while other channels dropped driven by the decline in game broadcasting – In 1Q15, average hourly ACU of music may increase 33.1% Q/Q, while the ACU of game broadcasting decreased significantly (Figure 1).……

January 1 - March 31, 2015 Operating Data Highlights:Data in this report is extracted from publicly available sources and processed with our proprietary methodology.•PC search queries were slightly up – QIHU’s PC search queries may increase to 460.5M in 1Q15 from 397.9M in 4Q14 (Figure 1). Measured by average daily search queries, the average traffic market share of QIHU could be 33.6% in 1Q15, up from 32.4% in 4Q14 (Figure 1). ……

December 2014 - March 31, 2015 Data Highlights:Data in this report is extracted from public resources and processed with our proprietary methodology.•Increase in fully registered courses in both winter and spring courses - According to our proprietary data, for FY4Q15 (winter courses from 12/2014 to 02/2015) and 1st half of FY1Q16 (1HFY1Q16 spring courses from 03/2015 to 05/2015), the number of fully registered courses* increased 12.1% Y/Y and 53.7% Y/Y, respectively, which was primarily driven by cities such as Guangzhou, Tianjin and etc. (Figure 1 & Figure 2). ……

January 1 – March 31, 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 1Q15, mobile app downloads for Youku Tudou’s platform was about 2,860M, which increased by 414.9M from 2,445M as of 12/28/2014 (Figure 1). YOKU’s mobile downloads are behind iQiyi at about 3,372M by the end of 1Q15 and 2,665M as of 12/28/2014. ……

2015 will continue to be a transitional year, as Sina works to transform its traditional portal business into a more vertical-centric business and with a better focus on mobile in this new internet era. Although we believe that the stock has bottomed, we may not see any meaningful upside results from the company’s transformation until late 2015 or early 2016. Therefore, we remain on the sidelines until we see meaningful results from Sina’s investments and execution. As such, we maintain our Hold rating. ……