Research Reports

December 1, 2014 - February 28, 2015 Data Highlights:Data in this report is extracted from public resources and processed with our proprietary methodology.•Increase in fully registered courses and opened courses – For F3Q15 (12/2014-02/2015), according to our proprietary data as of 2/28/2015, the number of opened and fully registered courses may grow 42.8% Y/Y, which was primarily driven by the growth in K-12 course offerings at 49.6% Y/Y (Figure 1). ……

YOKU will report 4Q14 results after the US markets close on March 19th with a 9:00 pm E.T. conference call. We don’t expect any upsides from its 4Q14 results and 1Q15 guidance. We believe that in order to stay competitive on eyeballs and traffic, YOKU must continue to invest in acquiring head content. While these head content, particularly the limited popular TV dramas and variety show titles, may generate traffic and revenue, they also cause the increase in bandwidth cost. In addition, the growth in mobile traffic also needs more bandwidth cost in 2015. Therefore, the increasing content and bandwidth cost may be a main hurdle for profitability in the foreseeable future. Therefore, we lower our estimate for 2015 and maintain our Hold rating. ……

EJ will report 4Q14 results before the U.S. markets open on March 18th with an 8:15am ET conference call. We believe the company may report 4Q14 results inline with consensus mainly driven by LEJU’s (LEJU, $7.87 – Intraday, Hold) e-commerce sector. However, we believe the 2015 full year guidance may be challenging, as the real estate market is soft and may continue to be soft in 2015. In addition, EJ’s investments in new businesses such as Fangjinsuo (房金所fangjs.sina.com.cn), Shihui (实惠) and www.fangjiadianping.com (房价点评) may still be too early to make revenue contributions, and the investment may continue to pressure margin. As such, we maintain our HOLD rating until we see market stabilization and new businesses begin to make contributions. ……

October 2014 – February 2015 Operation Data Highlights:Data in this report is extracted from publicly available sources and processed with our proprietary methodology.•Number of air TSPs continues to increase in 4Q14 and 1Q15 – The number of air ticket travel service providers (TSPs) on Qunar continued to increase in 4Q14. Average number of air ticket providers grew 61% Y/Y in sampled routes, or Q/Q growth of 11% in 4Q14. In January and February of 2015, the average number of air ticket providers grew 63% Y/Y (Figure 1).……

LEJU will report 4Q14 results before the U.S. markets open on March 18th with a 7am ET conference call. It is highly likely that the company may provide at least in line or better 4Q14 results compared with consensus driven by the e-commerce sector. The growth in e-commerce is mainly due to expansion. However, we believe its expansion in 2015 may face the headwinds of a weak real estate market, as home buyers are taking a wait-and-see approach to home purchase, which has already led to a drop in transaction volumes in early 2015. Therefore, we believe the current consensus in 2015 at 26.6% Y/Y growth is not conservative and the upside may be limited. As such, we downgrade our rating from BUY to HOLD. ……

HMIN will report 4Q14 results on Wednesday, March 11, 2015 after the market closes followed by a 9pm ET conference call. We expect weaker 4Q14 results and 1Q15 guidance due to the softness of China’s economy. As the softness in the general economy is likely to last for a while, we don't expect stronger-than-expected 2015 full year guidance either. As such, we downgrade the stock from BUY to HOLD due to such general economic weakness.……

HTHT will report 4Q14 results on March 10, 2015 after the market close followed by a 9pm EST conference call. We believe HTHT could report at most in line 4Q14 results based on the company’s preliminary operating results. We also believe HTHT’s 1Q15 guidance will be largely in line with consensus due to slightly better RevPAR in the first two months of 2015 offset by the currency depreciation. Upside to the full year guidance for 2015 could come from its Accor transaction if it comes earlier in 4Q15. HTHT is currently trading at a premium to its peers and we believe it is fairly valued at its current price. As such, we maintain our Hold rating.……

Weibo will report 4Q14 results on Tuesday, March 10, 2015 after the markets close followed by a 9pm ET conference call. We believe the company is making significant improvement in its monetization initiatives, which is driving fundamental growth. As such, we believe that these initiatives plus strong e-commerce activities and SME growth may propel 4Q14 results better than consensus expectation. For 1Q15 guidance, due to seasonality and higher than expected currency exchange loss, we expect revenue guidance to be at least in line with the Street. We believe Weibo is on the right track to realize its revenue potentials. We maintain our BUY rating and price target of $24.00.……

XUE reported largely in line 4Q14 results and provided slightly higher 1Q15 guidance than consensus. We believe the company may be in the process of gradually recovering from the worst and we may see meaningful results in 2H2015. The major issue with the business in the past was the stagnation in user growth.  To cope with that, XUE recently formed a joint venture with QIHU and established a cooperation with BIDU to drive enrollment growth. With better user growth, we believe the company may reduce promotions and discounts and may eventually increase price, which can be positive at least to margins. However, we believe the meaningful outcome may show toward 2H2015, and we maintain our Hold rating before we see meaningful results in the execution. ……

YY will report its 4Q14 results on Thursday after the market closes followed by an 8:00 pm ET conference call. We are expecting YY to deliver 4Q14 results in line or slightly better than consensus primarily driven by the increase in musical and dating show business. However, according to our proprietary data, its web games and game broadcasting declined significantly in January and February, which may limit the upside to its 1Q15 guidance, excluding the possible revenue contribution from the recent acquisition of edu24ol.com. Going forward, we believe YY may have to invest more in its newly acquired education business as well as investing for new growth drivers in its online entertainment business, which may lead to uncertainties in revenue growth and margin. Therefore, we maintain our Hol……

QIHU will announce its 4Q14 results before the market opens on March 10, 2014 with a conference call at 7:30AM EST. Due to the change in its business, we are making downward adjustments to our 1Q15 and full year 2015 estimates. The adjustments include: 1) lower revenue from PC-based web game business and paid links; 2) higher revenue from search monetization; 3) newly added enterprise security revenue. At this point, we believe most of the negatives have already been priced in and the downside risks can be limited. However, the upside potential can be significant driven by enterprise security, PC search and mobile initiatives. Among these three, the only potential source of new growth is mobile initiatives, as enterprise can be used to offset the decline of web games and upside from PC sea……

XUE will report 4Q14 results after the market closes on Wednesday, March 4th followed by a 7:00 p.m. ET conference call. We don’t expect any surprises for both 4Q14 results and 1Q15 guidance. The company underwent structural changes in 2014; major changes include eXueda and small group class initiatives. While we believe these initiatives are fundamentally positive to the company’s development, they may not bring meaningful financial benefits. Therefore, we expect the company to continue to come out with new initiatives to the business in 2015 to drive growth. As such, we maintain our Hold rating before we see new initiatives and associated execution in 2015 and 2016. ……

January 2015 Data Highlights:•Kugou Technology is the leading player with about 27% market share. Kugou Technology hits the #1 position with its major product, Kugou Music (酷狗音乐). Kuwoo Technology (北京酷我科技有限公司) followed Kugou with a 13% market share, and is well known for its app, Kuwoo Music (酷我音乐). Tencent and Baidu took the positions of #4 and #7, respectively, according to our proprietary data. Baidu’s leading position was mainly attributable to its acquisition of TTPlayer (千千静听). The mobile music industry is mainly comprised of three sectors, music player, music radio and Karaoke (Figure 1 & Figure 2).……

•Increase in number of daily actively viewed content – During the period of 01/01/2015-01/25/2015, the total number of daily actively viewed content was 54.5K or 1.7% Q/Q from 53.6K in 4Q14 (Figure 1). Of that, the number of actively viewed content titles on Youku Tudou’s platform was 20.3K, followed by LeTV at 11.0K, iQiyi/PPS at 8.9K, Tencent at 7.8K and Sohu at 6.6K during the period of 01/01/2015-01/25/2015 (Figure 1).    ……

January 2015 Data Highlights:•Sina dominates the microblog app market with 88.7% market share measured by cumulative downloads - We believe Sina Weibo is the most important mass media channel for news distribution and acquisition. According to our proprietary data, Sina Weibo leads the market with 88.7% market share, followed by Tencent with 10.9%, as measured by the total cumulative number of app downloads while the downloads for other microblog providers are not meaningful at all (Figure 1 & Figure 2).……

•GMV for cosmetics curated sales declined Q/Q in 4Q14 due to last phase of business transition – GMV of cosmetic curated sales declined 1.2% Q/Q in 4Q14 (Figure 1) driven by volume decline of 11.0% Q/Q, ASP increase of 11.1% Q/Q (Figure 2 & 3) and the number of SKUs decreased 5% Q/Q (Figure 4). We believe the softness in curated sales was attributable to the last phase of its business transition that moves beauty products from marketplace to merchandise model. Such transition reduced some brands and SKUs on Jumei.com. According to our proprietary data, about 179 brands were removed in 4Q14 compared with that in 3Q14. ……

October 1, 2014 – January 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.•Y/Y growth of direct sales GMV may accelerate in 4Q14 – Our proprietary data showed that JD’s GMV of online direct sales may grow 82.3% Y/Y in 4Q14 to RMB 50.1B (Figure 1). Of that, GMV for electronics and home appliance may grow 87.9% Y/Y to RMB 44.2B, while general merchandise and others grew 49.5% Y/Y to RMB 6.0B. On a Q/Q basis, the accelerated GMV growth was driven by volume growth offset by ASP decline. ……

BIDU will report 4Q14 results on Wednesday, February 11th after the close of the market with an 8pm EST conference call. We believe that BIDU may report 4Q14 revenue better than consensus, driven by continued strong advertising growth from mobile. However, we don’t expect any upsides in its margins in 4Q14 due to the investment in its LBS business, which started in 3Q14. Even though BIDU made a significant turnaround in its mobile business in the last year and a half, it did not seem to be enough in the mobile era. In the mobile world, BIDU needs to find a way to register users, which we believe is the driver behind the company’s focus to invest in location-based services (LBS) in 2015. As such, 2015 can be an investment year for BIDU. In addition, we believe that as BIDU’s mobile search b……