Resuming_Coverage_on_YY_86Research

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1、ResumingCoverage:YYYYInc.(YY):-Q3EarningsRecapandResumingCoverage;BuyonBroad-basedTop-lineGrowthandMarginExpansionValuation:InvestmentConcerns:WevalueYYat$58perADS,whichisbasedon12x2017non-GAAPEPSYYhasbeenlargelyabsentfromtherecentrapidgrowthofsocialplus80%of2016

2、year-endnetcashbalance.#86’sviewonYY:buyonbroadcasting.Severalnewplayers,includingInke,MOMO,andWB(viabroad-basedtop-linegrowthandmarginexpansionYizhibo),havebeenperformingstronglysincelate2015.ComparedtoYY,InvestmentTheses:thosecompetingplatformshavehosts&userswhoa

3、remorecasualandWebelieveYY’sinvestmentcaseiscompelling.Astheindustrylooselyorganized.AlthoughYYlauncheditsownsocialbroadcastingappincumbent,YYhasanimpressivetrackrecordinefficientlyacquiringandMEinresponse,theapp’smarketshareisfairlysmall.YYMusicmaymonetizingusers

4、withlivebroadcastingcontent.continuetoexperiencepressureonGPM.YYemploysatieredpayoutThemostdifficulttimeisnowbehindYY.Monetizationonmobileisscheme,whichassignsthehighestpayoutratiotothetop-grossingbracketprogressingwellwithbothpayingratioandARPPUrising.Game(abovea

5、certainthreshold).Morehostsmovingupintothetopbracketarebroadcastingandeducationbusinesses,bothdeepinlosses,aremovingleadingtohighercontentcostasapercentageofrevenue.steadilytowardsprofitability.Webgamedeclineisweighingonrevenuegrowthandmargins.SinceTheconcernsove

6、rtherecentriseofsocialbroadcastingappsmaybewebgamerevenueisbookedonanetbasis,webgamesisthesegmentoverdone.Investorsmayhavemisunderstoodthecompetitivedynamicswiththehighestmargin.Duetoindustryheadwinds,webgamesareandoverestimatedtheimpactonYY.expectedtoaccountfor2%o

7、ftotalrevenuein2018,downfrom13%inOverthelongertimehorizon,webelieveYY’suniqueecosystem,2015.characterizedbystrongemphasisoncontentqualityandcommunity-basedCriticalThinkingonYY:culture,willremainthekeytopromisinggrowthandmonetizationinIsYYlosingouttoup-and-comingr

8、ivals?ThecombinationofmobileChina’slivebroadcastingspace.connectivityandvideo-enabledsocialmediahassparkedtheexplosivegrowthofamultitudeofstart-u