Equity Analyst at CastleBay Capital Management

Jatinderpal Singh

Equity Bottom-Up

<ul><li>YY Inc' share price dropped 35% from a high of $95 last year down to ~$62 as tech stocks&nbsp;across the board got hit. This pullback allows us to enter YY at a favourable price and at a cheap valuation, which gives us a larger margin of safety.&nbsp;</li><li>I valued YY using a PEG ratio of 0.8x on a 3 year (FY15E-18E) CAGR EPADS&nbsp;of 36%, which arrives at an intrinsic value of $101 - a 63% upside from current price.&nbsp;</li></ul>I am bullish on this stock for the following reason:<ol><li>Strong revenue growth and positive and growing Free Cash Flow in a booming industry</li><li>Online education and dating segments could be a big hit for YY</li></ol>

YY Inc' share price dropped 35% from a high of $95 last year down to ~$62 as tech stocks&nbsp;across the board got hit. This pullback allows us to enter YY at a favourable price and at a cheap valuation, which gives us a larger margin of safety.&nbsp;I valued YY using a PEG ratio of 0.8x on a 3 year (FY15E-18E) CAGR EPADS&nbsp;of 36%, which arrives at an intrinsic value of $101 - a 63% upside from current price.&nbsp;I am bullish on this stock for the following reason:Strong revenue growth and positive and growing Free Cash Flow in a booming industryOnline education and dating segments could be a big hit for YY

YY Inc. - Beaten down stock with >50% upside

Head of China Research - Forsyth Barr Asia, Forsyth Barr Asia

David Millhouse

Head of China Research - Forsyth Barr Asia

Forsyth Barr Asia

Thematic (Sector/Industry)

China is proposing an overhaul of its foreign-investment rules, which some news sources are saying is "the biggest revamp of China’s rules governing foreign investment since Deng Xiaoping introduced elements of capitalism into the economy in the late 1970s." The draft looks to unify regulations overseeing foreign investment in China, scale back restrictions and begin regulating the variable interest entities (VIE) that are commonly used to circumvent foreign-ownership limits. The ministry said the rules should “promote foreign investment and normalize foreign investment management.” This represents a major step toward the formal regulation of the use of VIE structures in foreign investments in China, as well as simplifying rules for foreign companies looking to invest in China. Thoughts and implications of the changes below

 China is proposing an overhaul of its foreign-investment rules, which some news sources are saying is "the biggest revamp of China’s rules governing foreign investment since Deng Xiaoping introduced elements of capitalism into the economy in the late 1970s." The draft looks to unify regulations overseeing foreign investment in China, scale back restrictions and begin regulating the variable interest entities (VIE) that are commonly used to circumvent foreign-ownership limits. The ministry said the rules should “promote foreign investment and normalize foreign investment management.” This represents a major step toward the formal regulation of the use of VIE structures in foreign investments in China, as well as simplifying rules for foreign companies looking to invest in China. Thoughts and implications of the changes below

CHINA REFORM & ADRs:  Big overhaul of foreign investment rules in China. Thoughts and implications

China

JOYY Inc. operates a global social media platform. The Company offers platform which enables users to interact with each other in real time through online live media by creating, sharing, and enjoying a vast range of entertainment content and activities. JOYY serves customers in China.

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JOYY (YY US)

YY Inc. - Beaten down stock with >50% upside

YY Inc' share price dropped 35% from a high of $95 last year down to ~$62 as tech stocks across the board got hit. This pullback allows us to...

Jatinderpal Singh

CHINA REFORM & ADRs: Big overhaul of foreign investment rules in China. Thoughts and implications

China is proposing an overhaul of its foreign-investment rules, which some news sources are saying is "the biggest revamp of China’s rules...

David Millhouse

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)