Investment positives

MIG Unmobi Technology (MIG) now has three fully ownedsubsidiaries and several associates. After the disposal of itsoriginal surge protection device business, MIG has now becomea pure player in mobile marketing and is expected to entrench itsleadership as the No.1 mobile marketing player among A-sharecompetitors.

Has a presence along the entire mobile marketing supplychain through its subsidiaries and associates. MIG hasfully acquired Jinyuan (advertising agency), Yingmob(advertising platform), and Cloud Space-Time (advertisingalliance), along with equity stakes in Xiaozi (DMP & DSP),DlineAD (video advertising agency), Zhangzhong (advertisingalliance), Youcai (O2O), TAPJOY (overseas markets) and Online& Offline (instant messaging). These acquisitions will help MIGcover the entire supply chain for mobile marketing.

Created strong synergies through business integration.

As MIG’s acquired targets enjoy competitive advantages in theirrespective niche markets, there will likely be strong synergiescreated after their businesses are integrated.

M&A will likely continue. As China’s mobile marketingindustry is still very young, M&A will likely serve as a stronggrowth driver for MIG.

Financials

We expect 2015/16/17e revenue to jump 442.4%/+87.2%/+31.6% to Rmb917mn/1.716bn/2.258bn and net profit to surge1,152.7%/+331.6%/+32.7% to Rmb51mn/222mn/294mn.

Valuation and recommendation

We set our target market cap at Rmb12bn, implying 54x 2016eP/E and 41x 2017e. Initiate coverage with a BUY rating and TP ofRmb37.6.

Risks

Fiercer competition; business integration misses expectations.