Earnings beat expectation slightly

In 1Q16, the company recorded operating revenue of Rmb574mn （+273.14% YoY） and net profit of Rmb58.3405mn（+1,588.22% YoY）； recurring net profit was Rmb51.6856mn, up 1,411.50% YoY. The results slightly beat expectation.

Trends to watch

Three fully owned subsidiaries made significant earnings contribution. Jinyuan Technology consolidated in2015 stayed on a fast-growing track in 1Q16. The fully owned Yingmob Interaction and Cloud Space-Time wasconsolidated this year, contributing earnings significantly. The three recorded a combined recurring net profit ofRmb158mn in 2015, and Rmb207mn in 1Q16 （annualized, up as much as 31.3% YoY on a comparable basis）。

Enhancing internal integration while expanding presence so as to generate synergy and improve corecompetitiveness. The company has built up solid presence in mobile marketing by taking stakes in various entities,and these entities have their own resource advantages. The management attaches high importance to the integration ofthese entities. Currently, the three fully owned entities are still running independently.

Leadership in mobile marketing to be strengthened. The company’s Jiupai MIG Unmobi Industrial Fund realizedcapital increase, conducive to expanding the business scope in an efficient and rapid way. The company is expected tocontinue to expand and improve business deployment around the core business of mobile marketing.

Earnings forecast

Maintain 2016/17e net profit at Rmb222mn/294mn, implying EPS of Rmb0.70/0.92.

Valuation and recommendation

The company has been strengthening expansion and integration in mobile marketing, and enhancing organic growthamid the industry uptrend. Its leadership would be strengthened and its market cap has large room to grow. Lift TP by5.0% to Rmb42. It now trades at 50x 2016e P/E. Maintain BUY.

Risks

Competition increases; integration disappoints.