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><p>I am bullish on this stock for the following reason:</p><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

JOYY

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