Below is a brief excerpt transcribed from Wednesday's edition of The Macro Show hosted by Hedgeye China Analyst Felix Wang. If you are an institutional investor interested in accessing this research email sales@hedgeye.com.
Daryl Jones: With YY (YY) taking a nice pullback yesterday, is now a good time to buy? If so, what’s your fair value price and why?
Felix Wang: That a good question.
YY has done well for us since we became positive on it. Keep in mind that YY still owns about 38% of Huya (HUYA). It could go down to 20% or so if Tencent (TCEHY) goes out and buy up to 20% more shares of Huya to become close to a majority holder.”
But as I mentioned earlier, one of the reasons why we liked YY was because of revenue acceleration and BIGO. BIGO is the overseas live-streaming opportunity for YY and it has been gaining momentum particularly in the developed markets like the US and Japan which I keep a really close eye on.
That being said, I do think much of the upside is already in the stock. I do think my fair value price is a little bit higher than where the stock is today, but definitely not 20% higher or so like it was a quarter ago.
If we had to pick a name in the social media space today, it would continue to be YY, just because they don't really have that direct exposure to Kuaishou and can hold their own ground. And they have the overseas opportunity which actually isn't really being impacted by the trade war.
All that being said, we still like YY.
