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Interactive income

Investment from 4,600 USD

Expires: 18/04/2019

Expected
yearly returns
121%

Momo Inc. is one of the leading mobile social networks in China, allowing users to build and expand their network of contacts based on their interests and location (the latter function helps to determine in real time how far the interlocutors are located from one another). China accounts for 100% of Momo Inc.'s revenue, while 84% of the company's revenue comes from services related to online video broadcasts (bloggers, etc.), 6% from advertising, 3% from mobile games, 7% from paid subscriptions, etc. Momo Inc. was founded in 2011 and currently has around 99 million active users. The company's largest shareholders are BlackRock (3.95%), Alibaba Group (3.06%), Morgan Stanley (1.21%), and UBS (0.68%).

Growth factors:

  • Continued revenue growth due to:
    • further commercialisation of services. In particular, there remains a significant potential for growth from advertising, which currently makes up only 6% of revenue.
    • an increase in the number of users. In 2017, the number of users increased by 22.2% (YoY) (to 99.1 million at the end of 2017 from 81.1 million at the end of 2016).
    Revenue increased by 138% (YoY) in 2017; by 313% (YoY) in 2016; and by 199% (YoY) in 2015.
  • Continued growth in profit margins: return on equity increased to 38.18% in 2017 (from 26.35% in 2016), the return on assets increased to 30.75% in 2017 (from 22.14% in 2016). That said, the ratio of net profit to revenue is 24.4%.
  • Momo Inc.'s share price is trading with the following discounts compared to peers:
    • 50% in terms of P/E;
    • 17% in terms of EV/Revenue;
    • 34% in terms of EV/EBIT.
  • Minimal risks to financial stability due to the fact that the company does not have a debt burden: the ratio of total debt to total assets is 0%. At the same time, the company has significant liquidity reserves: the cash ratio has a high value at 4.08.

Investment period ends:
18/04/2019

Expected yield is calculated according to 90% capital protection and the price of the base asset at expiry, equal to 52 USD.

Technical Analysis:

Momo Inc.'s share price has been demonstrating an upward trend since the end of 2017, and has already broken up the 50-, 100- and 200-day moving averages and exited the Ichimoku cloud upwards. Significant technical levels: 45.65; 39.78; 36.49; 33.58; 30.28; 27.90; 24.93; 22.54; 19.70; 16.73; 12.75; 9.30.

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