 Good day fellow investors. Now we have already covered one Chinese growth stock ZTO Express and now I'll discuss another very, very interesting Chinese investment, YY Inc. So YY com is an online social entertainment platform that where people create content, game, talk shows, singing, teaching, whatever and the audience engages in consuming that content. So this would be the formal definition, the informal definition is it's a bunch of channels where scanty cat teenage girls entertain their audience and the interaction is monetized through ads, gifts, subscriptions etc. For example you can buy a sunflower for 1.5 cents or you can also buy a virtual Lamborghini that costs you 14 bucks. Now when you look at the picture you can say is this a serious investment? Is this something I would want to be exposed? Well that's up to you. But the fundamentals which I will discuss, the industry, the growth industry, the exposure to China might make you think otherwise. What's very important is YY's average active monthly user spends two days, 48 hours on YY. 56% of the company is live broadcasting, then gaming, online dating, online games, online education and other various all online activities. One example is huya.com where which is a gaming platform. For now it's still losing money but the user payment ratio is 4% for the YY live broadcasting and between just 1 and 2% for huya. So there is plenty of room to grow. What's significant about YY is that's one of the longest operators in the Chinese online video streaming and it has the highest revenue. The second competitor is extremely fast growing Momo which we'll talk in another video. What's also significant is that the market is very segmented. You can see YY revenues is 15% of broadcasting, YY game broadcasting is also 50% but there are many other platforms where people put content and consume it. However what's very significant is the growth. The growth has been triple digit in the last two years and then it is expected to grow at 50% and then 30% in the next two years. So it's expected to double in the next two years. So we are looking now at the market that will double in the next two years. China is switching from 3G to 4G. It will switch to 5G so many more mobile users, many more mobile power and of course China has such a large population where people really use such platforms. I have asked a few Chinese friends, former students of mine, what do they think? They say of course there is a lot of competition. It's not serious but I have a few channels that I watch regularly on YY. This was the most common answer so really people are watching it and consuming content. What do people do on the growth market? Look at concerts, the scanty cat girls, other game playing sports and other things. So really consuming content online. Back to YY. You can really see how it was a growth story quarter by quarter and now the game Huya Broadcasting is also significantly growing. More than 50% from Q3 2016 to Q4 2014. This is especially related to mobile users. That's a new growth story. On the fundamentals the operating margins are stable. They have been down as Huya was growing but now are pretty stable and growing. Earnings per share have gone from earnings per share have quadrupled in the last few years which is excellent and we can expect the growth to be similar in the future. What's also very important for such an online gaming company dilution is minimal. You can see shares have been around 60 million for the last five years while book value per share has been constantly increasing and now is around 14 dollars per share. What's extremely interesting is that the price earnings ratio is just 12. So we have a company that has been growing 50% so we have a company that has been growing. 37% in revenue in the last quarter compared to the previous quarter. 114% earnings growth and we have a price earnings ratio of 12. Price book ratio 3.8 still relatively good for an online platform. Price to sales just 2.7. It looks like grocery store and price to cash flows 9.9 which is very good. Now how can such a company have such a low price earnings ratio? Everybody is afraid about the competition. They fear that people will leave. It's not a serious company. How can we invest in it? The stock price has doubled in the last year but given the industry growth we really should look at something like this to hold in our portfolio. There are some risks of course regulatory environment and constraints. If you violate government regulations you can easily get shut down. Of course this usually hits smaller platforms. I think YY will manage to navigate these issues because it's the biggest platform and properly check what's going on. The second risk is MOMO another platform that's growing at 300-400% per year. I'll be talking as I said in another video and investors think that it will push up and investors think that it will push out YY. However YY is still growing so we have negative market sentiment that lowers the stock price in relation to fundamentals but the fundamentals are still growing and doing well. Very interesting value investment situation. What can happen? Now the price earnings ratio is 12. If the company doubles its revenue and earnings in the next two years as the market grows perhaps earnings will grow even faster then we are looking at I don't think the price earnings ratio go below 12 or 10 for a company that can double in the next two years so we are looking at a double in stock price. If we then attach a price earnings ratio of 20-25 which would be the norm in this market we are looking at a forebager of a company just from as is and if it follows market share. If all these other platforms get closed down more content and more users will go to MOMO and YY. So it's a very interesting risk reward story. Let's say even that earnings flatten out revenues flatten out we are still falling back to price to earnings ratio of just 12 extremely low price to cash flow of 10 so 10% return cash return on the current stock price. Very good value margin of safety in comparison to the upside. So to conclude another growing Chinese company competition fears but of course there is going to be competition as it's such an interesting growing market but the downside risk seems very low in comparison to what can happen if the company grows and hits estimated targets and grows just alongside the market. If the Huia platform explodes then we can see really also YY's stock price explode. So we are again talking about high growth companies but with good margins of safety which China offers. Looking at evaluations I would compare it to Facebook after the IPO. Everybody was afraid of slower growth and look what has happened so you never know with such companies. And there are many viewers who probably know much more than me about YY and would like to share their thoughts please leave a comment below. We'll try to learn as much as possible to see how to react and how to invest if we invest in such companies. Thank you for watching and I'll see you in the next video. We're just two down still 14 Chinese companies to go and of the total 16 I'm sure that you will find a few of them who will fit perfectly for your growth Chinese emerging market portfolio exposure. See ya.