Conclusion    3Q17earnings came in nearly 100% higher than both MQ and consensus dueto the strength in job revenue and lower than expected S&M expenses. Jobrevenue growth accelerated from 50% in 1H17to 60+% yoy in 3Q17, whilehousing revenue grew 20+% yoy amid a housing market cool-down. We retainour long-term bullish view of 58’s local ecosystem and expect 58to continueto show operating leverage in 2018-19. We maintain our FY17-19revenueforecast but raise our 2018-19earnings estimates due to non-operating items.We maintain our Outperform rating and US$90TP based on 35x 2018PE.    Impact    3Q results and 4Q guidance strong beat. 3Q17revenue increased 33%YoY to Rmb2.7bn, beating our/consensus by 3%/7%, on the back of strongerjob category revenue growth. The number of paying accounts increased 26%yoy to 2.6m in 3Q17. Non-GAAP OPM improved 11ppts yoy to 24%, primarilyattributable to the control over S&M expenses. Non-GAAP net incomereached Rmb479bn, 98% higher than consensus estimate of Rmb241m. Thecompany guides 4Q17revenue to increase 25-30% YoY to Rmb2.63-2.73bn,3-7% above consensus estimate of Rmb2.56bn.    Job growth accelerated and housing was better than expected. Jobrevenue growth accelerated to 60+% YoY in 3Q17from c.50% YoY in 1Q17.We expect an expansion of job revenue by c.50% in 2018. 58in the samecounty achieved 1m DAU and now covers 3,000counties. The company istargeting an increase of coverage by 10times to 30k counties in 2018.Despite the high base in 3Q16and soft transaction volume in the housingmarket, the housing vertical generated better-than-expected 20+% yoyrevenue growth in 3Q17. Looking to 2018, we expect revenue to grow 27% toRmb12.7bn.    Margin expansion should continue. 3Q17non-GAAP OPM improved    11ppts yoy to 24% as the advertising expense was prudently controlled andthe synergies of the merger with Ganji kicked in. In addition, 58’s customerare becoming more online self-served and customer services becoming moreautomated. Despite an increase in R&D personnel being expected in 2018,we believe 58will further cut sales headcount in 2H18onwards. We estimatenon-GAAP OPM to expand from 10% in 2016to 21%/24% in 2017/18.    Furthermore, equity loss related to 58Home will be largely removed in 2018and help non-GAAP net margin to expand from 15% in 2017to 21% in 2018.We estimate Rmb679m equity loss in 2017.    Earnings and target price revision    We raise 2018/19EPS by 13%/9%, largely due to non-operating items, andmaintain our TP of US$90based on a lower FY18E PER of 35x from 40x dueto the lower earnings CAGR.    Price catalyst    12-month price target: US$90.00based on a PER methodology. Catalyst: Margin expansion, jobs growth    Action and recommendation    Reiterate OP.

声明：如本站内容不慎侵犯了您的权益，请联系邮箱：wangshiyuan@epins.cn 我们将迅速删除。