UPDATE: Citigroup Initiates YY at Buy; Unique Social China Play

Citigroup initiated coverage on YY

with a Buy rating (High Risk) and a $22.40 price target. Citigroup said, "YY is a globally unique social communication and engagement platform in China that facilitates real-time online group activities via voice, text and video, allowing users to create and organize groups of varying size to participate in a wide range of online group activities such as karaoke, online games, music and other live performance dynamics. We project CAGR growth (‘11-14E) of 91% for revenues and 117% for non-GAAP NI. Catalysts to come from KPI outperformance, education monetization, mobile scaling. Our DCF-based target price of US$22.4, while appearing rich on PE (29x ‘13E), looks well supported by an implied PEG of 0.5x." YY closed at $13.65 on Thursday.