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VODone Limited(00082.HK)

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  • 1. VODone Limited(00082.HK) Robust earnings growth on rising lottery service Initiate BUY VODone Limited is the first and only listed domestic online video company in Hong Closing price (HK$) 1.72 Kong stock market; played as a new generation of media engine with cross-platform 12M Target price (HK$) 4.85 52 weeks H/L(HK$) 0.07/1.94 operation strategy. In the past, income was mainly generated through advertising fees based on its Broadcasting Union System (BUS), while in the near term, the Key Data newly launched mobile lottery service is expected to help VODone step onto profit Market cap (HK$’ Bn) 3.4 stage。We initiate it with “BUY”,12 month target price of HK$4.85。 Share outstanding (Bn) 2.06 FY10F PE (x) 18.0 Sector consolidation strengths VODone competitive advantage. Tightened policy on FY10F PB (x) 6.4 FY10F ROE (%) 35 copyright raises company competitiveness given it is one of the few that have obtained Major shareholder Lijun Zhang full list of online video operating licenses. The state-owned-enterprise (SOE) background further benefits information disclosure and capability to provide exclusive contents. HSI and Share Performance (%) Economic recovery bolsters advertising revenue. China has showed gradual 1M 3M 12M recovery sign in the last two quarters, which will positively impacted on VODone HSI +4.25 +14.78 +48.82 VODone -3.89 +38.40 +1430.9 advertising fees and income. The BUS advertising fees accounted for 98% of total Source:Bloomberg, Celestial Securities revenue in 2008, and the 1H2009 result was almost five times that of 2H2008. *As at 21 October 2009 1 Year Price Chart Mobile lottery - the critical unit that determines profitability. The company’s newly 2 HKD launched lottery business has already created stunning turnover of HK$5.7million sales in 82.HK 1.8 1.6 two months. Given over RMB100million China lottery market, we are optimistic on its 1.4 future growth, and strongly believe it will lead company to profit. 1.2 1 0.8 0.6 Initiate BUY with 12-month TP of HK$4.85. We expect VODone to achieve positive 0.4 0.2 earning of HK$160mn and HK$530mn in 2009 and 2010; and EPS to stand at HK$0.27 in 0 2010, a 231% annual increase comparing to HK$0.08 in 2009. We recommend BUY with 11/08 12/08 02/09 03/09 04/09 06/09 07/09 09/09 10/09 12-month TP of HK$4.85 against 18.0X forward PE for 2010. Source:Bloomberg, Celestial Securities Key Financials Year Ends 31/12 2007A 2008A 2009F 2010F 2011F Turnover (HK$’ M)) 58 66 937 1,734 2,700 Net profit (HK$’ M) -65 -124 160 530 951 EPS (HK$) -0.04 -0.07 0.08 0.27 0.48 Celestial Securities EPS Growth (%) NA NA NA 231 79 Michelle.yang@cash.com.hk PE (X) NA NA 21.1 18.0 10.0 22/10/2009 ROE (%) -10 -20 16 35 39 Source: VODone, Celestial Securities -1- VODone Limited(00082.HK)
  • 2. 22 October, 2009 Sector Renovation & Consolidation in 2009 Online Video Market: According to China Internet Network Information Centre (CNNIC), as of June 2009, online video population have grown to 222 million; nevertheless, video websites continue to face challenges in profitability with singular business model; advertising income remains the major revenue contributor, and firms are under great pressure to cover significant cost resulted from content acquisition and bandwidth. Especially in 2008, the sector experienced a series of restructures under financial crisis; majority of industries cut marketing budget, which negatively impacted on advertising income; as of Figure 3, the sector only posted RMB46.5 million advertising revenue in 2008 Q1, significantly lower than the latest Q1 when macro condition was gradually improved; and progressing to 2009 Q2, the sector enjoyed 57% year-over-year (yoy) growth by achieving total advertising revenue of RMB 122 million. The disrupted investment sentiment in 2008 also worsened websites’ financing needs and therefore business growth. It was a year of sector consolidation that upgrades the regulation system and emerges new business lines. a) Content and information copyright issue received a lot of attention last year, and by March 2009, the State Administration of Radio Film and Television (SARFT) closed down 162 websites without legal licenses. This brings competitive advantage to VODone, which is one of the few companies that have obtained all the relevant and necessary licenses in internet, media and telecom from SARFT and the Ministry of Information (MII). b) Diverse strategies: many websites start to add new business lines such as web games to improve their income condition. For example, Joy.cn is one of the first movers that utilizes content copyright by exclusively owning the online broadcast right at the first place, and later distribute it to other video websites; however such model was quickly copied by competitors and resulted in sky rocketing price of the content. In contrast, VODone follows an alternative business model with a comprehensive range of products and services that relates to its key theme of video. c) Future Outlook: We are optimistic about the sector outlook in the next few years on the back of 1) recovering economic condition; 2) continuous robust growth in user population; and 3) stabilized business model. -2- VODone Limited(00082.HK)
  • 3. 22 October, 2009 Figure 2 – Online video market size Figure 3 - Total market advertisement revenue (RMB,Bn ) 6 70% 140 (RMB,mn) 120% 122.1 60% 120 100% 5 103.3 101.5 99.9 50% 100 4 80% 77.7 40% 80 3 60% 30% 60 46.5 2 20% 40% 40 1 10% 20 20% 0 0% 2006 2007 2008 2009E 2010E 2011E 2012E 0 0% 2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 Income from Individuals Income from Enterprise Total YoY Grow th (RHS) Ads Revenue YoY Grow th (RHS) Source: iResearch Source: Analysys International Figure 4 – Market revenue margin Figure 5 – China internet and online video market population 2000 (RMB,mn) (RMB) 10 120% 80% 1800 9 70% 100% 1600 8 60% 1400 7 80% 50% 1200 6 60% 40% 1000 5 30% 40% 800 4 20% 600 3 20% 10% 400 2 0% 0% 200 1 2005 2006 2007 2008 0 0 Online video population w eight (RHS) 2006 2007 2008 2009E Online Video User YoY Grow th Total Revenue ARPU (RHS) Total Internet User Grow th Source: iResearch, Analysys International, CNNIC Source: Analysys International, CNNIC VODone – The New Media Engine As the first listed online video company in China, VODone plays a dual role of “service provider (SP)” and “content provider (CP)” under four business units. The key income model of VODone includes advertising income and service fees, mobile value added service (MVAS) and programme production. -3- VODone Limited(00082.HK)
  • 4. 22 October, 2009 Figure 6 – Business unit and 1H2009 revenue CP & SP integrated business model brings “3E” effect: Efficient Advert delivery Enriched User Experience; Advertising Service: Enhanced Brand Loyalty HK$ 64,380k Lottery: HK$5,675k Telecom VAS: HK$ 8k; Programme production: HK$182k; Advertising income: HK$ 21k; S o u r c e : V O D o n e , Celestial Securities Figure 7 – VODone SWOT Analysis Strength Weakness Full list of required license for online video operation; SOE background supports copyright acquisition and capital Lower traffic in comparison to other online video sharing requirements; leaders; Strong management track record, and substantial group Mobile video application is still at an early stage subsidiaries’ resources; Cross-platform synergy, and unique contents Newly introduced products and acquired business (e.g. Cost control and marketing productivity; Domouse) expand user base and turnover channel; Low industry entry barriers if licensing rules are relaxed Mobile lottery growth Threat Opportunity Source: Celestial Securities -4- VODone Limited(00082.HK)
  • 5. 22 October, 2009 Current “CASH COW” – VODone BUS Officially launched in February 2007, it is a united online video advertising broadcasting platform, which delivers client’s advertisement to a portfolio of member websites, including its own web portal. It is a similar system to Google Adsense, but more personalized and flexible. VODone BUS features three major differentiations: 1) Richer contents: rather than Google’s text format advertising, BUS supports a variety of advertisement formant, including video, text, picture etc., enriching the end result; 2) Flexible price plan: advertisers could freely choose from three different price plans, cost per view (CPV), cost per click (CPC) and cost per hour (CPH), depending on their needs and budgets; 3) Optimal delivery: BUS sorts member websites based on their 1) categories, e.g. Financials, Education; and 2) locations, as some products have a centralized local target audiences; and these ensures accurate delivery and maximizes advertisers’ resources. As of April 2009, daily page views of VODone BUS reached 150 million, with 25 million broadcasts covering over 2 million websites across China; by the end of 2008, BUS produced HK$ 64,601k of advertising service revenue, which accounted for 98% of total. VODone BUS Outlook: We believe this part of business will continue to expand in the next 2 to 3 years time given accelerated growth in the market size. In 2008, China web advertising service registered total revenue of RMB 2.17 billion, posted over 100% annual growth. By 2011, the sector is expected to achieve attractive income of RMB 8.56 billion. VODone, as one of the leading players in the market, will benefit from such a big pie through its built reputation and knowledge. Figure 8 – China Web Advertisement Union Market Size Figure 9 – VODone BUS Financial Performance 9 (RMB,bn) 120% 250,000 (HK$,k) 140% 8 120% 100% 200,000 7 100% 6 80% 150,000 80% 5 60% 4 60% 100,000 3 40% 40% 2 50,000 20% 20% 1 0 0% 0 0% 2006 2007 2008 2009E 2010E 2011E 2007 2008 2009E 2010E 2011E Market Size YoY Grow th (RHS) Revenue YoY Grow th (RHS) Source: iResearch Source: VODone, Celestial Securities -5- VODone Limited(00082.HK)
  • 6. 22 October, 2009 VODone Mobile Lottery – The Rising Star VODone announced entry into China’s mobile lottery business on April 2009, and progressing mobile VAS onto another stage of development. It is the first company that has been authorized by Heilongjiang Welfare Lottery Centre (WLC) to offer lottery service for mobile end users in China with initial agreed terms of 96 months. Figure 10 – VODone mobile lottery operating process Free Account Registration Account is bundled with mobile phone Top up account in order at VODone web portal and personal identity number to make payment Prize Check result on Live or Place a bet online or Collection through personal account through mobile text Source: VODone, Celestial Securities China Lottery Market Between 1995 and 2008, China lottery market has gained compound annual growth rate (CAGR) of 23.6%, the country has enjoyed a much higher growth rate than global average of 18%. In the first seven months of 2009, lottery market saw RMB 73.6 billion total sales with 21.24% yoy growth; and welfare lottery maintained as the main type of interest. The significant market rise is supported on the back of 1) strong buyer base; so far, China lottery population is estimated to excel 100 million; 2) improvement in information technology; the first computer lottery game was issued in 1994 in Shenzhen, but not until 2003, when such form was fully commercialized nationally. In 2000, computer welfare lottery achieved RMB 5.67 billion sales, which was greater than instant-draw lottery for the first time in history; and the emergency of advanced technology has supported sales acceleration since then; 3) policy influences; Chinese government plays an vital role in lottery sector given its kind contribution to the state’s fiscal package. There are a number of games that have been restricted in the past, for example, the large prized instant-draw games were forced to close after the Xi’an fraud case in 2004, which then incurred distinct decline in sports sales. In December 2007, central government announced the decision to suspend the online lottery trade; such act is likely to benefit the mobile lottery growth since player will shift from online purchase to mobile as a more convenient alternative. The latest effort by the state council to create a healthier market -6- VODone Limited(00082.HK)
  • 7. 22 October, 2009 Environment is the “Lottery Management Regulation”, which taking effective from 1st July 2009. The new regulation emphasizes in legitimacy of lottery issuance and fund management, which in turn placing VODone in a more vigorous condition. Figure 11 – China lottery sales by categories 1995 -2008 120,000 (RMB,mn) CAGR=21.24% 2005: Introduction of new computer games 100,000 and high frequency games such as Keno and Video Lottery Terminal 80,000 2004: Xi'an BMW Sports Lottery Fraud 60,000 case; government restricted large prized instant-draw games 40,000 1997: Asia financial 20,000 crisis 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Welfare Lottery Sports Lottery Source: Ministry of Finance, Ministry of Civil Affairs VODone is benefited from first mover position, which is able to quickly catch the market attention and speed up learning curve. Within two months as to the end of June, VODone received HK$ 5.7 million revenue from lottery business; while total registered lottery accounts have hiked to 1 million in the latest statistics, supported by recently launched “Constant lottery”. We expect higher sales will be driven by growing traffics as well as higher margin. Based on past few months performance, we estimate VODone’s average lottery sales per person per day (pppd) will reach RMB 1.9 in 2009, which is about 60% lower than national level of RMB 3.0 pppd; demonstrating considerable extent of marginal improvement in the future. Given great potentials of mobile lottery market, a number of players have followed after VODone since August this year, including Taobao, TLT Lottotainment (08022.HK) and Motorola. However, we are positive on VODone lottery leading position on the back of more interactive community and mobile value added services (MVAS). Apart from traditional web portal lottery draw and text message notice, VODone is also capable of lottery video broadcasting and online programming in order to enhance information delivery pace and therefore user experience. And the latest cooperation with china-lottery.net, the designated media under the -7- VODone Limited(00082.HK)
  • 8. 22 October, 2009 Ministry of Civil Affairs, to provide prompt information on lottery market further strengths VODone unique position. VODone Lottery Outlook: Given fast growing lottery population and prevalence of mobile phones, together with the technical support from 3G network, we believe mobile lottery will be the key turning point to help VODone achieve positive profit from 2009. The number of registered accounts is estimated to arrive 1.9 million in 2009, 3.0 million 2010 and 3.9 million 2011 respectively. Figure 12 – VODone lottery sales and margin forecast 2009 -2013 3 (HK$) (HK$,k) 7,000,000 6,000,000 2.5 5,000,000 2 4,000,000 1.5 3,000,000 1 2,000,000 0.5 1,000,000 0 0 2009E 2010E 2011E 2012E 2013E Lottery sales (RHS) Daily lottery margin per person Source: Celestial Securities -8- VODone Limited(00082.HK)
  • 9. 22 October, 2009 Tencent(0700.HK)’s Success - An implication for VODone We believe VODone will follow a similar track to Tencent given their similarities in business development and overall market environment: 1) Massive internet user base in China; internet population have surged to 298 million in 2008; 2) Industry nature: both provide internet services and focus on leisure and entertainment products; 3) Business development track: Mid-stage: MVAS; Late-stage: IVA + MVA + Advertising. Tencent was initially incorporated in Nov. 1998, and officially launched the instant messager (IM) application, Tencent QQ, in 1999; since then, QQ experienced phenomenon growth in the number of user account. By Dec. 1999, there were only one million total registered accounts, and within 6-month, it surged 900% to 10 million accounts. Nevertheless, large user base did not result in sound profit for Tencent before 2001. Under technology limit and unclear business models, income for internet companies were constrained to advertising, since they were vulnerable to charge online messaging services. This is very similar to what online video companies are experiencing, that new business model is required to flourish the financial statistics. Year 2000 was a milestone when cross-platform corporations between telecommunication companies (Telcos) and internet companies threshed the new stage of communication. From mid-2000, Tencent started to partner with major mobile operators to promote its MVAS. For example, “Mobile QQ”, a free mobile IM software that will be charged for activation on monthly basis and no further payment on QQ communication, users can send free messages anywhere and anytime through phones; and “mobile phone-QQ bundling” service, which bundles mobile phone number with QQ number for free, and charges any messages sent from mobile phone to an QQ account, but not vice versa. MVA brings Tencent: 1) Expanded accounts: Within the 6 months of launch, total registered QQ account hiked 400% to 50 million in Jan. 2001, and in March 2002, the user population out broke 100 million. The growth becomes moderate along with matured products and services over time. -9- VODone Limited(00082.HK)
  • 10. 22 October, 2009 Figure 13 – Tencent registered user 600 (mn) 1000% 492.6 900% 500 800% 369.7 700% 400 600% 300 256.1 500% 400% 200 151.3 300% 93.2 200% 100 50.0 10.0 100% 1.0 0 0% Dec,1999 Jun,2000 Jan,2001 4Q2001 4Q2002 4Q2003 4Q2004 4Q2005 Registered IM user YoY Grow th (RHS) Source: Tencent, iResearch 2) Profitability: Tencent became the first profitable internet corporation in June 2001. For four years in a row from 2001, Tencent MVAS remained as the major income driver for Tencent, accounted averagely 70% of total revenue, and also facilitated user base growth of IVAS unit. On the other hand, the once important advertising revenue plays a minimal role in Tencent overall business, its income weight declined from 16% in 2001 to only 4% in 2003; but with company’s rising brand recognition, advertising revenue retained high momentum yoy. Figure 14 – Tencent revenue breakdown 100% 80% 60% 40% 20% 0% 2001 2002 2003 2004 2005 2006 2007 2008 Mobile and Telcoms VAS Internet VAS Online advertising Others Source: Tencent, iResearch -10- VODone Limited(00082.HK)
  • 11. 22 October, 2009 VODone Financial Performance Peer Valuation: Given the diversity of business that VODone involves, it is difficult to compare VODone to companies in a single industry such as Internet Service or Casino; instead, we have grouped together a number of peers from three major sectors: broadcasting, internet service & software, and casino & gaming. VODone is currently trading at 20.5x PER, which is a substantial 61% discount to those internet service companies; and it is also about 44% lower than those broadcasting firms, and 22% cheaper than casino & gaming. We are confident that VODone earnings growth from the lottery will bring correction to the underestimate valuation. Figure15 - Peer Comparison ROE Gross P/E P/E P/B Market Code Name GICS SubInd Name 2008 Margin 2008 2009 2008 Cap (Bn) (%) 82 HK VODone Limited 30.49% -20.09 N/A 21.06 4.84 HK$3.45 600037 Beijing Gehua Broadcasting 29.25% 7.95 40.22 45.35 2.75 RMB11.12 CH 2008 HK Phoenix Satellite Broadcasting 20.11% 19.18 27.41 27.41 4.91 HK$8.32 700 HK Tencent Internet Software & Services 69.66% 45.68 52.98 42.02 23.22 HK$226.07 1688 HK Alibaba Internet Software & Services 87.09% 28.09 77.04 75.42 14.30 HK$90.20 BIDU US Baidu Internet Software & Services 63.87% 41.02 77.12 61.24 24.47 US$13.71 SINA US SINA CORP Internet Software & Services 59.69% 14.46 28.05 30.68 3.04 US$1.94 Galaxy 27 HK Casinos & Gaming 10.00% -89.62 N/A 26.04 1.96 HK$1.29 Entertainment 880 HK SJM Holdings Casinos & Gaming 60.77% 11.66 24.24 26.55 3.06 HK$20.35 Source: Bloomberg, Celestial Securities We recommend BUY on VODone TP of HK$4.85. We believe that MVAS expansion, particularly those related to lottery, together with improvement in advertisement budgeting on the back of growing market sentiment, will be the income driver for the company over the next 2-3 years. We recommend BUY with TP of HK$4.85 against 18.0x forward PE for 2010. -11- VODone Limited(00082.HK)
  • 12. 22 October, 2009 Profit & Loss (HK$, 000) 2007A 2008A 2009E 2010E 2011E Turnover 58,400 65,922 937,388 1,734,490 2,700,061 Cost of sales -31,806 -45,822 -368,111 -607,072 -810,018 Gross profit 26,594 20,100 569,277 1,127,419 1,890,043 Selling & marketing expenses -17,580 -81,800 -290,332 -346,898 -540,023 Administrative expenses -86,387 -79,235 -64,097 -70,507 -77,558 Other operating expenses -7,953 -24,747 0 0 0 Operating profit -85,326 -165,682 214,848 710,014 1,272,462 Profit from discontinuing operation 11,872 0 0 0 0 Other income 8,396 5,655 4,475 4,477 4,479 Other gains & losses 25,808 69,895 -908 0 0 Finance costs -22,916 -29,974 0 0 0 Share of results of an associate -20 -2,412 -482 6,261 16,279 Profit/Loss before taxation -62,186 -122,518 217,933 720,752 1,293,220 Taxation (Income tax) 0 -20 -54,483 -180,188 -323,305 Minority interest -2,506 -1,534 -3,269 -10,811 -19,398 Net Profit -64,692 -124,072 160,181 529,752 950,517 EPS -0.04 -0.07 0.08 0.27 0.48 -12- VODone Limited(00082.HK)
  • 13. 22 October, 2009 Cash Flow Statement (HK$,000) 2007 2008 2009E 2010E 2011E OPERATING ACTIVITIES Profit/(loss) before tax from -62,186 -122,518 217,933 720,752 1,293,220 continued operation -74,058 -122,518 217,933 720,752 1,293,220 discontinued operation 11,872 0 0 0 0 Provision for inventories 12 0 0 0 0 Allowance for doubtful debts 366 0 0 0 0 Depreciation 2,424 8,881 11,795 16,455 21,309 Amortisation of intangible assets 3,268 0 0 0 0 Loss on disposal of property, plant and equipment 63 0 0 0 0 Foreign exchange loss 6,342 3,777 0 0 0 Interest income -8,291 -5,655 4,475 4,477 4,479 Interest expense 13 0 0 0 0 Imputed interest of convertible notes 22,915 29,972 0 0 0 Finance lease charge 1 2 0 0 0 Fair value gain on derivative component of convertible notes -42,413 -78,672 0 0 0 Issuing cost on derivative component of convertible notes 9,630 0 0 0 0 Share of results of an associate 20 2,412 482 -6,261 -16,279 Share-based payment in respect of granting of share options 32,803 4,489 0 0 0 Loss on disposal of available-for-sale investment 103 0 0 0 0 Gain on disposal of a subsidiary -17,787 0 0 0 0 Operating profit/loss before working capital changes -52,717 -157,312 234,684 735,422 1,302,729 Change in Working Capital -153,950 76,390 -157,249 -74,506 -83,237 Net cash used in operating activities -206,681 -86,722 22,952 480,728 896,187 Net cash used in Investing activities -10,440 -9,498 -26,358 -23,591 -24,682 Net cash generated from financing activities 563,838 -208,542 183,834 0 0 INCREASE/(DECREASE) IN CASH AND CASH 346,717 -304,762 180,427 457,137 871,505 EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF 206,320 553,601 249,846 430,273 887,411 THE PERIOD EFFECT OF CHANGE IN FOREIGN EXCHANGE RATE 564 1,007 0 0 0 CASH AND CASH EQUIVALENTS AT END OF THE 553,601 249,846 430,273 887,411 1,758,916 PERIOD -13- VODone Limited(00082.HK)
  • 14. 22 October, 2009 Balance Sheet (HK$,000) 2007 2008 2009E 2010E 2011E Non-current assets Property, plant and equipement 16,418 22,268 36,502 43,343 46,305 Interest in an associate 48,034 52,443 53,318 54,884 55,600 Goodwill 231,792 265,188 265,188 265,188 265,188 Other receivable 19,016 19,495 19,490 0 0 Deposits for acquisition of property plant 10,399 10,853 17,133 16,514 14,809 and equipment Total 325,659 370,247 391,631 379,928 381,902 Current assets Accounts receivable 4,629 148 74,991 138,759 216,005 Other receivables, deposits and 97,648 40,923 49,045 58,893 70,473 prepayments Amount due from an associate 30,371 16,560 47,143 54,214 59,636 Amount due from a related company 4,221 4,491 4,490 0 0 Bank balances and cash 553,601 249,846 430,273 887,411 1,758,916 Total current assets 690,470 311,968 605,942 1,139,277 2,105,029 Current liabilities Accounts payable 0 0 0 0 0 Other payables and accruals 14,895 64,947 17,721 20,870 30,879 Deposit received 570 21 3,544 2,087 3,088 Obligations under finance lease 8 8 8 8 8 Other borrowings 1,414 1,414 1,414 1,414 1,414 Total current liabilities 16,887 66,390 22,688 24,379 35,389 Non-current liabilities Obligations under finance lease 32 23 19 11 3 Convertible notes 359,614 0 0 0 0 Total equity 639,596 615,803 974,866 1,494,815 2,451,539 -14- VODone Limited(00082.HK)
  • 15. 22 October, 2009 Our Rating System Stock pick Buy Expected to outperform the benchmark index by >15% over the next six months Accumulate Expected to outperform the benchmark index by 5 – 15 % over the next six moths Hold Expected to outperform or underperform the benchmark index by <5% over the six months Reduce Expected to underperform the benchmark index by 5 – 15% over the next six months Sell Expected to underperform the benchmark index by >15% over the next six months Sector Outperform Fundamentals/valuations of most stocks in the sector are expected to be improving over the next six months. Neutral Fundamentals/valuations of most stocks in the sector are expected to be steady, neither improving nor deteriorating, over the next six months. Underperform Fundamentals/valuations of most stocks in the sector are expected to be deteriorating over the next six months. Selective Fundamentals/valuations of the stocks in the sector are expected to be diverging over the next six months. Head Office: 21/F, Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong. Tel: (852) 2287 8888 Fax: (852) 2287 8000 The above information is provided and distributed by Celestial Securities Limited (“CSL”). CSL is a licensed corporation under the Securities and Futures Ordinance. The document is for information purpose only. Neither the information nor opinion expressed shall be construed, expressly or impliedly, as an advice, offer, invitation, advertisement, inducement, recommendation or representation of any kind or form whatsoever. While the information contained herein has been obtained from sources believed to be reliable, CSL or its affiliates (“CASH”) do not represent that it is accurate or complete and it should be relied upon. CASH hereby expressly disclaims all liabilities arising out of or incidental to the accuracy and completeness of the contents and information herein contained. The contents and information in this document will be subject to change without further notice. Trade in securities covered by this report may be made only in those jurisdictions where the securities are qualified for trading. This document may not in whole or in part be reproduced or furnished to any person other than the addressee. -15- VODone Limited(00082.HK)