FY15 results were 18% below our expectations. FY15 revenue was in-linewith expectations but net profit was lower than expected due to higher R&Dand S&M expenses and lower government grants.
Revise down FY16-17 software revenue estimations by 7.4%/ 9.5%,respectively, due to fierce market competition and slower than expectedcloud platform adoption.
Net profit margin is expected to benefit from scale effect with theramping up of cloud platform user base. FY16-18 net profit margin isexpected to be 11.7%/ 15.1%/ 16.7%, respectively.
Maintain the Company’s investment rating of “Buy” and cut the TP fromHK$20.00 to HK$18.00. Due to the revision of revenue and expensesestimations, we revise down FY16-17 EPS by 8.5%/ 9.3%, respectively. Thenew TP represents 56.2x FY16 PER, 40.5x FY17 PER and 35.3x FY18 PER.