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1 Deutsche Bank Markets Research R
Deutsche Bank Markets Research Rating Bu y Asia China Technology Software & Services Company WUBA Date 5 October 2016 Initiation of Coverage Gain to follow pain – initiating with Buy (Revised) Reuters Bloomberg Exchange Ticker WUBA.N WUBA US NYS WUBA Evolving platform of online verticals _________________________________________ _______________________________________________________________________ Deutsche Bank AG/Hong Kong Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, in vestors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATION S ARE LOCATED IN APPENDIX 1. MCI (P) 057/04/2016. Price at 3 Oct 2016 (USD) 48.42 Price target - 12mth (USD) 65.00 52 - week range (USD) 69.38 - 43.96 HANG SENG INDEX 23,689 Alvin Jiang Research Analyst (+852 ) 2203 6241 alvin.jiang@db.com Alan Hellawell Research Analyst (+852 ) 2203 6240 al an.hellawell@db.com Price/price relative Performance (%) 1m 3m 12m Absolute 0.7 1.1 - 0.4 HANG SENG INDEX 1.8 12.5 10.2 Source: Deutsche Bank 58.com is the fastest growing company in the online advertising market in C hina, with revenue expanding five - fold in the next five years. Having merged with Ganji, it dominates the classified service market with an 80% market rgard amc gar 10l SLD trdrr cnloardc sn Baict’r r

2 dacg ne 0.6l. Isr coverage of over 200
dacg ne 0.6l. Isr coverage of over 200 cities, promoted by a workforce of 16,000 off - line sales staff has created a significant barrier to entry, while the co - operation with 23% owner Tencent is increasing its long term monetization potential. We forecast a strong shift in profitability to a 17% margin by 2018 and initiate with a BUY rating. Turning leadership into margins and earnings turnaround its branding power and promotional resources should continue to enhance its leadership and enable it to penetrate more SMEs, wi th a wider range of services. It is therefore expanding from its core verticals in yellow page services, job recruiting, property and automotive into new areas including used goods , and management has proved its ability to weave these different products to gether, to increase user activity and monetization. With this model, it has shown how revenue growth can now be translated into better margins and we estimate it should shift rapidly from a loss last year to breakeven in 2016 and deliver an earnings CAGR o f 62% from 2017 – 19. Tencent cooperation undervalued. Online offline connection formidable We believe the market has undervalued the Tencent investment in 58.com. As Tdmcdms etrsgdr cdvdlnor isr acvdrsirimg atrimdrr, is cam ldvdragd nee 58.cnl’r user profi ling and SME client base and make the connection between an offline marketing resource and an online platform. In our bull case scenario , we estimate an extra USD82m/1 80 m or 5%/ 8 % increase in FY17/18 in revenue of 58.com Vertical expansion and quality impr ement catalysts to re - rating The core revenue streams in membership services and onl

3 ine marketing services are delivering o
ine marketing services are delivering organic growth of ~40% and this has been augmented by significant acquisitions over the past three years. With these assets now on - s tream and with an extension into new areas, we expect revenue growth to outstrip investment and opex growth costs. We estimate c ash flow growth will be strongly positive and the FCF yield will exceed 10% by FY18 . Initiate with B uy and USD65 price target We base o ur USD65 target price on a target PEG of 1x, FY17E non - GAAP EPS of USD1.29 and a 3Y EPADS CAGR of 51%. Key downside risks to our view include slow progress in building user stickiness, macro economic slowdown, and unsuccessful investment. N ote: Thi s is a revision to our report published on October 5, 2016. We have incorporated some changes in to the first para graph on this page . Distributed on: 05/10/2016 04:21:38 GMT 5 October 2016 Software & Services WUBA Page 2 Deutsche Bank AG/Hong Kong Model updated:27 September 2016 Running the numbers Asia China Software & Services WUBA Reuters: WUBA.N Bloomberg: WUBA US Buy Price (3 Oct 16) USD 48.42 Target Price USD 65.00 52 Week range USD 43.96 - 69.38 Market Cap (m) EURm 6,344 USDm 7,079 Company Profile 58.com Inc. (58.com) operates an online marketplace serving local merchants and consumers in China. 58.com Inc. started operations in 2005 in China. 58.com Inc. was listed in New York Stock Exchange in November 2013. The Company's online marketplace contains local information in approximately 395 cities, across the content categories, including housing, jobs, used goods,

4 automotive, pets, tickets, yellow pages
automotive, pets, tickets, yellow pages and other local services. Price Performance Margin Trends Growth & Profitability Solvency Alvin Jiang +852 2203 6241 alvin.jiang@db.com Fiscal year end 31 - Dec 2013 2014 201 5 2016E 2017E 2018E Financial Summary DB EPS (USD) 0.35 0.37 - 1.53 0.17 1.29 2.44 Reported EPS (USD) 0.27 0.30 - 2.45 - 0.23 0.96 2.13 DPS (USD) 0.00 0.00 0.00 0.00 0.00 0.00 BVPS (USD) 6.9 6.0 24.1 19.8 20.7 23.0 Weighted average shares (m) 32 84 117 143 147 149 Average market cap (USDm) 1,010 3,628 6,551 7,079 7,079 7,079 Enterprise value (USDm) 796 3,161 6,085 6,599 6,427 6,008 Valuation Metrics P/E (DB) (x) 91.0 116.4 nm 286.6 37.6 19.8 P/E (Reported) (x) 119.3 143.8 nm nm 50.3 22.7 P/BV (x) 5.54 6.90 2.73 2.45 2.34 2.10 FCF Yield (%) 6.1 1.8 nm 4.2 6.4 10.4 Dividend Yield (%) 0.0 0.0 0.0 0.0 0.0 0.0 EV/Sales (x) 5.5 11.9 8.5 5.5 3.9 2.7 EV/EBITDA (x) 41.3 257.3 nm 262.8 40.6 16.8 EV/EBIT (x) 54.4 473.4 nm 345.3 42.8 17.3 Inco me Statement (USDm) Sales revenue 146 265 715 1,200 1,663 2,223 Gross profit 142 257 697 1,099 1,522 2,023 EBITDA 19 12 - 217 25 158 357 Depreciation 5 6 33 6 8 11 Amortisation 0 0 0 0 0 0 EBIT 15 7 - 251 19 150 346 Net interest income(expense) 1 9 - 4 1 15 25 Associates/affiliates 0 0 - 1 - 1 0 0 Exceptionals/extraordinaries 0 0 0 0 0

5 0 Other pre - tax income/(expense)
0 Other pre - tax income/(expense) 4 17 - 54 - 48 0 0 Profit before tax 20 32 - 308 - 27 166 371 Income tax expense 0 6 - 8 5 22 48 Minorities 0 0 - 14 - 1 0 0 Other post - tax income/(expense) - 10 0 0 0 0 0 Net profit 9 26 - 287 - 33 144 322 DB adjustments (including dilution) 3 6 107 57 48 47 DB Net profit 12 32 - 180 25 192 369 Cash Flow (USDm) Cash flow from operations 66 99 11 294 459 753 Net Capex - 4 - 32 - 195 - 6 - 5 - 5 Free cash flow 62 66 - 184 288 454 748 Equity raised/(bought back) 198 806 400 0 0 0 Dividends paid 0 0 0 0 0 0 Net inc/(dec) in borrowings 0 0 402 0 0 0 Other investing/financing cash flows - 210 - 821 - 245 0 0 0 Net cash flow 50 51 372 288 454 748 Change in working capital 40 64 164 297 245 359 Balance Sheet (USDm) Cash and other liquid assets 311 610 529 819 1,272 2,020 Tangible fixed assets 6 18 123 135 132 126 Goodwill/intangible assets 0 0 2,733 2,733 2,733 2,733 Associates/investments 0 24 391 391 391 391 Other assets 16 51 291 313 399 462 Total assets 333 704 4,067 4,391 4,927 5,732 Interest bearing debt 97 168 448 723 1,004 1,333 Other liabilities 16 29 783 826 877 969 Total liabilities 113 197 1,230 1,549 1,880 2,302 Shareholder s' equity 220 507 2,830 2,834 3,039 3,421 Minorities 0 0 7 8 8 8 Total shareholders' equity 220 507 2,837

6 2,841 3,047 3,429 Net debt - 2
2,841 3,047 3,429 Net debt - 214 - 443 - 82 - 96 - 268 - 687 Key Company Metrics Sales growth (%) 67.3 81.8 169.8 67.9 38.5 33.7 DB EPS growth (%) n a 6.0 na na 661.7 89.6 EBITDA Margin (%) 13.2 4.6 - 30.4 2.1 9.5 16.1 EBIT Margin (%) 10.0 2.5 - 35.1 1.6 9.0 15.6 Payout ratio (%) 0.0 0.0 nm nm 0.0 0.0 ROE (%) 8.9 7.2 - 17.2 - 1.2 4.9 10.0 Capex/sales (%) 2.9 12.3 27.3 0.5 0.3 0.2 Capex/depreciation ( x) 0.9 5.8 5.9 1.0 0.6 0.4 Net debt/equity (%) - 97.3 - 87.3 - 2.9 - 3.4 - 8.8 - 20.0 Net interest cover (x) nm nm nm nm nm nm Source: Company data, Deutsche Bank estimates 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 3 Table Of Contents Investment thesis – gain to follow pain ............................... 4 (1) Superior growth rate combined with market leadership ................................ 4 (2) An off - line sales team of 16,000 staff covering 200 cities and 10m SME cu stomers ................................ ................................ ................................ ............. 5 (3) Conversion from aggressive M&A strategy into phase of revenue and margin expansion ................................ ................................ ................................ . 6 (4) The under - appreciated ben efits from working in tandem with 23% owner Tencent ................................ ................................ ................................ ................. 8 Valuation and comps ....

7 ............................ ...........
............................ ........................... 9 Valuation ................................ ................................ ................................ ............... 9 Confident on management visibility on top line ................................ .................. 9 Risks ................................ ................................ ................................ ................... 10 Operating review ................................ ............................... 11 58.com – leading online service platform ................................ .......................... 11 Business is mainly driven by five triple - L verticals ................................ ............ 13 Jobs ................................ ................................ ................................ .................... 16 Real estate ................................ ................................ ................................ .......... 21 Automotive ................................ ................................ ................................ ......... 23 Yellow page local services ................................ ................................ ................. 24 Used goods – zhuanzhuan ................................ ................................ ................. 26 Offline team – entry barrier rather than low efficiency burden ......................... 28 Investment slow down in 2017 ................................ ................................ .......... 31 Potential cooperation with T encent ................................ ........................

8 ........ ... 33 Financials revie w
........ ... 33 Financials revie w ................................ ............................... 36 Appendix ................................ ................................ ........... 41 Benefiting from larger digital ad spending ................................ ......................... 41 R apidly growing O2O market in China ................................ ............................... 4 3 58.cnl’r diggs lnrd vdrsicalr sn dxoamc – small share in large pile ................. 44 Benefiting from urb anization – service upgrade yet to come ............................ 47 Ownership structure ................................ ................................ ........................... 52 Management profile ................................ ................................ ........................... 52 5 October 2016 Software & Services WUBA Page 4 Deutsche Bank AG/Hong Kong Investm ent thesis – gain to follow pain 58.com started life as a pure - play yellow page services company in Beijing and has since grown rapidly across the country, by continually adding more verticals such as jobs, property, auto and used goods. The company now ra nks as the fastest - growing player in the online advertising market in China and – next year – should move decisively into profit as the benefits of integrating individual verticals and acquisitions begin to significantly enhance margins. On our forecasts , net income will rise to USD192m in 2017 followed by USD369m and we initiate coverage of the stock as a Buy . Key elements underpinning our view are as follows :

9  Superior growth rate combined w
 Superior growth rate combined with market leadership  An off - line sales team of 16,000 staff cover ing 200 cities and 10m SME customers  Conversion from aggressive M&A strategy into phase of revenue and margin expansion  The under - appreciated benefits from working in tandem with 23% owner Tencent (1) Superior growth rate combined with market leadership W e expect high growth in China digital advertising to continue thanks to the shift of the advertising budget from offline to online. The five - year CAGR (2015 - 2020 E ) could achieve 22%, according to eMarket. Figure 1 : China digit al advertising has a 22% CAGR from FY15 - 20E Source: emarket , Deutsche Bank estimates 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 5 58.com is enhancing its dominance among SMEs by acquisition and by providing more services. After the acquisition - driven growth during FY15 and FY16, we estimate orga nic growth could remain around 40% for 2017 and 35% for 2018. Meanwhile the healthy organic growth model should bring the margin back to 12% and 17% in FY17E and FY18E, respectively. We anticipate non - GAAP EPS could deliver a 51% three - year CAGR during 201 7 - 2020. Figure 2 : 58.com keeps rapid organic revenue growth Figure 3 : Margin is going back to 17% in FY18 Source: Company data, Deutsche Bank estimates Source: Company data, Deutsche Ba nk estimates (2) An off - line sales team of 16,000 staff covering 200 cities and 10m SME customers 58.com currently has 22,300 employees, including around 16,000 offline dire

10 ct sales, 1,600 call center sales and c
ct sales, 1,600 call center sales and customer services staff and 3,600 from R&D, 1,100 ernl G&A. Figtrd 3 rgnvr 72% ne 58.cnl’r rsaee ard raldr odnold. Figure 4 : 72% ne 58.cnl’r dlolnyddr ard cirdcs raldr Figure 5 : Direct sales headcount grew rapidly Source: Company d ata, Deutsche Bank , based on 1H16 Source: Company data, Deutsche Bank Two pillars help to build enter barrier s 1. We believe a large offline sales team is necessary for companies like 58.com carrying out multi - verticals business especially when they expand their verticals coverage and have maintained revenue growth at over 60% YoY during the past three years. Without an offline sales team to penetrate user traffic especially in lower - tier cities and more local markets, there are 5 October 2016 Software & Services WUBA Page 6 Deutsche Bank AG/Hong Kong fewer opportunities for them to grow. Baixing.com, as a major competitor of 58.com with a very s light sales team , was only 4.5% of 58.com in terms of revenue size 2. Fnr raldr deeicidmcy, vd adlidvd raldr enrcdr’ dxodridmcd ir jdy. 58.cnl’r sales team have 11 years ’ experience and it was rtooldldmsdc ay Gamii’r sales force, which also had 11 years ’ experience . Compared to similar sales force s rel y i ng on business like the real estate sales SouFun is doing, the sales efficiency of an experienced sales agent is 0.5 unit per month per agent, compared to the 0.3 unit per month per agent of a new sales agent, which implies a 66% difference in sales efficiency. Therefore, we believe it is different for the lat t er marke

11 t entrant to build up an experienced
t entrant to build up an experienced sales team and achieve high sales efficien cy. Figure 6 : From 2016E, efficiency growth surpasses headcount expansion Source: Company data, Deutsche Bank estimates (3) Conversion from aggressive M&A strategy into phase of revenue and margin expansion Investment to expand Merger with Ganji.com in a bid to raise market share 58.com acquired a 43.2% stake in its major competitor Ganji.com ( ’ 赶集 网 ’ im Chinese, an online local services platform in China ) in April 2015 and further increased its holding to 99.6% in August 2015, in order to expand its market share in the domestic online classifieds market. 58.com commenced consolidation of the results of the two companies from August 6, 2015. Figure 7 shows the recent progress of the 58.com and Ganji integration. 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 7 Figure 7 : Recent progress of 58.com and Ganji integration Source: Deutsche Bank, Company data, China Economy.com, CCID net, yicai.com Step by step to improve quality We urge investors to exercise patience whe m dvaltasimg 58.cnl’r noonrstmisy , givdm sgir nmgnimg orncdrr. Zgtamygtam (“ 转转 ” in Chinese, which is 58.cnl’r trdc gnncr olasenrl latmcgdc im Nnvdladr 2015( isrdle rdlaimr a work in process but we view it as a good starting point. This business already gdmdrasdr lnrd sgam 20% ne dxirsimg sraeeic sn 58.cnl’r olasenrl. Tgd increasing service quality and customer satisfaction rates (which doubled within six months) have already helped 58.com to improve i ts brand image among users. We

12 expect some new vertic als , such as
expect some new vertic als , such as pets and 58 Home , to create further unique value to users. Even small business improvements such as social networking for local job seekers, offline recruiting product “ Supin ” ( “速聘” in Chinese, me ans speed recruiting) among local yellow - page services, and WeChat user sharing all help to shift 58.com from a transaction - based platform to a user - based platform. We expect this process to take some time, but see little rush to aggres rivdly otrg givdm 58.cnl’r cnlimamcd im sgd 3L service market (local, low - frequent, local price ). Nov - 2015 Establish specific departments by business division, including re al estate division, used car and finance division, white collar recruitment division and 58 Daojia, etc. Nov - 2015 Guazi.com Inc., which operates 58.com's consumer - to - consumer (C2C) used car trading platform plans to spin off from 58.com. Mr. Mark Haoyong Yang, the founder, former Chairman and CEO of Ganji.com, resigned from his position as Co - CEO of 58.com and serve as Chairman and CEO of Guazi.com Inc. End of 2015 58.com responded to the speculation regarding to cancelling over 60 Ganji 's dealerships, that 58.com only terminated the contracts being expired. Apr - 2016 58.com and Ganji co - hosted conference their local partners(help do marketing in local cities) where Senior VP of 58.com Mr. Song Bo mentioned that 58.com and Ganji together targeted to cover local services in more China cities and have 15 partners generating over RMB10mn annual revenue in 3 years. Sep - 2016 58.com cleared up the duplicated distributors f

13 rom Ganji platform mainly in property
rom Ganji platform mainly in property and yellow page service. The remaining distributors from Ganji are only in job vertical. 5 October 2016 Software & Services WUBA Page 8 Deutsche Bank AG/Hong Kong (4) The under - appreciated benefits from working in tandem with 23% owner Tencent Cooperation with Tencent – SME resources are core. We believe that the marke t is currently focusing only on users sharing between Tdmcdms amc 58.cnl. Wd imrsdac adlidvd sgas 58.cnl’r cnvdragd ne lillinmr of SMEs across more than 200 cities in China will increasingly prove to be a core rdrntrcd enr Tdmcdms’r annlimg acvdrsirimg atr iness. 58.com can increasingly feed Tencent by its solid offline sales t ea m and access to SMEs, educating and ornlnsimg Tdmcdms’r 2a atrimdrr im etstrd. Scenario analysis Wd ornvicd a rcdmarin amalyrir enr 58.cnl’r 2017 E revenue including membership serv ices, online marketing services and other revenues. Our analysis implies 19% upside for 2017E revenue in a bull case (base case: USD1,663 m ) and 10% downside in a bear case. The bull case number s mainly incorporate the input from Tencent C orporation , whic h could contribute ~10% additional revenue for 58.com with a 30 - 40% operating margin in long term . The bear case number incorporated the risk from a distributor clean - up and strict property policy. Figure 8 : Tdmcdms’r onsdms ial contribution Source: Deutsche Bank 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 9 Valuation and comps Valuation We initiate coverage on 58.com with

14 a B uy rating and a 12 - month target
a B uy rating and a 12 - month target price of USD 65 . We choose PEG as our primary valuation methodology as it offers viriailisy nm sgd cnloamy’r e uture earnings and a balance between the valtasinm ltlsiold amc sgd cnloamy’r grnvsg onsdmsial. We apply a PEG ratio of 1x to FY17E non - GAAP EPS of USD 1.29 against a non - GAAP EPS CAGR of 51.6 % over FY17E - FY 20 E and a discount rate of 10.2% to arrive at our 12M target price of USD 65 . This implies a 50.5 x P/E for FY17E and 26.8x P/E for FY18E. We are using PEG of 1, which is a mix of 1.1x PEG of some verticals with clear long term growth like Travel and Education, and 0.9x PEG of some other verticals with low er growth rate like property and automobile. Figure 9 : 58.com : valuation table Source: Company data, Deutsche Bank estimates Confident on management visibility on top line Our forecasts on revenue are slightly more posit ive than the consensus for FY16 - 18, while the DBe FY17 - 18 non - GAAP bottom line was lower than the S treet estimates. Wd sracj 58.cnl’r rdvdmtd cdlivdry vr . cnmrdmrtr ar vdll ar lamagdldms’r guidance vs . consensus since its IPO. The c ompany has delivered a b etter - than - expected top line compared to the consensus number and management has strong visibility of its future earning s in most quarters, ex ce pt 2Q14 and 2Q16 , which were followed by a share price drop. We believe the company ’r management will continue t o guide for reasonable revenue numbers in the future. 5 October 2016 Software & Services WUBA Page 10 Deutsche Bank AG/Hong Kong Figure 10 : 5 8 .cnlâ

15 €™r girsnrical sno - line delivery and m
€™r girsnrical sno - line delivery and management visibility on earnings Source: Deutsche Bank, Company data, Bloomberg Finance LP Figure 11 : China internet comps table as of September 2 6 close Source: Deutsche Bank estimates , Thomson Reuters , Company data Figure 12 : 58.com peers operating comp table Source: Deutsche Bank estimates , Bloom berg Finance LP , Company data Risks The key downside risks include : (1) lagged progress in build ing user stickiness ; (2) slowdown of China ’ s macro economy ; and (3) unsuccessful investment s . 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 11 Operating review 58.com – leading online service platform 58.com Inc (58.com), established in 2005, is a provider of local services information covering a wide spectrum of categories such as used goods, job vacancies, real - estate and housing information, automotive information, pets and yellow pages available in both o nline and mobile. The company primarily connects local merchants and users and share s information relating to local services through its website www.58.com in China. The company was listed on the New York Stock Exchange (NY SE) in October 2013 and is headquartered in Beijing. Tgd cnloamy’r rdvdmtd ir laimly cdrivdc ernl svn laim rntrcdr , i.e. :  Online marketing services (53.9% of net revenue in FY15): The m ainrisy ne 58.cnl’r rdvdmtd ir gdmdrasdc ernl nmlimd larjdsimg service s , which mainly include real - time bidding advertising services and other marketing services and charged mainly based on cost - pe

16 r - click (CPC) or a daily basis. ï
r - click (CPC) or a daily basis.  Membership fees (41.6% of net revenue in FY15): Membership fees are earned by providing services such as priority listings, online store front displays, certification of merchants and customer services, etc. to paying members. Listing service s is the main driver 58.cnl’r lirsimg rdrvicdr cnvdr rdal - time bidding (RTB) and priority listing services. Its RTB platform charges merchants on a CPC or daily basis and commenced its operations during 3Q12. During 2014, close to 27% of the acsivd oayimg ldladrr trdc 58.cnl’r larjdsimg rdrvicdr vgild aants 18% ne active members used RTB during the same period. The company also has partnerships with thi rd - party websites where the company earns revenue based on the traffic routed to those relevant websites. 58.com receives revenue based on CPC or CPM basis for the above arrangements with thi rd - party portals. On the o ther hand, services available to online merchants include membership services where by ldladrr ard givdm arrirsamcd sn amalyyd sgd lirsimgr’ performance in terms of page views (PVs) and unique vis it ors (UVs) and thereby to optimize the effectiveness of the storefront listings. Generally, housing memberships are for one to three months and jobs /yellow pages memberships are for one year. 58.com itself had 1 million paying membership accounts during 1Q16, together with 784,000 paying membership accounts of Gan ji and Anjuke. Membership services also has healthy growth The membership services provided by 58.com for active paying members are as follows. 5 October 2016 Software & Services WUBA Page 12 De

17 utsche Bank AG/Hong Kong
utsche Bank AG/Hong Kong  Certification services: The c ompany certifies the local merchants by authenticating their business licenses aga inst third - party databases. In addition, the trust rating is revised periodically (either upgrade/downgrade) depending on the circumstances from time to time  Online storefront : Active paying members are given the flexibility to create their storefronts usi ng standard templates covering reservations, and payments as well  Preferential listing: Member listings are given priority over the non - member listings o n the 58.com website along with a larger daily quota for listings than others  Customer service: The com pany has a dedicated customer service team to assist active paying members addressing issues and concerns , and to help members to optimize the effectiveness of their listings  Account management system: An all - inclusive system that assists paying merchants in managing their business operations, listings, keeping records and appraising the effectiveness of the listing operations, etc. These services are also accessible through the mobile app specifically developed to provide the same range of services just l ike in a PC environment with the added feature enabling merchants to communicate with users on a real - time basis. The charts below illtrsrasd 58.cnl’r rdgldmsal rdvdmtd ardajcnvm amc revenue mix over the past few years. During FY11 - FY15, online marketing s ervices grew rapidly contributing 53.9% of the revenue pie during FY15 from 37.3% in FY11 , surpassing membership fees to become the cnloamy’r largest revenue gene

18 rator . Further, an other revenue segme
rator . Further, an other revenue segment that mainly consists of e - commerce - related revenue rec orded significant growth to represent 4.5% of total revenue in FY15 mainly backed by revenue cnmrnlicasinm visg Amitjd’r rdvdmtd ernl orilary gnldr rdlasdc circntms cards. Figure 13 : Historical revenue breakdown in FY11 - 15 F igure 14 : Historical revenue mix in FY11 - 15 Source: Company data, Deutsche Bank Source: Company data, Deutsche Bank Notably, average quarterly paying members showed exponential growth , reaching 827,000 by the end of F Y15, recording a CAGR of 76.1% from 86,000 in FY11. (Figure 15 ) 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 13 Figure 15 : Average paying merchant members trend Source: Company data, Deutsche Bank Business is mainly driven by five triple - L verticals Having started by o ffering basic local services, 58 .com subsequently moved into the job recruitment, automobile, property and used goods verticals. Over the past few years, t he company has had Ganji (an online local services platform in China), Anjuke (an online real estate listing platform in China), ChinaHR (an online recruiting platform in China), Jiaxiao Yidiantong (a website provides driving training and driving exam preparation), Edaijia (a platform for mobile - based designated driver services in China) and others. All o f these various components make 58.com what it is today. We have constructed a template (Refer to Figure 16 ) to evaluate how 58.com make s money from such a wide span of coverage, and how large the aggregate market could be. Currently

19 58.com covers five maj or verticals.
58.com covers five maj or verticals. M eanwhile , it has begun to increase its interests in eight smaller verticals , aim ing to add user stickiness although mak ing minor revenue contribution. We are confident that 58.com will capture most of the opportunities based on its solid exe cution track record and potential cross sales as the platform grows to a larger riyd. Om sno ne sgir, 58.cnl’r tmiptd neelimd rdrntrcdr rgntlc dmaald lnrd cooperation with other internet companies. Figure 16 : Three main verti cals account for the majority of total revenue; Zhuanzhuan gradually grows Source: Deutsche Bank estimates 5 October 2016 Software & Services WUBA Page 14 Deutsche Bank AG/Hong Kong 58 .com continues to cultivate relatively low - frequency, low - price and local service (3L) verticals. Within the 3L space, 58 .com has come to focu s on five major verticals to generate its main revenue and attract its core traffic. We believe that 58 .com is well positioned in these verticals given its relatively higher stickiness and established network. The GMV that we profile above should support a 30% - plus CAGR and m ake rate improvement s in the coming five years. Tgd cnloamy’r laim lncal rdrvicdr imenrlasinm casdgnridr ornvicdc sn trd r s can be presented as follows.  Jobs: 58.com provides job vacancies in different industries ranging from skilled wor kers to F&B, delivery, and home care. 58.com and Ganji platforms allow employers to search and review resumes, and to manage hiring process online. Ar odr iRdrdarcg casa, 58 cnl’r inar ranked at the top in terms of MUVs compared to ot

20 her hiring websites in China . 
her hiring websites in China .  Housing: The c nloamy’r gntrimg business covers rents for residential purposes, office leasing, industrial leasing, secondary market property sales etc. 58.com and G an ji have mainly secondary home sales and rental listings, while Anjuke has both new home and secondary home sales listings.  Yellow pages local services: Directory information includes homecare, weddings, travel, entertainment, beauty, food and others. Users can also make reservations for their favorite restaurants and complete transacti ons via the website .  Automotive: This mainly includes information regarding used cars, car repair and maintenance, hiring, driving schools information etc. Users cam cnloldsd sramracsinmr via 58.cnl’r 3rc oarsy nmlimd oayldms partners .  Used goods: This c ov ers a wide variety of consumer products and include products such as mobile phones, computers, electronics, furniture, books, artworks, sports goods etc. Figure 17 ornvicdr a rmaorgns ne 58 cnl’r vicd varidsy ne lncal lirsimg rdrvicdr covered. The newly in troduced merchant app (available on both PCs and mobiles) helps merchants with faster access to customers through automatic match between demand for the particular service and the relevant local merchants. 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 15 Figure 17 : 58.cnl’r local services information available for users Source: Company data 5 October 2016 Software & Services WUBA Page 16 Deutsche Bank AG/Hong Kong Jobs According to Analysys, the market size for onli

21 ne job recruiting will rise from RMB4.4
ne job recruiting will rise from RMB4.4bn in 2015 to RMB8.6bn in 2018. This part of the business contributes ~ 25% ne 58.cnl’ s to tal revenue. After acquiring Ganji in 2015, 58 .com became the No.1 blue collar online job platform. The company covers 6 m enterprises ( 500k of which are paying users) and 894 m candidates. Business overview : Below we present the basic business model behind 58 .com ’r job recruiting segment. Figure 18 : 58.com ’ s job business model Source: Deutsche Ban k, Company data 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 17 China has roughly 400 m laborers and more than 35 m enterprises in the blue collar job market. A major part of this market still has a heavy of fline presence, especially for manufacturing companies. The sector has relatively stable labor demand and is large scaled, served by a reliable eco - system of available labor. We believe that this area remains hard to penetrate for 58 .com . We thus expect 58 . com to mainly focus on the market for service industries, which have a relatively higher churn rate. Going forward, 58 .com is also expanding into the white collar market (through China HR), but still lags behind 51 j ob and Zhao pin in terms of both revenue s ize and market share, because of their first mover advantage s . We estimate that in total 58 .com ina’r rdvdmtd should reach USD1,117 m in 2020 (+39% CAGR for 2016E - 2020E). We are confident 58 .com will be able to improve its market share thanks to the existin g traffic from 58.com platform. Going forward, the compan y sho

22 uld also penetrate more into manufact
uld also penetrate more into manufacturing job markets. We believe 58 .com ’r lainr noonrstmisy rdlaimr im traam ardar visg a stronger neelimd ordrdmcd. Tgd cnloamy’r ctrsnldrr ard laimly SLDr im service industries (90% of total). The business model remains somewhat traditional: 58 .com charges customers on an annual basis , based on the number of job postings and the number of resumes and interview invitations that recruiters are able to receive and send out. T raffic acquisition is not difficult within th is business. A high turnover rate in the blue collar labor market, with three to four job changes each year on average, makes it an attractive segment. Figure 21 : Onl ine job recruiting market size in 2009 - 2018E Figure 22 : Quarterly online recruiting app active user Source: Deutsche Bank estimates , Analysys Source: Deutsche Bank, iResearch Figure 19 : 1H16 revenue comparison Source: Company data, Deutsche Bank Figur e 20 : 2016Q1 online recruiting market share Source: Company data, Deutsche Bank 5 October 2016 Software & Services WUBA Page 18 Deutsche Bank AG/Hong Kong Comparison between 51job and Zhaopin Fig ure 23 : Operating c omparison between 51job and Zhaopin Source: Deutsche Ban k, Company data Figure 24 : 58.com ha d the fastest revenue YoY growth in 1H16 Source: Company data , Deutsche Bank 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 19 Figure 25 : Job recruiting app usage frequency Source: Analysys, Deutsche Ban k , based on 2015 As shown in the above

23 figures, 58.com and Ganji together re
figures, 58.com and Ganji together reached ~115% YoY revenue growth in 1H16 and gradually achieved mo re user stickiness in terms of app usage frequency. Zhaocaimao App Zhaocaimao ( 招才猫 ) is a newly launched job recruiting app for employers, especially SMEs, whereby employers are able to receive recommendations from 58.com of nearby job seekers based on rele vance and location, and then contact them through the Zhaocaimao app directly. Although the ARPU of this business is relatively low, we fore see margin expansion being driven by a growing number of app downloads since Jan uary 2016 (4 m downloads by iOS users and 4.9 m downloads by Android users ) , as well as more monetization opportunit ies as 58.com begins to charge recruiters and job seeker s for real time communication. Figure 26 shows Zhaocaimao ’r the main page , including search columns, recommended position s, nearby job vacancies, and popular jobs. O n the job recruiting page of 58.com ’ s website, users may also search for jobs listed in Supin as well as China HR. (See also Figure 27.) 5 October 2016 Software & Services WUBA Page 20 Deutsche Bank AG/Hong Kong Figure 26 : Screen shot of 58.com job recruiti ng website Source: Deutsche Ban k, Company data 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 21 Figure 27 : Screen shot of 58.com job recruiting app Source: Deutsche Ban k, Company data Real estate Business overview : Below we present the basic business model be hind 58 .com ’r rdal drsasd segment. 5 October 2016 Sof

24 tware & Services WUBA Page 22 D
tware & Services WUBA Page 22 Deutsche Bank AG/Hong Kong Figure 28 : 58.cnl’r rdal drsasd atrimdrr lncdl Source: Deutsche Ban k, Company data W e believe secondary home market volume is relatively stable at ~ 5 m units per annum currently. We estim ate 58 .com ’r rdal drsasd atrimdrr cnmsriatsdc 45% of company total revenue in FY16 , implying 4 0 % YoY growth. We assume a two - year CAGR 23 % for FY16 - 18. The 58.com and Ganji platforms mainly focus on secondary home sales and rental listing s while Anjuke cov ers both the new home and secondary home listing s business es . Amitjd’r contributed around 30% to total revenue and its rapid traffic pick - up against SFUN and HomeLink improved 58.com ’r total paying customer number s . Having acquired Anjuke in March 2015, 58 .cnl’r real estate business ARPU grew to ~USD241 , from ~ USD152 before the acquisition , while the number of paying customers totaled 560k , up from 310k before acquisition. Comparison with SFUN and HomeLink 58.cnl’r svn laim cnlodsisnrr, SFUN amc HnldLimj, actually follow different business strateg ies. SFUN focus es on both real estate listing s and ecommerce , especially for secondary home sales; while HomeLink is aggressively expanding cities under coverage, and its offline sales team. W ith SFUN switching its attention to offline secondary home sales, we expect Anjuke and 58.com to be able to acquire greater market share in the listing business . Figure 29 : Operating c omparison between 58.com+Anjuke, SFUN and HomeLink Source: Deutsche Ban k, Company

25 data 5 October 2016 Software &
data 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 23 Figure 30 : HomeLink with the most revenue in 1H16 Figure 31 : 58.com together with Anjuke and HomeLink grew faster in 1H16 Source: Deutsche Ban k, Company data Source: Deutsche Ban k, Company data Automotive Business overview Below we present the basic business model behind 58 .com ’r automotive segment. Figure 32 : 58 .com ’r atsnln tive business model Source: Deutsche Ban k, Company data 58.com supports new and used car listing s , car leasing, driving school services, auto repair service s, vehicle inspection information as well as financial services through qualified third - party partners. T he current number of total paying merchants f rom 58 .com ’r automobile vertical is 210k and quarterly ARPU is ~USD227. I n 2015, the sale of passenger vehicles in China totaled 21 m units including 13 m units being new PVs and 8 m units being used PVs, according to the China Association of Automobile Manuf actures (CCAM) and the China Automobile Dealers Association (CADA). F or used PVs sales, we have see n solid growth over the past three years with a CAGR of 24% in 2013 - 2015. T he automobile business accounted for ~15% of 58.com ’ s total revenue , with only 4 - 5 % 5 October 2016 Software & Services WUBA Page 24 Deutsche Bank AG/Hong Kong coming from the used car business. Given the rapid growth in China ’r used car market and greater usage of car - related services in China, we estimate the revenue contributio

26 n from this business to be ~20% and
n from this business to be ~20% and the used car business to grow from a current 4 - 5% to 10% in the long term. Comparison with ATHM and BITA Compared to ATHM and BITA, 58.com mainly focuses on the traditional listing business of both new and used car s while ATHM also has a ecommerce business and BITA switched its strategy to automotive financing business recently. I n terms of revenue size in 1H16, both ATHM and BITA are around four - to - five times the size of 58.com. W e provide a detailed table for these three companies in Figure 33 below. Figure 33 : Operatin g comparison between 58.com, ATHM and BITA Source: Deutsche Ban k, Company data Figure 34 : 58.com ’ s 1H16 revenue is relatively small Figure 35 : ATHM has the fastest revenue growth in 1H16 Source: Deutsche Ban k, Company data Source: Deutsche Ban k, Company data Yellow page local services Business overview Yellow page local services significantly include homecare, business services, renovation , education and training, vehicle rental, fr anchise licensing services, wedding and filming and travel services. Below we present the basic business model behind 58 .com ’r yellow page local services segment. 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 25 Figure 36 : 58 .com ’r ydllnv oagd lncal rdrvicdr atrimdrr lncdl Source: Deutsche Ban k, Company data Comparison with Baixing.com I n the local services vertical, Baixing.com is the major market player alon g side 58.com and Ganji. Prior to the consolidation of 58.com and Ganji, Baixing.com was a

27 relative larger player compared to
relative larger player compared to Ganji but smaller than 58.com . U nlike 58.com ’ s heavy dependence on an offline sales team, Baixing.com ha d only 158 employees as of end - 2015 and mainly focuses on the online expansion. T he recent conflicts between 58.com+Ganji and their local di stributors hurt its local services business most among all the verticals covered. Baixing.com instead took the opportunity to rapidly expand its revenue in 1H16 , achieving YoY growth of 168%. 58.com and Ganji encountered issues with their distribut o rs , whi ch impacted yellow page local services most among 58.cnl’r verticals ( with a more negative impact on Ganji) . 58.com and Ganji decided to change to a direct sales model in tier - 1 and tier - 2 cities for their local services business. The merged c ompany believ es that selling through distributors may hurt its own customer base as distributors used to hold 58.com and Ganji ’ s inventor y and offere d a larger discount to customers. W e present more on the conflicts between 58.com+Ganji and their distributors in subseq uent sections . Figure 37 : Operating comparison with Baixing.com Source: Deutsche Ban k, Company data 5 October 2016 Software & Services WUBA Page 26 Deutsche Bank AG/Hong Kong Figure 38 : 58.com still had larger revenue in 1H16 Figure 39 : Baixing.com rapidly expanded in 1H16 Source: Deutsche Ban k, Company data Source: Deutsche Ban k, Company data Used goods – zhuanzhuan More than traffic pump – Zhuanzhuan builds a better reputation and digs deeper user data According t

28 o Zhuanzhu am’r latest “ China 1
o Zhuanzhu am’r latest “ China 1H16 used goods market report ” , the market size of the used goods industry in China is RMB400bn in 2016 with the most popular products of mobile phones, apparel and shoes, and electronic products accounting for 17.5%, 14.6% and 10.7% , re spectively . Zhuanzhua n – launched in November 2015 – ir 58.cnl’r vdmstrd imsn sgir grnvimg larjds ; it is integrating the used good platforms of 58.com and Ganji. The Zhuanzhuan mobile app allows users to search and trade used goods such as PCs, mobile phon es, furniture, home appliances, baby products, etc. The earlier market comer Xianyu ( 闲鱼 ) , owned by Alibaba , which launched in June 2014 and was previously the Taobao used goods business unit, focuses on 3C products, baby products, household appliances and clothing. Xianyu recently started a used car business providing services for used car s online : valuation s , auction s and sales to used car dealers. The key element differentiating Xianyu from Zhuanzhuan is its transaction community called Xianyu pool ( 鱼 塘 ), consisting of users in nearby areas or with common interests, which currently has more than 125k pools and a max imum of 34k users in one pool. Lnrd nmlimd olasenrlr ne trdc gnncr cnld to adricdr Aliaaaa’r Xiamyt amc 58.cnl’r Zgtamygtam. Osgdrr olaydrr rt cg ar LdTV’r Jit’Ai ( 旧 爱 ) and Htavdi’r Hui S hou Bao ( 回收宝 ) are also looking for opportunities in the used gnncr larjds. Jit’Ai assracsdc ~300j rdgirsdrdc trdrr amc achieved more than RMB1 m transaction s in the fir st month after launch. 5 October

29 2016 Software & Services WUBA De
2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 27 Figure 40 : Th e products categories available on Zhuanzhuan, Xianyu and other platforms Source: Deutsche Bank, Company data Debate – mn vay sn cnlodsd visg Ali’r Xiam Yt olasenrl? Zgtamygtam’r caily sramracsinm vnltld acgidvdr 100j tmisr, visg odr ctrsnldr transact ion of RMB500 - 600 in May 2016, after six lnmsgr’ oracsicd. Zgtamygtam’r mtladr ne sramracsinmr gar alrn imcrdardc rtarsamsially to 29% MoM on average This c ompare s to the earlier market mover Xianyu : Xianyu currently has ~100m users and daily transaction v olume of 200k with per customer transaction of RMB700. 170 m products have been sold through Xiamyt ctrimg isr 15 lnmsgr’ oracsicd sill sgir Larcg. Figure 41 : MAU and DAU of Zhuanzhuan and Xianyu Source: QuestMobile, Deutsc he Bank 5 October 2016 Software & Services WUBA Page 28 Deutsche Bank AG/Hong Kong A lthough we believe Zhuanzhuan will find it hard to compete with Xian Yu to become the no.1 user goods platform, its high - quality service and improving brand image ha ve already helped 58.com to achieve better user stickiness. High quality to buil d reputation, which was short bar of 58.com platform To make en sure the good quality of products sold via Zhuanzhuan, especially for the high ASP product like iPhone, Zhuanzhuan initiated a quality check olasenrl calldc ‘Zgtamygtam Yntoim’ (‘ 转转优品 ’ in Chine se, means high - quality products). Through Zhuanzhuan Youpin, users are able to sell their iPhone after the quality check by Zh

30 uanzhuan. According to our price check o
uanzhuan. According to our price check on three iPhone models, iPhone 6 16GB, iPhone 5s 16GB and iPhone 6sPlus, we believe the mob ile phone quality check provided by Zhuanzhuan adds a 12.8% price premium to the same product sold by Xianyu. During July 1 - 12, ~31,000 mobile phones went through quality check s out of ~50,000 units sold and 82.7% of these products were qualified . Figure 42 : iPhone price on Zhuanzhuan and Xianyu platforms Source: Company data, Deutsche Bank Regarding the relatively more standardized quali t y check ing process and large user base, we believe Zhuanzhuan has ample capacity to g row as it focus es on used mobile phone transactions. Zgtamygtam’r cnnodrasinm visg WdCgas ir accimg rsicjimdrr The a lliance with Tencent : users can login in by WeChat accounts, invite WeChat friends to Zhuanzhuan, share products information to WeChat mom ents and pay via Tenpay . Zgtamygtam imcnronrasdc Ams Fimamcial’r ‘Zgila Crdcis’, vgicg ir a trdr casd - based online credit scoring service, to allow users sn cgdcj rdlldrr’ crdcis rcnrdr. Tgdrd ir alrn a rdcsinm oarsictlar rdllimg trdc goods originally boug ht from JD. Offline team – entry barrier rather than low efficiency burden More stable efficiency improvement than at SouFun and Autohome S imilar to 58.com, other internet companies such as S ou F un and Autohome also carr y large sales headcounts with 58% of S ou F tm’r dlolnyddr ernl its raldr civirinm amc 62% ne Atsngnld’r gdaccntms ernl its sales division . By comparing the headcount efficiency among these three companies (see figures below ), we see th at th e revenue

31 per headcount at 58.com improved by
per headcount at 58.com improved by 9% and 22 % YoY in 2014 and 2015, respectively , while SouFun and Autohome both saw their revenue per headcount decline YoY in 2015. 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 29 Figure 43 : Although relative ly smaller revenue per headcount for 58.com … Figure 44 : … v e see stable growth in revenue per headcount Source: Company data, Deutsche Bank Source: Company data, Deutsche Bank Implication s ernl Baict’r oracsicd Cnloardc sn Baict’r revenue per headcount of USD165k/171k/254k in 2013/14/15, 5 8.cnl’r deeicidmcy still ha s a large gap with revenue per headcount of USD26k/28k/35k in 2013/14/15. We believe there is r oom for 58.com to grow with a greater revenue contribution coming from the online marketing business. F rom Baict’ s practise, the reven ue per headcount i mprov e d significantly by 49% YoY in 2015, thanks to core search business growth of 29% YoY as Baidu added a larger number of verticals covered and more bidding keywords . As shown in the figure below, we estimate a faster YoY revenue growt h of online marketing business for 58.com from 2016 (+75% YnY( cnloardc sn ldladrrgio rdrvicdr atrimdrr’r 63% YnY grnvsg im 2016E. Figure 45 : N umber of total enterprise users and paying enterprise members of 58 .com and Baidu Source: Company data, Deutsche Bank 5 October 2016 Software & Services WUBA Page 30 Deutsche Bank AG/Hong Kong Figure 46 : 58.cnl’r rdvdmtd odr gdaccntms vr. Baict Figure 47 : 58.com member

32 ship and online marketing growth estima
ship and online marketing growth estimates Source: Company data, Deuts che Bank Source: Deutsche Bank estimates Direct sales or distributors? 58.com and Ganji used to rely heavily on distributors who helped to expand its geographic network especially to the lower tier local cities where 58.com and Ganji had limited co verage , and also to increase their vertical coverage . T hose distributors take inventories from 58.com and Ganji, offer relatively large discounts to customers and get a c. 50% commission rate while direct sales take only ~15% commission. Furthermore , the company has seen higher sales efficiency by adopting a direct sales model rather than a dealership sales model especially in yellow page local services and real estate business. T herefore , 58.com and Ganji are transiti oni ng from dealership sales to direct sales f or specific verticals such as yellow page local services and real estate business in tier - 1 as well as tier - 2 cities. For other verticals where 58.com has a lower penetration rate , such as job recruit ment business, the company currently still maintains its cooperation with distributors to expand coverage and network s . These transitions have led to conflicts with distributors in recent quarters which will further lead to 3 - 5 bpts revenue deduction for 3Q16 revenue and have a continuous revenue impact in 4Q1 6. The revenue contribution from the dealership sales model was 10 - 20% previously and the company expects to keep its revenue contribution at the 10 - 15% level going forward. I n the longer term, we believe accelerating revenue fr

33 om the direct sales model wi ll bene
om the direct sales model wi ll benefit the cnloamy’ s top line as less commission fee s are allocated to distributors and the commission rate of the direct sales model is much lower than that of the dealership model. Our f orecast : faster efficiency improvement than headcount expansion Due to the consolidation of Ganji in 2015, we saw a jump in headcount while revenue per headcount growth remained at 22.5% YoY. Going forward, we expect headcount expansion to be more stable at c. 10% YoY growth. R evenue per headcount should grow faster t han headcount expansion thanks to the more experienced sales team and the economic scale generated by accelerating vertical coverage. 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 31 Investment slow down in 2017 As shown in Figure 48 , i n addition to Ganji, 58.com continued to expand its eco - system throug h further strategic investments into other online classified players specializ ing in different verticals such as Anjuke (primary and secondary housing/rental listings), China HR (white collar jobs listings), To8to (platform for listing services on interior decorations), AutoComment (an automotive website), Edaijia, etc. These additions bring with them the potential to complement the existing 58.com business model. Figure 48 : 58.cnl’r acptirisinm cdalr im sgd oars sgrdd ydarr Source: Deutsche Bank, Company data Lock - up period expired The b iggest lock up of 46 m shares expired o n August 5 2016 – as shown in Figure 49 – and we saw share price fluctuation s after such event

34 s . 5 October 2016 Software &
s . 5 October 2016 Software & Services WUBA Page 32 Deutsche Bank AG/Hong Kong Figure 49 : 58.cnl’r o rice vs. rebased index price after three main lock - ups Source: Company data, Bloomberg Finance LP , Deutsche Bank 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 33 Potential cooperation with T encent Case study: successful platform could bring greater monetization opportunities Through our case study ne Tdmcdms’r ordvintr oracsicd ne nodmimg isr nvm platform in mobile and telecommunications value - added services , PC games and mobile games , we noticed incremental revenue contribution s from this kind of leverage . We believe the coming cooperation between 58.com and Tdmcdms vill admdeis Tdmcdms’r B2B atrimdrr sgamjr sn 58.cnl’r dxirsimg SLD sraeeic amc lncal cisidr’ cnvdragd. Tgd valtd ne sgir oarsmdrrgio gar mns addm priced in by the market, in our view, and we wait to see the revenue and margin contribut ion from the cooperation between Tencent and 58.com in the near future. The figure below rgnvr Tdmcdms’r ordvintr imvdrsldms sn ldvdragd isr trdr base in the O2O business. Figure 50 : Tencent ’ s previous investment in the O2O bu siness Source: Company data, Deutsche Bank Tdmcdms’r three previous open platform exercises:  Tdmcdms’r lnaild amc sdldcnlltmicasinmr valtd - added services such as mobile instant messaging and ringback tone services contributed over 20% revenue back to 2007 and before. Tencent shared revenue with mobile operators based on a fixed commission rate . ï

35 ® In 2011, Tencent decided to share it
® In 2011, Tencent decided to share its 670 m users via a series of open platforms with partners and third - party developers, which was expected to generate USD3bn revenue for Tencent and its partners.  PC online game developers are allowed to launch their own games via QQ Game platform and Tencent shared revenue with these game developers.  For mobile game s , Tencent opened up the platform for around 50 mobile game d evelopers and reduced the number of self - developed mobile games to one to two games per month from three to four galdr odr lnmsg. Tdmcdms’r lnaild gald rdvdmtd snsaldc RMB21.3bn, accounting for 40% of China ’r mobile game market. In 2Q16, Tdmcdms’r lnaild g ame revenue was RMB9.6bn with a 114% YoY growth. Mobile game developed in house vs . licensed published during 1Q15 to 1Q16 and mobile games in the pipeline. 5 October 2016 Software & Services WUBA Page 34 Deutsche Bank AG/Hong Kong Figure 51 : Tencent prefers to launch licensed mobile games Source: Company data, Deutsche Bank Tgrdd ne Tdmcdms’r lnaild galdr vdrd ramjdc alnmg sgd sno 10 im the China iOS app store in July 2016. One is a Tencent in - house developed mobile game while the other two we re developed with other Ch inese online game companies Kingsoft and Giant. Tencent has open ed up WeChat for some third - party application s in which Tencent had already invested or partnered, such as eLong, Didi, Tongcheng, JD, Dianping.com, Meilishuo. WeChat users currently have acc ess to these third - party operators , imcltcimg 58 Hnld amc Zgtamygtam’r websites via WeChat Wal

36 let. Accnrcimg sn Tdmcdms’r lamagdld
let. Accnrcimg sn Tdmcdms’r lamagdldms, sgd initial rational e sn imvdrs im 58.cnl var sn ldvdragd ansg cnloamidr’ sraeeic to strengthen their leading position s in the O2O atrimdrr, visg Tdmcdms’r largd trdr aard ernl WdCgas amc QQ, ar vdll ar 58.cnl’r SLD rdrntrcdr. 58.com has large SME customer base with an average of c. 1.17 m paying merchant members in 2Q16 , as well as expanding city coverage of 485 cities among 1 3 verticals. On September 12 , Tencent and 58.com initiated a ‘ Teng Cheng Plan ’ (Tencent and 58 Tong cheng) to build up a ‘ social + local services ’ ecosystem. T he cooperation focuses on both personal users and SMEs by offering personal users with customized local services and setting up a dynamic advertising platform for SMEs. T ak ing job recruiting as an example, this plan can filter out the most suitable candidates by using Tencen ’ t social community big data and 58.com ’ s local services big data, then apply Tencent ’ s Lookalike technique and social community ads to reach out the target candidates. W e believe this helps to build up a healthy ecosystem by connecting enterprises especially SMEs and personal user s based on the social media applications WeChat and QQ, and we expect to see more color on Tencent and 58.com ’ s cooperation on ‘ smart ’ local services. Published in 1Q15 - 1Q16: 20 Published in 1Q15 - 1Q16: 18 Pipeline: 9 Pipeline: 1 0 5 10 15 20 25 Licensed In - house 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 35 How we value this cooperation?

37 We value the potential cooperation bet
We value the potential cooperation between 58.com and Tencent at USD 82 m /1 80 m / 330 m in 2017/18/19, impl y i ng a 5 %/ 8 %/ 1 2% upside on 58.cnl’r rdvdmtd im 2017/18/19. Wd arrtld Tdmcdms cntlc odmdsrasd 1%/1.2%1.5% of the traffic from 58.com in 2017/18/19, and share 3 5 % of the revenue from this cooperation with 58.com. Figure 52 : Potential revenue upside fr nl Tdmcdms’r cnnodrasinm Source: Deutsche Bank estimates 5 October 2016 Software & Services WUBA Page 36 Deutsche Bank AG/Hong Kong Financials review Tno limd arrtlosinm crivdm ay sgd dxoamrinm ne 58.cnl’r vdrsical casdgnridr. Regarding the healthy historical top - line growth in FY11 to FY15, we estimate a FY16 - 18 CAGR of 46 % with FY16/17/18 YoY revenue growth of 68 %/ 39 % / 34 %. We expect the key driver to be sgd dxoamrinm ne 58.cnl’r vdrsical categories. Figure 53 : We estimate a FY16 - 18 revenue CAGR of 46% Source: Company data, Deutsche Bank estimates We forecast the revenues contributed by online marketing will narrow while membership revenue and other revenue will grow sustainably. Figure 54 : Revenue breakdown forecast s Figure 55 : Revenue mix forecast s Source: Company data, Deutsche Bank estimates Source: Company data, Deutsche Bank estimates 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 37 Margin expansion capped by continuous trial to improve platform quality Historically , 58.com has enjoy ed a high gross margin of ove r 90% on average while EBIT income/net income experience d a loss in FY1

38 5 due to high sales and marketing expen
5 due to high sales and marketing expenses and the consolidation of Ganji. With the acquisition of Ganji, its largest competitor, we forecast a significant decline in marketing expendit ure. We expect the cnloamy’r mnm - GAAP EBIT margin to improve from - 20.1% in 2015 to 17.7 % in 2018 and remain at the ~20% level mainly due to the fierce competition in each vertical and relatively lower margin of the new business lines. In terms of cash flo w, we believe that after the completion of several acquisitions in the past few years, 58.com should enjoy a rich cash position and health y cash flows in FY16 - 18. Figure 56 : Historical and DBe margin Figure 57 : Historical and DBe opex as % of revenue Source: Company data, Deutsche Bank estimates Source: Company data, Deutsche Bank estimates Figure 58 : Quarterly sales & marketing spending Figure 59 : Historical and DBe cash position Source: Company data, Deutsche Bank estimates Source: Company data, Deutsche Bank estimates 5 October 2016 Software & Services WUBA Page 38 Deutsche Bank AG/Hong Kong Figure 60 : Income statement Source: Deutsche Bank estimates , Com pany data 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 39 Figure 61 : Statement of cashflow Source: Deutsche Bank estimates , Company data 5 October 2016 Software & Services WUBA Page 40 Deutsche Bank AG/Hong Kong Figure 62 : Balance sheet Source: Deutsche Bank estimates , Company data 5 October 2016 Software &

39 Services WUBA Deutsche Bank AG/Hon
Services WUBA Deutsche Bank AG/Hong Kong Page 41 Appendix Benefit ing fr om larger digital ad spending China continues to record significant growth in ad spending As depicted in the figures below, de spite the slowing economic conditions vismdrrdc im sgd cntmsry, dLarjdsdr enrdcarsr Cgima’r ldcia ac rodmcimg will grow by 13% YoY to reach USD78bn in 2016. Further, more mature markets such as the US and Japan sh ould also record relatively lower rates of 5% and 3%, rdrodcsivdly sgir ydar. dLarjdsdr dxodcsr Cgima’r ldcia ac rodmcimg sn reach USD123bn by 2020 (a five - year CAGR of 12.1 %). Figure 63 : Total media ad spending growth in China Figure 64 : Total media ad spending growth in China vs . Japan and US Source: eMarketer, Deutsche Bank Source: eMarketer, Deutsche Ba nk China to account for more than 18% of world ad spending by 2020 Accordingly, as shown in the figures adlnv, Cgima’r rgard ne vnrlcvicd ldcia ad spending sh ould increase from 13.5% in 2015 to 18.2% in 2020 while the share of US and Japan would slightly decline historically . Being the top three media ad spending markets, the US, China and Japan collectively account for about 56% of worldwide media ad spending and as a result of the growing contribution by China, their share sh ould rise to close to 59% by 2020, according to eMarketer data. 5 October 2016 Software & Services WUBA Page 42 Deutsche Bank AG/Hong Kong Figure 65 : Media ad spending worldwide by region in 2015 Figure 66 : Media ad spending worldwide by region in 2020E Source: eMarketer, Deutsc

40 he Bank Sou rce: eMarketer, Deutsche
he Bank Sou rce: eMarketer, Deutsche Bank Mobile to account for more than 50% of total ad spending by 2020 in China Figure s 6 7 and 6 8 below show the growing contribution by mobile - based ad spending in both China and the US as forecast by eMarketer. Given Chinese user r’ raoicly grnvimg aoodsisd enr lnaild cdvicdr nvdr nsgdr sracisinmal ldcia, mobile ad spending is set to account for more than 50% of total media ad spending by 2020 (about 84% of total digital ad spending), up from about 24.6% in 2015. Similarly , in the US, mobile ad spending sh ould account for about 33% of total ad spending, a much smaller contribution than in China largely as a result of still significant contribution by the TVs in the US. Figure 67 : Mobile ad spending in C hina Figure 68 : Mobile ad spending in US Source: eMarketer, Deutsche Bank Source: eMarketer, Deutsche Bank With the rapidly growing internet and smart phone penetration and continuous technological advancement across the world, online classified ads are swiftly gaining over offline classifieds. Easy accessibility from anywhere with internet facilit ies and higher user - friendly interface s ha ve made online classifieds popular among users. 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 43 Figure 69 : Forms of online ad in 2011 - 2018E Source: iResearch, Deutsche Bank Rapidly growing O2O market in China Low penetration in the O2O market presenting growth opportunities Mainly driven by the growth in mobile - based shopping (result ing from an e ver - expanding mobile user base) and expansion in the

41 number of sectors combining offline -
number of sectors combining offline - nmlimd rgnooimg, Cgima’r O2O larjds cnmsimtdr sn grnv rapidly. As shown in the figure below, iResearch forecasts the space will grow by 27.6% in 2016 to reach RMB428bn . Given the lower penetration level (5.5% in 2015), the market presents vast growth opportunities for players such as 58.com. Figure 70 : China e - commerce market share in 2015 vs . 2014 Figure 71 : Local lifestyle O2O GMV in 2011 - 2018E Source: iResearch, Deutsche Bank Source: iResearch, Deutsche Bank 5 October 2016 Software & Services WUBA Page 44 Deutsche Bank AG/Hong Kong Figure 72 : Private car services app coverage of active users in 3Q15 Figure 73 : China food delivery market share in 2015 Source: Analysys, Deutsche Bank Source: Analysys, Deutsche Bank Figure 74 : 2016 Q1 OTA market share Figure 75 : Online film ticketing market sha re in 3Q15 Source: Analysys, Deutsche Bank Source: Analysys, Deutsche Bank 58.cnl’r d ight more verticals to expand – small share in large pile W e believe the total revenue contribution of 58.com ’ s other eight minor verticals will account for only 3.7% in FY16 since most of their business models are about traffic transfer and there is limited space to monetize these large traffic. However, sgdrd rdrvicdr cntlc dmricg 58.cnl’r atcidmcd amc improve traffic quality continuously. A mong these eight vert icals, we identify the pets business in terms of rapidly growing market size and lack of sizable competitors in this market. 5 October 2016 Software & Services WUBA De

42 utsche Bank AG/Hong Kong Page 45
utsche Bank AG/Hong Kong Page 45 Figure 76 : S ummary for eight more verticals Source: iResearch, Analysys, Company data, Deutsche B ank Pet s The pet market size in China was around RMB50bn in 2015, with a two - year CAGR of ~30%. In China, only 2.6% of household have a pet with tier - 1 cities like Beijing and Shanghai hav ing higher penetration rate s of 7.6% and 4.6% respectively. With th e accelerating disposable income of Chinese people and a larger portion of the elderly , who have more spare time, the demand as well as consumption potential of pet and pet products are both growing. We forecast a two - year CAGR of 48% for 2016 - 18E for 58.c nl’r ods atrimdrr. How big is the market? We forecast t he pet market size will grow to RMB150bn (USD23bn) in 2020 from RMB50bn (USD8bn) in 2015, with a five - year CAGR of 25% . We estimate t he number of household s in China will be 522 m in 2020, from 409 m in 2015. We a ssume the penetration rate of households owning pets increase s from the current 2.6% to 5% in 2020, and the average annual spending on pet s per household gr o w s to RMB6,268 in 2020 from the current RMB4,728. 5 October 2016 Software & Services WUBA Page 46 Deutsche Bank AG/Hong Kong Figure 77 : DBe pet market size with 25% CAGR in 2015 - 2020 Source : Industry data, Deutsche Bank estimates What conclusions can we draw from the US market? A ccording to the American Pet Products Association (APPA) , in 2015 t he pet market size in the US was USD6 0bn, which was 7.5 times that in China. 65% of US household s own at least one p

43 et – a ratio that was 40 times
et – a ratio that was 40 times that in China. Even compared to the tier - 1 cities in China , with a higher penetration rate, the rate in the US is 8.5x that in Beijing and 14x tha t in Shanghai. In terms of spending breakdown, in the US in 2015, 38% of pet - related spending was allocated to food and 50% of spending was on vet care and supplies/OTC medicine. Only 4% of spending in the US in 2015 related to live animal purchase. There fore, we think 58.com should have more room to grow in vet care and the supplies/OTC medicine segments. Figure 78 : Pet spending breakdown in the US in 2015 Source: APPA, Deutsche Bank 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 47 58.cnl’r ods atrimdrr imcltcdr cieed rent types of pets for sale or adoption such as dogs, cats, fish, birds and other small house pets, as well as supplementary products and services regarding pet care , such as pet hospitals, pet food and pet wear. 58.com currently offers packages which incl ude pet sales/adoption - only package as well as pet care or comprehensive pet sales/adoption and pet care products which has an annual package fee reaching as much as RMB9,800 in Beijing. Also , other value - added products are offered , such as pet health chec k s where we see 58.com cooperate with certain pet hospitals. Given the rapid growing pet market in China, the limited number of sizable online players, and 58.cnl’r relative price premium, we see more monetization opportunity in this vertical compared with the other seven. Figure 79 : 58.cnl’r odsr atrimdrr lncdl

44 Source: Company data, Deutsche Bank
Source: Company data, Deutsche Bank Benefiting from urbanization – service upgrade yet to come A mong these eight consumption categories, we see on average ~70% of the consumption com ing from urban areas. The largest gap between urban and rural areas consumption come in Miscellaneous Goods and Services (77% consumption from urban and 23% from rural areas) and Clothing (76% consumption from urban and 24% from rural a reas). W e believe all these eight consumption categories will benefit from urbanization, where housing and job recruiting should drive 58.com ’ s revenue most. Food and catering 58.com provides food and catering services including group catering and online f ood delivery. Local restaurants will pay for displaying their restaurants ’ information as well as per number s of click s . The annual package price for food and catering in Beijing is RMB2,800, including two priority listings per day and RMB600 coupon s . See Figure 8 0 below for this vdrsical’r atrimdrr lncdl: 5 October 2016 Software & Services WUBA Page 48 Deutsche Bank AG/Hong Kong Figure 80 : 58.cnl’r ennc amc casdrimg atrimdrr lncdl Source: Company data, Deutsche Bank 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 49 Cgima’r nmlimd ennc cdlivdry atrimdrr snsaldc RLB36am im 2015 in terms of revenu e according to Analysys report, implying 201% YoY growth. Although we expect this business to maintain rapid growth rate s of 114%/67%/50% YoY in FY16 - 18, the current market players such as Baidu Waimai, Ele.me and other competitors alrea

45 dy take around 85% of the market share
dy take around 85% of the market share. Therefore, we see limited growth potential for 58.com. Figure 81 : Cgima’r nmlimd ennc cdlivdry larjds riyd im 2013 - 2018E Source: Analysys, Deutsche Bank estimates Finance 58 Finance offers various fin ancial products including cash loan s , used car/rent loan s , financial products (58 Qian Gui), credit cards and lottery. Except for the lottery business , which is currently banned by government policies, most of of 58 Finance ’r P2P products are vertical serv ice s compl e ldmsimg 58.cnl’r nsgdr business es, such as providing used car installment plan s and monthly rent payment plan s (usually by quarter or by year ). For credit card application s , 58.com performs as a traffic transfer platform where customers are dire cted to the relevant websites to apply for credit cards offered by commercial banks. Figure 8 2 shows th at th d GLV ne Cgima’r P2P ldmcimg rnardc 231% YnY sn RMB830bn in 2015 and is estimated to reach RMB3.5tr in 2019 , according to iResearch. We believe the finance business revenue sh ould grow at a healthy pace given the connection with other main verticals , while the revenue contribution would be a small er portion given the China government ’r more restrict ive regulation s on P2P lending. 5 October 2016 Software & Services WUBA Page 50 Deutsche Bank AG/Hong Kong Figure 82 : China's P2P lending GMV in 2012 - 2019 Source: iResearch, Deutsche Bank Online dating For online dating, we see a market size of RMB692 m in 4Q15, with a growth rate of 10.85% YoY according to Analy

46 sys ( 易观国际 ). Figure 83 : Ma
sys ( 易观国际 ). Figure 83 : Market size of China's online dating in 4Q14 - 4Q15 Source: Analysys, Deutsche Bank Ddroisd sgd cnmsimtntrly grnvimg larjds, sgd atrimdrr lncdl ne 58.cnl’r online dating business finds it hard to earn money as a traffic transfer platfo rm to other market player Zhenai.com. Jiayuan.com is the market leader in the online dating business, with a market share of 27% in 4Q15, followed by Youyuan.com (16%), Zhenai.com (10%) and Baihe.com (6.9%). The combined 60% market share of the top four pl ayers also lead s to higher entry barrier s for 58.com to acquire more share in this market. 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 51 Transportation 58.cnl’r car rdrvicdr imcltcd car rdmsal s , driving school service s , car repair s and maintenance, as well as training services. For the car rental busi ness, we can seen the market size accelerating to RMB54bn in 2016E with more than 200 m Chinese people holding driving license but two - thirds of of them do not have a car. The huge demand for long - term car rental s as well as short - term rental s while travell ing, both drive the future growth of this business. However, 58.cnl’r car rdmsal atrimdrr ir in competi tio n with much stronger companies such as CAR Inc., eHi and recent entrant Didi Chuxing. We believe it w ill take longer for 58.com to generate more reven ue from this vertical given the competition landscape. Figure 84 : 58.cnl’r car rdmsal atrimdrr lncdl Source: Company data, Deutsche Bank Ticketing 58.cnl’r sicjdsimg atrimdrr imc

47 ltcdr dvdmsr sicjdsr rtcg ar cnmcdrsr, l
ltcdr dvdmsr sicjdsr rtcg ar cnmcdrsr, lnv ies, operas and plays, and travel related tickets like sightseeing spots, train and bus tickets. Figure 85 : 58.cnl’r sicjdsimg atrimdrr lncdl Source: Company data, Deutsche Bank Healthcare 58.com provides healthcare info rmation as well as directing users to another online healthcare site for consultation s and appointment s . Cgima’r nmlimd healthcare market size was RMB11bn in 2014, according to an iResearch 5 October 2016 Software & Services WUBA Page 52 Deutsche Bank AG/Hong Kong report. There are already a few online healthcare players – large internet peer s like Baidu, finance companies like Ping An Trust and many startups with specific business focuses such as appointment s and online consultation s . Similar to the online dating business, we believe it is also hard to monetize this vertical as c onsumption may only occur after traffic has been direct ed to 58.cnl’r oarsmdr. 58 Home The home services industry in China is massive but fragmented. 58 Home operates a mobile - based transactional platform for home services, such as home cleaning, moving se rvices, and manicure services provided at home. Currently , 58 Hnld’r rdvdmtd ir cdcnmrnlicasdc ernl 58.cnl’r eimamcialr vgild it still brings traffic to the company. Ownership structure 58.com is 22.9% owned by Tencent Holdings Ltd , followed by Mr. Jinbo Yao, CEO and Chairman of 58.com, holding 11.3% of the company (as of Feb ruary 2016) as indicated in Figure 8 6 . Figure 86 : 58.cnl’r nvmdrrgio rsrtcstrd ar ne Fdartary 29, 2016 Source: Company data, De

48 utsche Bank Managemen t profile 58.c
utsche Bank Managemen t profile 58.com was founded by Jinbo Yao, the current chairman and CEO of the company. We give details of the senior management team below in Figure 8 7 . 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 53 Figure 87 : 58.cnl’r lamagdldms sdal Source: Company data 5 October 2016 Software & Services WUBA Page 54 Deutsche Bank AG/Hong Kong Appendix 1 Important Disclosures Additional information available upon request Disclosure checklist Company Ticker Recent price* Disclosure WUBA WUBA.N 47.52 (USD) 4 Oct 16 NA *Prices are current as of the end of the previous trading session unless otherw ise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendatio ns or estimates made on securit ies other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look - up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr. For disclosures pe rtaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look - up page on our website at http://gm.db.com/ger/disclosure/Disclosure.eqsr?ricCode=WUBA.N Analyst Certification The views expressed in this report accurately refle ct the personal views of the undersigned lead analyst(s) about

49 the subject issuer and the securities
the subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view i n this report. Alvin Jiang Historical recommendations and target price: WUBA (WUBA.N) (as of 10/5/2016) Previous Recommendations Strong Buy Buy Market Perform Underperform Not Rated Suspended Rating Current Recommendations Buy Hold Se ll Not Rated Suspended Rating *New Recommendation Structure as of September 9,2002 **Analyst is no longer at Deutsche Bank 1. 05/10/2016: Upgrade to Buy, Target Price Change USD65.00 Alvin Jiang 5 October 2016 Software & Services WUBA Deutsche Bank AG/Hong Kong Page 55 Equity rating key Equity rating dispersion and banking relationships Buy: Based on a current 12 - month view of total share - holder return (TSR = percentage change in share price from current price to projected target price plus pro - jected dividend yield ) , we recommend th at investors buy the stock. Sell: Based on a current 12 - month view of total share - holder return, we recommend that investors sell the stock Hold: We take a neutral view on the stock 12 - months out and, based on this time horizon, do not recommend either a Buy or Sell. Newly issued research recommendations and target prices supersede previously published research. Regulatory Disclosures 1.Important Additional Conflict Disclosures Aside from within this report, important conflict disclosures can als o be found at https://gm.db.com/equities unde

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