Strong domestic smartphone shipments. Coolpad ranked third in the domestic smartphone market share in 2013 due to the company's good relationship with telecom operators, mature brand effects, and innovative mobile phone features. Smartphone shipments will increase in 2014-15. With the launch of 4G networks in China, we expect Coolpad to benefit from telecom operators' strategies and accelerate user growth by launching low-end 4G smartphones. Strong 3G smartphone shipments will continue as 2G users speed up the upgrade to 3G networks. Smartphone shipments are expected to increase by 57.8%/77.8%/58.7% year on year in FY13-15. The average price of smartphones will be affected by increased competition in the market. Due to intense market competition, the average smartphone price is expected to fall by 10.0%/28.0%/25.0% year on year in fiscal year 13-15. We set an investment rating of “buy” and a target price of HK$4.40. Due to strong smartphone shipments and the increase in the contribution of 4G smartphones, the earnings per share forecast for the 13-15 fiscal year is expected to increase by 32.8%/27.4%/11.2% year on year. The target price is equivalent to 16.9 times the FY14 price-earnings ratio, 15.2 times the FY15 price-earnings ratio, and 3.4 times the FY14 net price-earnings ratio. We set Coolpad's investment rating as “buy” based on strong smartphone shipments, increased brand recognition, and benefits from economies of scale.