Revenue in 2014 rose 20.3% year-on-year to 661 million yuan, in line with expectations. E-commerce business grew 31.8% year-on-year, faster than the offline 17.7% year-on-year growth, and continues to be the growth driver of the company. E-commerce accounted for 20.3% of total sales in 2014, compared with 18.6% in 2013.

Due to fierce competition in the industry, gross profit margin fell 1.6 percentage points year-on-year to 37.7%, 1.0 percentage points lower than we expected. Although the average price increased by 1.0%, it still could not offset the increase in outsourcing production costs. Net profit in 2014 rose 6.4 per cent year-on-year to 138 million yuan, 4.2 per cent lower than we expected, mainly because of lower-than-expected gross margins.

Maintain the "buy" rating and the target price of HK $1.52. The fierce competition in the industry reacts to the contraction of gross profit margin. However, with the gradual relaxation of the "one-child policy" and the increase in disposable income, child-related consumption is expected to be strong. MIG will benefit from the prosperity of the industry. We maintain a "buy" rating and a target price of HK $1.52, equivalent to 5.9 times and 5.4 times 2015 and 2016 earnings, respectively.