Will the real clean master please stand up? I reiterate my bearish view that the consensus is overly bullish on the stock and that share price is at risk if monetization does not materialize in the near-term. The 0% monetization rate for its mobile products is likely to continue in the near-term, which makes the current valuation unjustifiable. Clean Master, mobile security and app distribution) are facing competitive pressure from the established incumbents. In my view, CMCM's valuation is overly rich at 110x FY14 earnings when the company's PC products are facing the structural shift of ad dollars from PC to mobile and that its mobile products (ie. This trend is likely to make it unnecessary for the users to install the Clean Master or Cheetah Mobile security. As for the international market, where many investors and analysts are hoping for an eventual monetization, I believe that CMCM will face similar challenges despite its favorable ranking on Google Play as smartphone OEMs and carriers begin to pre-install mobile security software by collaborating with branded mobile security firms that are familiar to the consumers. As such, I do not see CMCM has the ability, the financial resource and the brand advantage to compete against Qihoo ( QIHU), Baidu ( BIDU) and Tencent in China. My conclusion is that despite having over 223m mobile MAUs (of which 140m belongs to the 'Clean Master'), CMCM does not have a meaningful competitive advantage in the mobile cleaner space due to the lack of technological sophistication behind the product.

In conjunction with my initiation on Cheetah Mobile ( NYSE: CMCM) (Please see my note: Cheetah Mobile: This Cat Has A Long Way To Go Initiating With $16 Target, 24% Downside), I conducted a deep analysis on the mobile cleaner market.

Cheetah mobile cleanmaster