Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Thematic (Sector/Industry)

In CY 2018 private AST operators responded to the regulatory tightening by swiftly reigning in their capacity expansions. In July 2018 <a href="https://www.smartkarma.com/entities/new-oriental-education-tech-grp-adr" target="_blank" data-smartkarma-citation="entities:531:1" rel="noopener">New Oriental Education (EDU US)</a>  and <a href="https://www.smartkarma.com/entities/tal-education-group" target="_blank" data-smartkarma-citation="entities:1124:1" rel="noopener">TAL Education (TAL US)</a>  guided ~27% and ~45% YoY topline YoY growth in the following summer semesters (August Q 2018, FQ2 19 for TAL, FQ1 19 for EDU), decelerating from 44% and 71% YoY growth in FQ1 2019 ended May 2018, respectively.  Both stocks were massively sold off:  TAL declined by 51% from then all-time high of 47 USD in June to 23 USD in October 2018.   During the same period, EDU dropped 50% from then all-time high of 105 USD (before 10 for 1 stock split on March 2021) in June 2018 to 52 USD in December 2018.   Nevertheless, since then EDU and TAL delivered 198% and 164% return since the beginning of 2019.

In CY 2018 private AST operators responded to the regulatory tightening by swiftly reigning in their capacity expansions. In July 2018 New Oriental Education (EDU US)  and TAL Education (TAL US)  guided ~27% and ~45% YoY topline YoY growth in the following summer semesters (August Q 2018, FQ2 19 for TAL, FQ1 19 for EDU), decelerating from 44% and 71% YoY growth in FQ1 2019 ended May 2018, respectively.  Both stocks were massively sold off:  TAL declined by 51% from then all-time high of 47 USD in June to 23 USD in October 2018.   During the same period, EDU dropped 50% from then all-time high of 105 USD (before 10 for 1 stock split on March 2021) in June 2018 to 52 USD in December 2018.   Nevertheless, since then EDU and TAL delivered 198% and 164% return since the beginning of 2019. 

China’s Congress on AST Industry Oversight: Mostly Rhetoric, Little Practicality

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<ul class="">
<li>The chief of the People’s Bank of China made a positive comment on Ant Group.</li>
<li>India will ban 59 Chinese apps forever.</li>
<li>Tencent Music (TME US) increased its shareholdings in Universal Music Group.</li>
<li>Xiaomi (1810 HK)'s smartphone shipment increased by 32% yoy in 4Q20. </li>
</ul>


The chief of the People’s Bank of China made a positive comment on Ant Group.
India will ban 59 Chinese apps forever.
Tencent Music (TME US) increased its shareholdings in Universal Music Group.
Xiaomi (1810 HK)'s smartphone shipment increased by 32% yoy in 4Q20. 


China Internet Weekly (1Feb2021): Central Bank's Positive Comment on Ant, Xiaomi Got Mkt Share in Q4

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

Following the <a href="https://www.smartkarma.com/entities/gamestop-corp-class-a" target="_blank" data-smartkarma-citation="entities:13790:1" rel="noopener">GameStop Corp Class A (GME US)</a> saga that has been all over the financial press (and is now spreading into the mainstream press), we have been getting questions on names in Hong Kong that could be prone to a squeeze.We do not believe that retail players in Hong Kong have the heft that retail investors in the US do, nor are single stock options frequently used (though there is a lot of retail activity in warrants on large cap names), but the pain that is being felt in global portfolios could lead to unwinding in Hong Kong shorts too.Some highly shorted stocks in Hong Kong that have seen prices jump today along with volume surge are <a href="https://www.smartkarma.com/entities/ping-an-healthcare-and-technology-company-limited" target="_blank" data-smartkarma-citation="entities:27008:1" rel="noopener">Ping An Healthcare and Technology Company Limited (1833 HK)</a>, <a href="https://www.smartkarma.com/entities/hang-seng-bank-ltd" target="_blank" data-smartkarma-citation="entities:24:1" rel="noopener">Hang Seng Bank (11 HK)</a>, <a href="https://www.smartkarma.com/entities/vitasoy-intl-holdings-ltd" target="_blank" data-smartkarma-citation="entities:2807:1" rel="noopener">Vitasoy Intl Holdings (345 HK)</a>, <a href="https://www.smartkarma.com/entities/china-literature-ltd" target="_blank" data-smartkarma-citation="entities:24388:1" rel="noopener">China Literature (772 HK)</a>, <a href="https://www.smartkarma.com/entities/bank-of-east-asia-ltd" target="_blank" data-smartkarma-citation="entities:341:1" rel="noopener">Bank of East Asia (23 HK)</a>, <a href="https://www.smartkarma.com/entities/mtr-corp" target="_blank" data-smartkarma-citation="entities:13289:1" rel="noopener">MTR Corp (66 HK)</a>, <a href="https://www.smartkarma.com/entities/want-want-china-holdings-ltd" target="_blank" data-smartkarma-citation="entities:355:1" rel="noopener">Want Want (151 HK)</a>, <a href="https://www.smartkarma.com/entities/samsonite-international-sa" target="_blank" data-smartkarma-citation="entities:12790:1" rel="noopener">Samsonite (1910 HK)</a> and <a href="https://www.smartkarma.com/entities/wharf-real-estate-investment" target="_blank" data-smartkarma-citation="entities:26031:1" rel="noopener">Wharf Real Estate Investment (1997 HK)</a>.We identify more stocks that could be prone to short covering based on short interest as a percentage of issued shares, free float and in terms of days of ADV to cover.

Following the GameStop Corp Class A (GME US) saga that has been all over the financial press (and is now spreading into the mainstream press), we have been getting questions on names in Hong Kong that could be prone to a squeeze.We do not believe that retail players in Hong Kong have the heft that retail investors in the US do, nor are single stock options frequently used (though there is a lot of retail activity in warrants on large cap names), but the pain that is being felt in global portfolios could lead to unwinding in Hong Kong shorts too.Some highly shorted stocks in Hong Kong that have seen prices jump today along with volume surge are Ping An Healthcare and Technology Company Limited (1833 HK), Hang Seng Bank (11 HK), Vitasoy Intl Holdings (345 HK), China Literature (772 HK), Bank of East Asia (23 HK), MTR Corp (66 HK), Want Want (151 HK), Samsonite (1910 HK) and Wharf Real Estate Investment (1997 HK).We identify more stocks that could be prone to short covering based on short interest as a percentage of issued shares, free float and in terms of days of ADV to cover.

<ul>
<li>The stock price surged after the announcement of the 3Q21 result, as the revenue growth rate climbed up.</li>
<li>However, operating loss was deepened due to significant increase of selling and marketing expense.</li>
<li>We believe that TAL’s ability of revenue generation is overvalued according to the unbelievably low prices of online courses.</li>
</ul>


The stock price surged after the announcement of the 3Q21 result, as the revenue growth rate climbed up.
However, operating loss was deepened due to significant increase of selling and marketing expense.
We believe that TAL’s ability of revenue generation is overvalued according to the unbelievably low prices of online courses.


TAL Education (TAL): Meaningless Growth Rate in 3Q21

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

Poppins Holdings Inc / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/poppins-holdings-inc" target="_blank" data-smartkarma-citation="entities:31056:1" rel="noopener">Poppins Holdings Inc (7358 JP)</a> , the provider of child and elderly care services in Japan has filed for an IPO to list its shares on the Tokyo Exchange. The company will be issuing 1.1m new shares at the IPO while existing shareholders will issue 2.15m shares, and at the midpoint of the IPO pricing of JPY2,750 per share, the company will raise gross proceeds of JPY8.9bn (US$85.8m).In our previous insight on the company’s IPO, we examined the company’s business model, segments and financials. In this insight, we discuss the company’s valuation.Read our previous insight on the company's IPO:<a href="https://www.smartkarma.com/insights/poppins-ipo-well-positioned-to-benefit-from-japanese-demographic-trends" target="_blank" data-smartkarma-citation="insights:46156" rel="noopener">Poppins IPO: Well Positioned to Benefit from Japanese Demographic Trends</a>

Poppins Holdings Inc (7358 JP) , the provider of child and elderly care services in Japan has filed for an IPO to list its shares on the Tokyo Exchange. The company will be issuing 1.1m new shares at the IPO while existing shareholders will issue 2.15m shares, and at the midpoint of the IPO pricing of JPY2,750 per share, the company will raise gross proceeds of JPY8.9bn (US$85.8m).In our previous insight on the company’s IPO, we examined the company’s business model, segments and financials. In this insight, we discuss the company’s valuation.Read our previous insight on the company's IPO:Poppins IPO: Well Positioned to Benefit from Japanese Demographic Trends 

Poppins IPO Valuation: Attractively Priced for a Growing Company

China

East Buy Holding Limited operates livestreaming platform businesses. The Company provides private label products including agricultural products, food, books, and household goods. East Buy Holding also conducts college education businesses.

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East Buy Holding (1797 HK)

China’s Congress on AST Industry Oversight: Mostly Rhetoric, Little Practicality

The crackdown on irregular AST businesses, if seriously implemented, will wipe out small operators (mostly mom and pops), and leave the big ones...

JL Warren Capital

HK Shorts: Squeeze-O-Meter

Following the GameStop saga, we try to identify stocks in HK that could be susceptible to a short squeeze based on short interest vs issued shares...

Brian Freitas

TAL Education (TAL): Meaningless Growth Rate in 3Q21

The stock price surged after the announcement of the 3Q21 result, as the revenue growth rate climbed up. However, we believe that TAL’s ability of...

Ming Lu

Poppins IPO Valuation: Attractively Priced for a Growing Company

Poppins, the provider of child and elderly care services in Japan has filed for an IPO to list its shares on the Tokyo Exchange. In this insight,...

Shifara Samsudeen, ACMA, CGMA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China’s Congress on AST Industry Oversight: Mostly Rhetoric, Little Practicality

The crackdown on irregular AST businesses, if seriously implemented, will wipe out small operators (mostly mom and pops), and leave the big ones...

JL Warren Capital

China Internet Weekly (1Feb2021): Central Bank's Positive Comment on Ant, Xiaomi Got Mkt Share in Q4

The chief of Chinese central bank positively commented Ant Group.India will ban 59 Chinese apps forever. Tencent Music increased its shareholdings...

Ming Lu

HK Shorts: Squeeze-O-Meter

Following the GameStop saga, we try to identify stocks in HK that could be susceptible to a short squeeze based on short interest vs issued shares...

Brian Freitas

TAL Education (TAL): Meaningless Growth Rate in 3Q21

The stock price surged after the announcement of the 3Q21 result, as the revenue growth rate climbed up. However, we believe that TAL’s ability of...

Ming Lu

Poppins IPO Valuation: Attractively Priced for a Growing Company

Poppins, the provider of child and elderly care services in Japan has filed for an IPO to list its shares on the Tokyo Exchange. In this insight,...

Shifara Samsudeen, ACMA, CGMA