Overseas Chinese Equities, Aequitas Research

Ming Lu

A veteran with 19-year experience in equity research.

Geographical coverage:
* Companies operating in China, but listed in Hong Kong and the U.S.
* Previously China A-share (listed in mainland China).

Equity sector coverage:
* Chinese App / Internet-based consumption in China, e.g., Alibaba, Tencent, etc.
* Previously covered education, transportation, telecom, power, bank, advertisement, hotel, etc.

Research methods:
* Generally bottom-up.
* Talk to related people on the ground.  Talk to readers and independent writers for analyzing a news portal.  Talk to parents and teachers for analyzing a tutoring school. 
* Visit stores and show photos as evidence in notes.
* Do technical analysis when finding a short-seller attacking an equity.

Languages:
* English
* Mandarin Chinese (Official language of China)
* Shanghainese (Language of Shanghai, the most developed city in China)
* Cantonese (Language of Hong Kong and Canton Province, one of the most developed provinces in China)

Overseas Chinese Equities

Alibaba (BABA): A Visit to Hema’s New Business “Pick’n Go” – A Careless Variation

Alibaba (BABA): A Visit to New Business Hema-Mini – Successful Change

Alibaba (BABA): A Visit to Hema Bazaar – Has Found Key Problem, But Not Thorough Solution

Alibaba (BABA): Growth Accelerated After New Law Headwind, Cost Control Will Fix Margin, 30% Upside

Alibaba (BABA): Thorough Explanation of June Re-Organization

Alibaba (BABA US): Early Thoughts on the Hong Kong Listing

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<ul>
<li>We are pessimistic about “new retail”, but still optimistic about BABA.</li>
<li>Our price target is still at USD232, significantly higher than the market price.</li>
<li>By far, except for Hema’s first store, no “new retail” store, neither for Alibaba nor for competitors, has made money.</li>
<li>“New retail” is one of BABA’s three expansion ways, but by far BABA can hardly find a business better than e-commerce in China.</li>
</ul>


We are pessimistic about “new retail”, but still optimistic about BABA.
Our price target is still at USD232, significantly higher than the market price.
By far, except for Hema’s first store, no “new retail” store, neither for Alibaba nor for competitors, has made money.
“New retail” is one of BABA’s three expansion ways, but by far BABA can hardly find a business better than e-commerce in China.


Alibaba (BABA): Failure of “New Retail”