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): Weakest Business Line Transfers Risk to Suppliers and Cuts Headcount, 38% Upside

Amazon (AMZN): Has Failed and Will Continue to Fail in China – From a Regular Shopper’s Perspective

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

Alibaba (BABA): Jack Ma’s Retirement Plan - Wants to or Has To?

Alibaba (BABA) – Cuts Cloud Computing Sales in US

Alibaba (BABA): Freezes Hiring and Minor Businesses to Save Margin, Upgrade to HOLD

Alibaba (BABA): Eventually Non-State Owned Companies Do Not Need to Face Another Judgement Day

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<ul class="">
<li>For the December quarter results, the market is focusing on the slowdown of the revenue growth, but we notice that the growth rate of operating profits recovered.</li>
<li>In two of our previous reports, we mentioned BABA’s efforts on cost control in the second half of 2018. Now we can see the results.</li>
<li>We believe the most important risk is the significant operating losses in the minor business “digital media”.</li>
<li>The P/E band suggests that the stock price has an upside of 40%.</li>
</ul>


For the December quarter results, the market is focusing on the slowdown of the revenue growth, but we notice that the growth rate of operating profits recovered.
In two of our previous reports, we mentioned BABA’s efforts on cost control in the second half of 2018. Now we can see the results.
We believe the most important risk is the significant operating losses in the minor business “digital media”.
The P/E band suggests that the stock price has an upside of 40%.


Alibaba (BABA): For Dec. Quarter, Focus on Profit Improvement, But Not Revenue Growth, 40% Upside