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) – Cuts Cloud Computing Sales in US

Alibaba Pivot Support Breach with 150 and 135 Targets

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

Alibaba (BABA) – Kicking Competitors Out of Cloud Computing with a Stable Negative Margin

A Visit to Super Species - Investee of Tencent and Alibaba's Main Competitor In "New Retail"

A Visit to Alibaba’s “New Retail” – Physical Store Hema

BABA Sacrificed Margin to Acquire Customers in FY2018

Equity Bottom-Up

Alibaba Group Holding  / Equity Bottom-Up

<ul class="">
<li>Operating margin plunged to 10% in 1Q19 versus 35% in 1Q18.</li>
<li>Revenue growth accelerated merely due to the additions of new business lines.</li>
<li>Cainiao Network revenues declined – the business was just consolidated in the income statement 2 quarters before.</li>
<li>Following competitors, BABA diversified into many thin margin businesses.</li>
<li>We believe BABA is seeking monopoly, but we are concerned the margins and the time BABA will take.  SELL.</li>
</ul>


Operating margin plunged to 10% in 1Q19 versus 35% in 1Q18.
Revenue growth accelerated merely due to the additions of new business lines.
Cainiao Network revenues declined – the business was just consolidated in the income statement 2 quarters before.
Following competitors, BABA diversified into many thin margin businesses.
We believe BABA is seeking monopoly, but we are concerned the margins and the time BABA will take.  SELL.


Alibaba (BABA): Logistics Fails as Part of Aggressive Diversification