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

China Internet Weekly (31Aug2020): Q2 Result of Weak Xiaomi, Overheated BILI, DADA, and BITA

China Internet Weekly (7Sep2020): BABA Re-Opened Freshippo Stores, India Banned Tencent’s Top Game

China Internet Weekly (14Sep2020): Meituan & Ele.me Criticized as Sweatshop

Autohome (ATHM): Poor Performance Due to Bad Market and Bad Decisions

Autohome (ATHM): See Recovery of China Passenger Car Sales, 11% of Last Year in Feb, But 76% Now

Autohome (ATHM): Positive - Competitors Became Clients, Negative - Inflated Leads Revenues, Hold

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

China Internet Weekly (2Mar2020): Photos of Rush Hour in Shanghai, ByteDance Starts Search App

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

<ul>
<li>ATHM’s operating margin improved to 29% in 2Q20 versus 25% in 2Q19.</li>
<li>The car sales volume in China declined YoY before the pandemic, but turned positive in recent four months.</li>
<li>The YoY growth rate of passenger cars in China in July 2020 reached record high since May 2018.</li>
<li>We set an upside of 28% (Exhibit 9) and a price target of US$111.</li>
<li>The ‘ceiling’ of US$90 can be a concern, but can also be an opportunity.</li>
</ul>


ATHM’s operating margin improved to 29% in 2Q20 versus 25% in 2Q19.
The car sales volume in China declined YoY before the pandemic, but turned positive in recent four months.
The YoY growth rate of passenger cars in China in July 2020 reached record high since May 2018.
We set an upside of 28% (Exhibit 9) and a price target of US$111.
The ‘ceiling’ of US$90 can be a concern, but can also be an opportunity.


Autohome (ATHM): Higher Margin in 2Q20 and China Car Market Growing Faster Than Last Year

Autohome Inc (Adr)

Autohome (ATHM): Higher Margin in 2Q20 and China Car Market Growing Faster Than Last Year