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

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

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): Commission Conflict with Dealers, as Auto Industry Suffers First Decline Since 1990

Autohome (ATHM): Promising Auto Loan, Waiting for Buying Opportunity

Autohome (ATHM): Lower Margin in 3Q18, But Fully Impacted Since Our Previous Risk Note

Equity Bottom-Up

<ul>
<li>The 1Q19 results show that we were right to upgrade ATHM to HOLD in our last note.</li>
<li>However, the stock surged after our upgrading; therefore, we believe that it might be  overvalued now.</li>
<li>The margin stopped declining in 1Q19, which suggests the auto loan business launched last year will bring profits in 2019.</li>
<li>We set the downside at 12% and the price target at USD97 based on a P/E comparison with other Chinese internet leaders.</li>
</ul>


The 1Q19 results show that we were right to upgrade ATHM to HOLD in our last note.
However, the stock surged after our upgrading; therefore, we believe that it might be  overvalued now.
The margin stopped declining in 1Q19, which suggests the auto loan business launched last year will bring profits in 2019.
We set the downside at 12% and the price target at USD97 based on a P/E comparison with other Chinese internet leaders.


Autohome (ATHM): Surged After We Upgraded to Hold, Now Overvalued

Autohome Inc (Adr)

Autohome (ATHM): Surged After We Upgraded to Hold, Now Overvalued