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

Baidu (BIDU): The Change Amounts to Business Suicide, Disappointing Existing Users and Clients

Baidu (BIDU): Stagnant in 4Q18, Wrong Change Feeds a 24% User Increase to Google

Baidu (BIDU): Obituary - Review the Way to First Loss Since IPO

Baidu (BIDU) – Google Rumor Not a Concern, Healthy 2Q18, and 50%+ Upside

Baidu (BIDU) – Yes, COO Saved Baidu, But No, His Resignation Not a Concern

Baidu (BIDU): To Win Battle with Sogou (SOGO) Over Traffic Hijacking After 4 Years

Baidu – IQIYI IPO Surfaces Value of Core Business – Search Is Undervalued

Equity Bottom-Up

<ul class="">
<li>The operating margin of the search business declined in 3Q18 - We believe return to the hospital clients raised marketing expenses.</li>
<li>We believe that hospital clients will bring significant revenues.</li>
<li>Subsidiary iQiyi (IQ)’s negative operating margin was flat with the same period last year.</li>
<li>
<a href="https://www.smartkarma.com/entities/26755" target="_blank" data-smartkarma-citation="entities:26755:1">iQIYI Inc (IQ US)</a> revenues grew 40% yoy in 3Q18 versus 15% yoy for the search business.</li>
</ul>


The operating margin of the search business declined in 3Q18 - We believe return to the hospital clients raised marketing expenses.
We believe that hospital clients will bring significant revenues.
Subsidiary iQiyi (IQ)’s negative operating margin was flat with the same period last year.

iQIYI Inc (IQ US) revenues grew 40% yoy in 3Q18 versus 15% yoy for the search business.


Baidu (BIDU): Returning to Hospital Clients Impacted Margin, But Will Bring Growth, 17%~59% Upside