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

(Some) Promises Kept in 1Q19, but Retaining Sell Rating and $36 Target Price for Ctrip.com

TRACKING TRAFFIC/Chinese Tourism: Destination Shift Could Dampen 2019 Spending

TRACKING TRAFFIC/Chinese Tourism: May Firmer, but HK & Macau Boom Suggests Tourists Pinching Pennies

Ctrip (CTRP): Overcame Two Difficulties in Q4, But Market Over-Reacted to “Global No. 1”

Re-Initiating Coverage of Ctrip.com: Challenges to Resurface in 2H19

Ctrip.com (CTRP): Surpasses Expedia and Booking to Become the Largest OTA, Upgrade to HOLD

TRACKING TRAFFIC/Chinese Tourism: HK & Macau Gained 'Share' in December, Continuing H218 Trend

Equity Bottom-Up

<ul>
<li>CTRP reached its highest Q1 operating margin in the past 6 years.</li>
<li>We believe the growth rate ceiling of “transportation ticketing” is the growth of “accommodation reservation”, i.e. 21% YOY.</li>
<li>The travelers increased 13.7% in China during in the Labor Day holidays in May 2019 versus May 2018.</li>
<li>Unsustainable “other income” of RMB4.6 billion in 1Q19 came from “fair value changes in equity securities investments”.</li>
<li>We believe CTRP is fairly valued, based on P/E comparison with Chinese Internet leaders and international online travel agencies. Upgrade to Hold.</li>
</ul>


CTRP reached its highest Q1 operating margin in the past 6 years.
We believe the growth rate ceiling of “transportation ticketing” is the growth of “accommodation reservation”, i.e. 21% YOY.
The travelers increased 13.7% in China during in the Labor Day holidays in May 2019 versus May 2018.
Unsustainable “other income” of RMB4.6 billion in 1Q19 came from “fair value changes in equity securities investments”.
We believe CTRP is fairly valued, based on P/E comparison with Chinese Internet leaders and international online travel agencies. Upgrade to Hold.


Ctrip (CTRP): Highest Q1 Operating Margin Since 2014, Upgrade to HOLD

Trip.com

Ctrip (CTRP): Highest Q1 Operating Margin Since 2014, Upgrade to HOLD