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

Alibaba (BABA): Weakest Business Line Transfers Risk to Suppliers and Cuts Headcount, 38% Upside

Amazon (AMZN): Has Failed and Will Continue to Fail in China – From a Regular Shopper’s Perspective

IQIYI (IQ US): 3Q18 Results Show that the Hype Is Slowly Running Out of Steam

IQIYI: Is There A (Clear) Path to Profitability?

IQiyi (IQ): Temporary Headwind in Ad Revenues, But Robust Membership Revenues in 3Q18

Baidu (BIDU): IQiyi (IQ) Caught a Hit TV Series

Equity Bottom-Up

<ul class="">
<li>We notice that the growth rate of cost of revenues exceeded the growth rate of membership revenues.</li>
<li>We believe that the margins will continue to decline even if the advertising business recovers.</li>
<li>IQ has the largest monthly active users in the video market, but it does not have an obvious advantage over <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26:1">Tencent Holdings (700 HK)</a> .</li>
</ul>


We notice that the growth rate of cost of revenues exceeded the growth rate of membership revenues.
We believe that the margins will continue to decline even if the advertising business recovers.
IQ has the largest monthly active users in the video market, but it does not have an obvious advantage over Tencent Holdings (700 HK) .


IQiyi (IQ): In 4Q18, Baidu’s Growth Engine Lost Control Over Content Cost

iQIYI Inc

IQiyi (IQ): In 4Q18, Baidu’s Growth Engine Lost Control Over Content Cost