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

JD.COM (JD): Record High Margin Since IPO, Stock Price Can Be Double

Last Week on China Internet (14 Oct 2019): Richest Chinese and Forbes Top Digital Companies

Last Week on China Internet (21Oct19): Baidu Saves Paper Cup, Tencent Signed up China's Largest Bank

JD.com (JD): Lawsuit Over, Price Falling Back to First Trading Day, Defensive in Bear Market

JD.com (JD): Cancels Delivery Man’s Basic Salary, Adapts to Growth of Commission Business

JD.com (JD): The Real Main Business Grew 46% YoY, and Not 20% YoY in 4Q2018

Equity Bottom-Up

<ul>
<li>JD is dismissing white-collar workers and cutting blue-collar workers’ benefits.</li>
<li>We believe the operating margin will be 8.5% in 2019 and 16.4% in 2020 versus negative numbers in previous years after the cost control.</li>
<li>We believe the revenues grew 28% YoY in 1Q19, rather than 21% YoY, when we define pro forma revenues as the sum of direct sales gross profits and service revenues.</li>
<li>The historical average of price / sales ratios suggests upside of 55% and a price target of USD44.</li>
</ul>


JD is dismissing white-collar workers and cutting blue-collar workers’ benefits.
We believe the operating margin will be 8.5% in 2019 and 16.4% in 2020 versus negative numbers in previous years after the cost control.
We believe the revenues grew 28% YoY in 1Q19, rather than 21% YoY, when we define pro forma revenues as the sum of direct sales gross profits and service revenues.
The historical average of price / sales ratios suggests upside of 55% and a price target of USD44.


JD.com (JD): Good to See Cost Control, 55% Upside

JD.com Inc (ADR)

JD.com (JD): Good to See Cost Control, 55% Upside