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

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

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

JD.com (JD): Time to Accumulate - Answers to Typical “Buts”

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

JD.com (JD): 3Q18 Not Slowing Down, As Two Parts of Revenues Not Comparable!

Equity Bottom-Up

<ul class="">
<li>We believe the real main business line is service (commission), but not product (direct sales).</li>
<li>In 4Q2018, service revenues grew by 46% YoY, but nominal main business line, product, grew only 20%.</li>
<li>JD raised its commission rate in 2018, as demonstrating  that the company still has the bargaining power over retailers.</li>
<li>Historical GMV numbers suggest significant upside.</li>
</ul>


We believe the real main business line is service (commission), but not product (direct sales).
In 4Q2018, service revenues grew by 46% YoY, but nominal main business line, product, grew only 20%.
JD raised its commission rate in 2018, as demonstrating  that the company still has the bargaining power over retailers.
Historical GMV numbers suggest significant upside.


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

JD.com Inc (ADR)

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