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

New Oriental Hong Kong Secondary - Might Be Relatively Small

New Oriental Hong Kong Secondary Trading - Largest ADR/HK Listing Premium Yet

China Online Education - Diversified Revenue Stream Wins Here - Balance in All Things

New Oriental (EDU): Students Declined YoY for First Time in Seven Years

New Oriental (EDU): Will Stop Declining in Two Quarters, but Over-Optimistic at Current Price

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Bottom-Up

New Oriental Education & Techn / Equity Bottom-Up

<ul>
<li>EDU’s student growth turned positive, but revenue growth was still negative in 1Q21 (by August 2020).</li>
<li>We believe revenue growth rate will accelerate and operating margin will improve YoY in 3Q21.</li>
<li>We believe it is a manipulation signal that the stock price rose before the quarterly result.</li>
<li>The P/E band suggests a downside of 22%.</li>
</ul>


EDU’s student growth turned positive, but revenue growth was still negative in 1Q21 (by August 2020).
We believe revenue growth rate will accelerate and operating margin will improve YoY in 3Q21.
We believe it is a manipulation signal that the stock price rose before the quarterly result.
The P/E band suggests a downside of 22%.


New Oriental (EDU): Wait for Lower Price or Wait for Better Financials in F3Q21