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

TAL Education (TAL US) - Chaos in Junior High School Application in Shanghai

OneSmart Education IPO: Leader in the One-On-One Tutoring but Wider Discount Needed

High School Enrolment Reform at Shanghai Pushing Students to Tutoring and Private Schools

Schools Come and Go, But Parents Stay Anxious – Promising Education Industry in China

Equity Bottom-Up

<p><strong>Summary</strong></p>
<ul>
<li>The education authorities’ “burden relief” policy negatively impacted tutoring programs for elementary schools pupils, but One Smart operates 1-on-1 programs which meet the needs of high school students.</li>
<li>Many tutoring schools failed in 1-on-1 businesses, merely because they focused on elementary school pupils. But One Smart mainly covers high school programs.</li>
<li>Based on P/E ratio comparison with other part-time tutoring schools, we believe One Smart has upside of 28% by August 2019.</li>
</ul>

Summary

The education authorities’ “burden relief” policy negatively impacted tutoring programs for elementary schools pupils, but One Smart operates 1-on-1 programs which meet the needs of high school students.
Many tutoring schools failed in 1-on-1 businesses, merely because they focused on elementary school pupils. But One Smart mainly covers high school programs.
Based on P/E ratio comparison with other part-time tutoring schools, we believe One Smart has upside of 28% by August 2019.


One Smart (ONE): Only 1-On-1 Operators Will Not Be Impacted By “Burden Relief” Policy

Onesmart Education

One Smart (ONE): Only 1-On-1 Operators Will Not Be Impacted By “Burden Relief” Policy