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): Online Courses Improved Margin in 3Q19, Parents Returning, 44% Upside

TAL Education (TAL): Margin Reached 5-Year High, Too Late to Buy, Downgrade to Hold

TAL Education (TAL): First Loss Since IPO, But Overreacted, Upgrade to Buy

TAL - Fully Impacted by Policy Despite Free Riders Launch Class Action – Upgrade to HOLD

TAL Education (TAL) – Mgt. Expects QOQ Decline for Q1, First Time in 5 Years

TAL Education (TAL) – Short Seller Muddy Waters, Not a Hero, But a Free Rider

Equity Bottom-Up

<ul class="">
<li>Do not short TAL merely because of the weak 2Q19 results.</li>
<li>TAL has declined 45% in 4 months.</li>
<li>The five-year P/E band suggests upside of 17%.</li>
<li>We assume revenues will grow 26% the fiscal year ended 2020 after rising 44% in F2019.</li>
<li>We also forecast that  the operating margin will rise slightly by 1pp in F2020.</li>
</ul>


Do not short TAL merely because of the weak 2Q19 results.
TAL has declined 45% in 4 months.
The five-year P/E band suggests upside of 17%.
We assume revenues will grow 26% the fiscal year ended 2020 after rising 44% in F2019.
We also forecast that  the operating margin will rise slightly by 1pp in F2020.


TAL Education (TAL): Weak 2Q19 as Expected, But Do Not Short It