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

Tencent Music (TME): Problems Come from Corporate Clients and In-House Contents, 35% Downside

Tencent Music 1Q19 Results Quick Take and the Looming US$4.85bn Lock-Up Overhang

Tencent Music (TME): Paying User Growth Tumbled in Both Business Lines, 32% Downside

Tencent (700 HK): Tencent Music – Pre-IPO Monopolist

Momo (MOMO): No Man Admits He Is a User, Price Will Double

Tencent Music (TME): Only 29% Spotify-Like, But the Other Business Produces Profits

Tencent Music Pre-IPO Review - The Final Countdown - Growth Doesn't Seem to Be Slowing Down

Tencent Music IPO Preview: A Better Version of Spotify?

Equity Bottom-Up

<ul class="">
<li>We believe that TME is fairly valued based on peer companies’ price / sales ratios.</li>
<li>The Chinese internet peer companies as comparison bases in valuation have declined significantly more than indices, we believe it is not a concern that indices declined further.</li>
<li>We believe that the main business of music will grow strongly in 2019 and 2020 due to the rapid growth of both the paying user base and ARPU (Average Revenues per User per month).</li>
</ul>


We believe that TME is fairly valued based on peer companies’ price / sales ratios.
The Chinese internet peer companies as comparison bases in valuation have declined significantly more than indices, we believe it is not a concern that indices declined further.
We believe that the main business of music will grow strongly in 2019 and 2020 due to the rapid growth of both the paying user base and ARPU (Average Revenues per User per month).


Tencent Music (TME): Both Live Video and Music Fairly Valued, No Action