Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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

PDD Holdings Inc. is a multinational commerce group that owns and operates a portfolio of businesses. The Company focuses on digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities. PDD Holdings has built a network of sourcing, logistics, and fulfillment capabilities for its underlying businesses.

<ul>
<li>In 3Q24, PDD released strong revenue growth, but a flat margin.</li>
<li>We believe, in 2025, PDD will continue to focus on growth rather than profit.</li>
<li>We conclude an upside of 43% and a price target of US$167 for 2025. Buy.</li>
</ul>


In 3Q24, PDD released strong revenue growth, but a flat margin.
We believe, in 2025, PDD will continue to focus on growth rather than profit.
We conclude an upside of 43% and a price target of US$167 for 2025. Buy.


PDD (PDD US): 3Q24, Focuses on Growth, But Not Profit Margin

Kuaishou Technology operates as a content community and social platform. The Company helps users create, upload and watch short videos on mobile devices. Kuaishou Technology offers services worldwide.

<ul>
<li>Both online marketing and “other revenues” grew strongly in 3Q24.</li>
<li>Both the gross margin and the operating margin improved over the same period last year.</li>
<li>We believe total revenue will accelerate when live streaming is not significant and margins will rise when e-commerce makes profit.</li>
</ul>


Both online marketing and “other revenues” grew strongly in 3Q24.
Both the gross margin and the operating margin improved over the same period last year.
We believe total revenue will accelerate when live streaming is not significant and margins will rise when e-commerce makes profit.


KS / Kuaishou (1024 HK): 3Q24, Ad and E-Commerce Strong, Margins Improved

Trip.com Group Limited provides online travel agency services. The Company offers mobile applications, hotel reservations, flight ticketing, package tours, corporate travel management, and train ticketing services. Trip.com Group provides services worldwide.

<ul>
<li>The stock has risen by 38% since our last buy rate.</li>
<li>The 3Q24 results are still healthy – both growth rate and operating margin.</li>
<li>We set a downside of 19% for the end of 2025.</li>
</ul>


The stock has risen by 38% since our last buy rate.
The 3Q24 results are still healthy – both growth rate and operating margin.
We set a downside of 19% for the end of 2025.


Trip.com (9961.HK, TCOM): 3Q24, Still Healthy, But Stock Price Exceeded Our Last Target

Tencent Music Entertainment operates an online music entertainment platform in China. The Company offers platform that comprises of online music, recording, music-centric live streaming enabling users to discover, listen, sing, watch, perform, and socialize music.

<ul>
<li>Our 2024 High Conviction, the stock of Meituan has risen by 87% in one year.</li>
<li>We believe the market ignores TME because of its flat revenue.</li>
<li>However, we expect TME will significantly benefit from its dominant position in the Chinese music market.</li>
</ul>


Our 2024 High Conviction, the stock of Meituan has risen by 87% in one year.
We believe the market ignores TME because of its flat revenue.
However, we expect TME will significantly benefit from its dominant position in the Chinese music market.


2025 High Conviction: Tencent Music Entertainment (TME) – Music as Promising Future

Alibaba Group Holding  / Equity Bottom-Up

Alibaba Group Holding Limited provides online sales services. The Company provides internet infrastructure, electronic commerce, online financial, and internet content services through its subsidiaries. Alibaba Group Holding offers its products and services worldwide.

<ul>
<li>Total revenue grew slightly as we expected in our preview note.</li>
<li>The operating margin improved significantly, but this was due to the shrinks of non-cash items.</li>
<li>However, we believe Alibaba will benefit from the boycott against JD.com and the disposal of Sun Art.</li>
</ul>


Total revenue grew slightly as we expected in our preview note.
The operating margin improved significantly, but this was due to the shrinks of non-cash items.
However, we believe Alibaba will benefit from the boycott against JD.com and the disposal of Sun Art.


Alibaba (BABA US): 2Q25, Weak Quarter, But Waiting for Two Events to Benefit Top Line

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)