JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Investment Advisors

China’s Congress on AST Industry Oversight: Mostly Rhetoric, Little Practicality

Investment Advisors, JL Warren Capital

Junheng Li

Equity Bottom-Up

<p>We see posts by <a href="https://www.smartkarma.com/entities/gsx-techedu-inc" target="_blank" data-smartkarma-citation="entities:28069:1" rel="noopener">GSX Techedu (GSX US)</a>  employees on Maimai mentioning that certain “celebrity instructors” in K11 and K12 may be leaving the platform after the spring semester as the tutors were instructed to cease recruiting new enrollments for the instructors.   We believe that “celebrity teachers” receive options with a lockup period when signing up with GSX.  The recent stock selloff could result in a significant number of departures of “celebrity instructors”.  GSX consistently claims that “celebrity teachers” are their moat, resulting in their reported unusually high profit margins that the entire K12 AST industry have hard time to comprehend.</p>

We see posts by GSX Techedu (GSX US)  employees on Maimai mentioning that certain “celebrity instructors” in K11 and K12 may be leaving the platform after the spring semester as the tutors were instructed to cease recruiting new enrollments for the instructors.   We believe that “celebrity teachers” receive options with a lockup period when signing up with GSX.  The recent stock selloff could result in a significant number of departures of “celebrity instructors”.  GSX consistently claims that “celebrity teachers” are their moat, resulting in their reported unusually high profit margins that the entire K12 AST industry have hard time to comprehend.

GSX Post Archegos' Liquidation, Chinese K12 Parents Survey - Q2 2021

Gaotu Techedu

GSX Post Archegos' Liquidation, Chinese K12 Parents Survey - Q2 2021