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

<ul class="">
<li>The State Administration for Market Regulation (SAMR) started to investigate many internet companies for monopoly.</li>
<li>We believe the movement is generally temporary for most companies.</li>
<li>However, there is risk for online payment and giant companies.</li>
</ul>


The State Administration for Market Regulation (SAMR) started to investigate many internet companies for monopoly.
We believe the movement is generally temporary for most companies.
However, there is risk for online payment and giant companies.


Alibaba (BABA): This Online Antitrust Wave, A Risk, But Not A Massacre

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Event-Driven

The possibility of a merger break opens up significant downside risk for Douyu in our opinion. We had previously said that we believed Douyu had managed earnings to present strong looking financials for the rumoured merger and the sustainability of the business was suspect. It looked like that wouldn’t end up mattering but this news changes things.

The possibility of a merger break opens up significant downside risk for Douyu in our opinion. We had previously said that we believed Douyu had managed earnings to present strong looking financials for the rumoured merger and the sustainability of the business was suspect. It looked like that wouldn’t end up mattering but this news changes things.

Huya – Increasingly Our Preferred Pick Vs. Douyu Given the Threat of the Merger Collapsing

Tencent is not an overheated company riding on the home quarantine. On the contrary, we believe  the competitors to all Tencent's business lines are in trouble. These provide Tencent another opportunity of upside.
The 6-year P/E Band suggests an upside of 24% for the end of 2021 and a price target. We upgraded Tencent to "buy" after the release of the 3Q20 result. Now we raise our price target from HK$660 to HK$700.

Tencent is not an overheated company riding on the home quarantine. On the contrary, we believe  the competitors to all Tencent's business lines are in trouble. These provide Tencent another opportunity of upside.
The 6-year P/E Band suggests an upside of 24% for the end of 2021 and a price target. We upgraded Tencent to "buy" after the release of the 3Q20 result. Now we raise our price target from HK$660 to HK$700.

2021 High Conviction: Long Tencent as All Competitors Are in Trouble

Investment Advisors, JL Warren Capital

Junheng Li

Investment Advisors

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.

Forensic Accounting

Muddy Waters’ short selling report on YY is technically detailed and logical.  It showcases its team’s cyber capability to collect user activity data and analyze them.  While the report is credible, we believe that the data used to make its arguments are snapshots of activities during specific periods (i.e. during the annual talent show from November 2019 to January 2020). The lack of a continuum has created biases, and ultimately results in an inappropriate conclusion that YY is 90% fraudulent.  Our due diligence primarily involves speaking with the agencies that have helped to build the YY video streaming business, leads us to conclude that YY Live is “mostly” real.  It is a massively lucrative cash machine monetizing on fandom-ship and virtual relationships among individuals across China. While the virtual gifting phenomenon is difficult for certain American investors to comprehend, it is prevalent in China.

Muddy Waters’ short selling report on YY is technically detailed and logical.  It showcases its team’s cyber capability to collect user activity data and analyze them.  While the report is credible, we believe that the data used to make its arguments are snapshots of activities during specific periods (i.e. during the annual talent show from November 2019 to January 2020). The lack of a continuum has created biases, and ultimately results in an inappropriate conclusion that YY is 90% fraudulent.  Our due diligence primarily involves speaking with the agencies that have helped to build the YY video streaming business, leads us to conclude that YY Live is “mostly” real.  It is a massively lucrative cash machine monetizing on fandom-ship and virtual relationships among individuals across China. While the virtual gifting phenomenon is difficult for certain American investors to comprehend, it is prevalent in China. 

YY Due Diligence Suggesting a Lucrative Cash Machine with Unique Ecosystem

<ul class="">
<li>Huya (HUYA)’s security guard carried an employee out of the office by force.</li>
<li>Shenzhen Municipal Anti-Pornography Office suspended Tencent Music (TME)’s karaoke platform for 30 days.</li>
<li>Alibaba (BABA) is facing class action for the investment in Ant Group.</li>
<li>Baidu (BAIDU) acquired Joyy (YY)’s business in China, which is a short target.</li>
</ul>


Huya (HUYA)’s security guard carried an employee out of the office by force.
Shenzhen Municipal Anti-Pornography Office suspended Tencent Music (TME)’s karaoke platform for 30 days.
Alibaba (BABA) is facing class action for the investment in Ant Group.
Baidu (BAIDU) acquired Joyy (YY)’s business in China, which is a short target.


China Internet Weekly (23Nov2020): HUYA’s Violence, TME’s Porn, and BIDU Acquired a Short Target

United States

HUYA Inc. operates as a game live streaming platform. The Company offers interactive video broadcast services including e-sports, music, reality show, entertainment genres, talent shows, and anime and outdoor activities. HUYA serves customers in China.

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HUYA (HUYA US)

Alibaba (BABA): This Online Antitrust Wave, A Risk, But Not A Massacre

The State Administration for Market Regulation (SAMR) started to investigate many internet companies for monopoly. We believe the movement is...

Ming Lu

Huya – Increasingly Our Preferred Pick Vs. Douyu Given the Threat of the Merger Collapsing

We have consistently said that proper analysis of the financials pointed to Huya's business being noticeably more sustainable than that of Douyu....

Mio Kato

2021 High Conviction: Long Tencent as All Competitors Are in Trouble

Tencent is not an overheated company riding on the home quarantine. All the competitors to all Tencent's business lines are in trouble. These...

Ming Lu

YY Due Diligence Suggesting a Lucrative Cash Machine with Unique Ecosystem

YY's live streaming is a massively lucrative cash machine monetizing on fandom-ship and virtual relationships among individuals across China.

JL Warren Capital

China Internet Weekly (23Nov2020): HUYA’s Violence, TME’s Porn, and BIDU Acquired a Short Target

Huya security guard carried an employee out of office by force. Shenzhen Authorities suspended Tencent Music ’s karaoke for 30 days. Baidu acquired...

Ming Lu

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