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.

Equity Bottom-Up

While we believe that direct sellers will all face tougher regulatory scrutiny in China in 2019, as well as high comps from 2018, some will venture better than the others.  We believe that <a href="https://www.smartkarma.com/entities/6216" target="_blank" data-smartkarma-citation="entities:6216:1">Herbalife Ltd (HLF US)</a> China will see worst decline YoY in Q1 2019 since 2014, and <a href="https://www.smartkarma.com/entities/12451" target="_blank" data-smartkarma-citation="entities:12451:1">Nu Skin Enterprises Inc A (NUS US)</a> has been the most resilient, due to the positive momentum in their skincare category.  Growth overall in the cosmetics industry is accelerating, despite the challenging macroeconomic environment, driven by targeted marketing efforts focused on Chinese female millennial across the country.

While we believe that direct sellers will all face tougher regulatory scrutiny in China in 2019, as well as high comps from 2018, some will venture better than the others.  We believe that Herbalife Ltd (HLF US) China will see worst decline YoY in Q1 2019 since 2014, and Nu Skin Enterprises Inc A (NUS US) has been the most resilient, due to the positive momentum in their skincare category.  Growth overall in the cosmetics industry is accelerating, despite the challenging macroeconomic environment, driven by targeted marketing efforts focused on Chinese female millennial across the country.    

Assessment of China’s Crackdown on American MLMs

Lane Research

Douglas Lane

Lane Research is a boutique fundamental equity research firm focusing on companies that employ a direct to consumer business model. This is an area where we have had extensive experience over the years, going back to the mid-1990s when Amway Asia Pacific, Amway Japan and Nu Skin originally listed on the New York Stock Exchange. We think Direct Selling in particular supports many favorable consumer macro-trends such as leveraging today’s technology to advance social selling and workplace flexibility, and the move towards shopping away from a fixed retail location. Our proprietary financial modeling coupled with our decades of experience and contacts within this unique business model leave us well positioned to provide alpha to investors interested in the space. Lane Research does not have any trading or investment banking operations, fully aligning our objectives with our clients.

Experience includes:

-9 equity analyst awards, including Starmine's #2 stock picker in 2011 for Household Durables & #1 earnings estimator in 2010 for Personal Products, and The Wall Street Journal's #1 stock picker in 2004 & 2006 for Household Products. 

-Financial TV appearances including CNBC and Bloomberg

-Quotes in financial publications such as Wall St Journal, Investors Business Daily and Barron's, and newswires such as Reuters and the Associated Press

-Chartered Financial Analyst since 1992 and member of the CFA Society Boston

-FINRA Series 7, 63, 86 & 87

<a href="https://www.smartkarma.com/entities/6216" target="_blank" data-smartkarma-citation="entities:6216:1">Herbalife Ltd (HLF US)</a> held its first analyst day in over 5 years yesterday in NYC.  Management demonstrated how it was well positioned to continue to deliver above-average growth rates and return substantial free cash flows to shareholders.  The CEO believes that the company has every opportunity to double or triple the size of its business over the next 10 years.

Herbalife Ltd (HLF US) held its first analyst day in over 5 years yesterday in NYC.  Management demonstrated how it was well positioned to continue to deliver above-average growth rates and return substantial free cash flows to shareholders.  The CEO believes that the company has every opportunity to double or triple the size of its business over the next 10 years.

Herbalife Nutrition: Well Positioned for Growth; Large Cashflows Returned to Shareholders

<a href="https://www.smartkarma.com/entities/6216" target="_blank" data-smartkarma-citation="entities:6216:1">Herbalife Ltd (HLF US)</a>  reported 3Q results ahead of expectations as both top line and margin assumptions were beat handily.  Clearly, the underlying business has gained meaningful traction with its top 4 markets in aggregate growing the top line comfortably in the double-digits.  However, EPS forecasts for 2018 4QE and 2019 FYE may have to come down primarily due to the recent rise in the dollar.  Management now expects the FY impact to EPS from currency in 2018 FYE to be -$0.07, down from neutral previously, and for 2019 FYE to have an impact of -$0.25.

Herbalife Ltd (HLF US)  reported 3Q results ahead of expectations as both top line and margin assumptions were beat handily.  Clearly, the underlying business has gained meaningful traction with its top 4 markets in aggregate growing the top line comfortably in the double-digits.  However, EPS forecasts for 2018 4QE and 2019 FYE may have to come down primarily due to the recent rise in the dollar.  Management now expects the FY impact to EPS from currency in 2018 FYE to be -$0.07, down from neutral previously, and for 2019 FYE to have an impact of -$0.25.

Herbalife Nutrition: 3Q Beat on Top Line and Margins; Underlying Momentum Impressive

We moved to a Hold rating on <a href="https://www.smartkarma.com/entities/6216" target="_blank" data-smartkarma-citation="entities:6216:1">Herbalife Ltd (HLF US)</a> from a Buy earlier this year after sharp multiple expansion on the stock in conjunction with the covering of a large short position.  With prospective p/e ratios now closer to the upper end of historical ranges (please see:  <a href="https://www.smartkarma.com/insights/sector-analysis-direct-selling-stocks-are-sharply-outperforming-broader-averages-this-year" target="_blank" data-smartkarma-citation="insights:24845">Sector Analysis: Direct Selling: Stocks Are Sharply Outperforming Broader Averages This Year</a> ) we are waiting for the fundamentals, where we believe we have seen some momentum building in recent quarters, to re-accelerate and catch up to the valuations.  We also believe there is an overhang on the stock as its largest shareholder is likely looking to exit his position in the near future.

We moved to a Hold rating on Herbalife Ltd (HLF US) from a Buy earlier this year after sharp multiple expansion on the stock in conjunction with the covering of a large short position.  With prospective p/e ratios now closer to the upper end of historical ranges (please see:  Sector Analysis: Direct Selling: Stocks Are Sharply Outperforming Broader Averages This Year ) we are waiting for the fundamentals, where we believe we have seen some momentum building in recent quarters, to re-accelerate and catch up to the valuations.  We also believe there is an overhang on the stock as its largest shareholder is likely looking to exit his position in the near future. 

Herbalife Nutrition: This Week’s Earnings 2-Minute Drill

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<a href="https://www.smartkarma.com/entities/231" target="_blank" data-smartkarma-citation="entities:231:1">Unilever Indonesia (UNVR IJ)</a> has long been dubbed as the proxy for the rising middle-class domestic consumption story in Indonesia and enjoyed a rich PE multiple despite less favorable externalities that could potentially reduce its margin; namely a weakening IDR, increasing competition, as well as changing consumer behavior. In this report, we will discuss the following:
<ul>
<li>Its Products and their performance</li>
<li>The Competitive Landscape</li>
<li>Premiumization and Innovation</li>
<li>Costs and Externalities</li>
<li>Changing Consumer Behavior</li>
<li>Valuation and the Investment Thesis</li>
</ul>

Unilever Indonesia (UNVR IJ) has long been dubbed as the proxy for the rising middle-class domestic consumption story in Indonesia and enjoyed a rich PE multiple despite less favorable externalities that could potentially reduce its margin; namely a weakening IDR, increasing competition, as well as changing consumer behavior. In this report, we will discuss the following:

Its Products and their performance
The Competitive Landscape
Premiumization and Innovation
Costs and Externalities
Changing Consumer Behavior
Valuation and the Investment Thesis


UNVR IJ: Stiff Competition to Reduce Unilever Indo's Lofty Valuation Premium

United States

Herbalife Ltd. is a global nutrition company that sells weight management, healthy meals and snacks, sports and fitness, energy and targeted nutritional products as well as personal care products. The Company distributes and sells its products through a network of independent distributors, using the direct selling channel.

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Herbalife Ltd (HLF US)

Assessment of China’s Crackdown on American MLMs

While we believe that direct sellers will all face tougher regulatory scrutiny in China in 2019, as well as high comps from 2018, some will venture...

JL Warren Capital

Herbalife Nutrition: Well Positioned for Growth; Large Cashflows Returned to Shareholders

Herbalife Ltd (HLF US) held its first analyst day in over 5 years yesterday in NYC. Management demonstrated how it was well positioned to continue...

Douglas Lane

Herbalife Nutrition: 3Q Beat on Top Line and Margins; Underlying Momentum Impressive

Herbalife Ltd (HLF US) reported 3Q results ahead of expectations as both top line and margin assumptions were beat handily. Clearly, the...

Douglas Lane

Herbalife Nutrition: This Week’s Earnings 2-Minute Drill

We moved to a Hold rating on Herbalife Ltd (HLF US) from a Buy earlier this year after sharp multiple expansion on the stock in conjunction with...

Douglas Lane

UNVR IJ: Stiff Competition to Reduce Unilever Indo's Lofty Valuation Premium

Unilever Indonesia (UNVR IJ) has long been dubbed as the proxy for the rising middle-class domestic consumption story in Indonesia and enjoyed a...

Henry Soediarko

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