ASEAN (Indo) & China-focused. Ex-Deputy HoR UBS.

Johannes Salim, CFA

Thematic (Sector/Industry)

<ul>
<li>A big question for investors at this juncture is if China (macro) consumption has slowed down and what kind of slow-down (major or mild one) it is.</li>
<li>Anecdotal evidence we have collected below points to consumption slow-down narrative, and the slow-down is deepening in Oct.</li>
<li>Major slow-down is on durable goods consumption (auto, property, consumer electronics), vs. a mild one for non-durable goods consumption. </li>
</ul>


A big question for investors at this juncture is if China (macro) consumption has slowed down and what kind of slow-down (major or mild one) it is.
Anecdotal evidence we have collected below points to consumption slow-down narrative, and the slow-down is deepening in Oct.
Major slow-down is on durable goods consumption (auto, property, consumer electronics), vs. a mild one for non-durable goods consumption. 


IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<p><a href="https://www.smartkarma.com/entities/27351" target="_blank" data-smartkarma-citation="entities:27351:1">Babytree Inc (BABYTRE HK)</a> is a leading Chinese online parenting firm which can be described as a combination of a maternity focused online forum and an e-commerce platform. Babytree has relaunched its IPO today after cancelling it on Tuesday. Babytree has slashed its proposed IPO raise from $1 billion to $218-282 million. The proposed market cap of HK$11.3–14.7 billion ($1.5–1.9 billion) is below the $2.2 billion valuation at which <a href="https://www.smartkarma.com/entities/787" target="_blank" data-smartkarma-citation="entities:787:1">Alibaba Group Holding (BABA US)</a> made a $214 million investment in May 2018. </p><div class="content-highlight"><p>We had previously expressed our concerns about Babytree's fundamentals. The bull-case firmly on the potential of the Alibaba collaboration delivering on its promise. However, our analysis suggests that the IPO price range already factors in the Alibaba collaboration delivering exceptional results. We recommend staying clear of the IPO. </p></div>

Babytree Inc (BABYTRE HK) is a leading Chinese online parenting firm which can be described as a combination of a maternity focused online forum and an e-commerce platform. Babytree has relaunched its IPO today after cancelling it on Tuesday. Babytree has slashed its proposed IPO raise from $1 billion to $218-282 million. The proposed market cap of HK$11.3–14.7 billion ($1.5–1.9 billion) is below the $2.2 billion valuation at which Alibaba Group Holding (BABA US) made a $214 million investment in May 2018. We had previously expressed our concerns about Babytree's fundamentals. The bull-case firmly on the potential of the Alibaba collaboration delivering on its promise. However, our analysis suggests that the IPO price range already factors in the Alibaba collaboration delivering exceptional results. We recommend staying clear of the IPO. 

Babytree IPO Valuation: On an Alibaba Hope and Prayer

CHINA - Healthcare, Steel, Autos, Education, Research From Beijing

Scott Laprise/ 乐天虎

CHINA - Healthcare, Steel, Autos, Education

Research From Beijing

We try to provide our clients with on the ground research of what is really going on here in China.

Our business goal and focus are to provide on the ground research This will give our clients an early look at changes about to happen in China and to give them an edge.

To have the ability to go out and check a car dealer or visit a hospital or go see any new launches in the market. We have regular products such as our steel monthly, a visit to the traders and discuss with them what they see. The steel trader visit gives a great early proxy to spending by the government. We do weekly car dealer visits to see how the car companies are doing but this is also a proxy to the consumer and how is the consumer thinking these days. We visit school and hospitals and attend events to find out what people are really thinking.

Our primary method of research is fundamental research starting with a neutral view, analyzing the financials and building the case for the company. We rarely look at the news as we have found the views to be incomplete lacking the understanding of Chinese thinking. We strive for a fresh differential view on the Chinese stocks. Most Chinese research is made by analysts reading the news and reading other Chinese analysts giving clients the same old view. We also try to give you a better understanding of how the Chinese look at issues. The English media tends to focus on examining issues from the western view giving investors often an incomplete view.

If you want your research done by professionals on the ground who are able to give you early feedback instead of most research taking a long distance view driven by the media. This is our value proposition: focused on the ground research to limited clients. We think this is the best way to give you the best chance to generate alpha for your funds.

Equity Bottom-Up

<p>This strength in consumer spending is counter to the views of most Chinese foreign-based analysts. Consumption is much stronger than consensus is expecting. <strong>We have just written a 31 page NON-CONSESNUS report on China’s debt and the state of the economy, let me know if you are interested in this report.</strong></p>

This strength in consumer spending is counter to the views of most Chinese foreign-based analysts. Consumption is much stronger than consensus is expecting. We have just written a 31 page NON-CONSESNUS report on China’s debt and the state of the economy, let me know if you are interested in this report.

China Singles Day – Consensus Is Wrong on Chinese Consumers and Consumption

<p><a href="https://www.smartkarma.com/entities/27761" target="_blank" data-smartkarma-citation="entities:27761:1">Mogu (MOGU US)</a> is a leading fashion and lifestyle e-commerce platform in China, backed by <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26:1">Tencent Holdings (700 HK)</a> which an 18% shareholder. Users access MOGU primarily through the <em>Mogujie</em> app and Mini Programs on Weixin. It plans to list on the NYSE to raise $200 million, a significant decline from the $500 million target in July, as reported by Caixin Global. </p><div class="content-highlight"><p>MOGU hopes to distract investors from its uninspiring financials through the promise of tapping into China's young generation. However, MOGU's claims to be a leading online fashion destination sits uncomfortably with a loss of market share, stagnating growth in active buyers and material cash burn.</p></div>

Mogu (MOGU US) is a leading fashion and lifestyle e-commerce platform in China, backed by Tencent Holdings (700 HK) which an 18% shareholder. Users access MOGU primarily through the Mogujie app and Mini Programs on Weixin. It plans to list on the NYSE to raise $200 million, a significant decline from the $500 million target in July, as reported by Caixin Global. MOGU hopes to distract investors from its uninspiring financials through the promise of tapping into China's young generation. However, MOGU's claims to be a leading online fashion destination sits uncomfortably with a loss of market share, stagnating growth in active buyers and material cash burn.

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.

<p>The initial results of <a href="https://www.smartkarma.com/entities/787" target="_blank" data-smartkarma-citation="entities:787:1">Alibaba Group Holding (BABA US)</a> Singles’ Day Shopping Festival which concluded at 11 am ET today came out to be largely in line with the high end of the street expectations.  BABA and <a href="https://www.smartkarma.com/entities/446" target="_blank" data-smartkarma-citation="entities:446:1">Jd.Com Inc (Adr) (JD US)</a> announced 27% and 26% year-over-year growth in GMV, respectively. The headline data should ease investors’ escalating anxiety over China’s macro slowdown, as these results clearly demonstrate that Chinese consumers are still buying the bargains. </p><p>On the other hand, our tracking indicates that <a href="https://www.smartkarma.com/entities/24184" target="_blank" data-smartkarma-citation="entities:24184:1">Baozun Inc. (BZUN US)</a>, the largest ecommerce service provider servicing brand retailers such as NKE, ADI, Zara, Huawei, GOOS, UA are under pressure in meeting its sales target on Nov 11st.   </p>

The initial results of Alibaba Group Holding (BABA US) Singles’ Day Shopping Festival which concluded at 11 am ET today came out to be largely in line with the high end of the street expectations.  BABA and Jd.Com Inc (Adr) (JD US) announced 27% and 26% year-over-year growth in GMV, respectively. The headline data should ease investors’ escalating anxiety over China’s macro slowdown, as these results clearly demonstrate that Chinese consumers are still buying the bargains. On the other hand, our tracking indicates that Baozun Inc. (BZUN US), the largest ecommerce service provider servicing brand retailers such as NKE, ADI, Zara, Huawei, GOOS, UA are under pressure in meeting its sales target on Nov 11st.   

2018 China’s Singles’ Day GMV Review - First Cut

China

JD.com Inc is an online direct sales company in China.  The Company offers a wide selection of products through its website and mobile applications.  JD.com sells appliances, computers, digital products, communication products, garments, books, and household items to consumers and vendors.

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JD.com (ADR) (JD US)

China Consumption: Slow-Down Deepening?

A big question for investors at this juncture is if China (macro) consumption has slowed down and what kind of slow-down (major or mild one) it...

Johannes Salim, CFA

Babytree IPO Valuation: On an Alibaba Hope and Prayer

Babytree Inc (BABYTRE HK) is a leading Chinese online parenting firm which can be described as a combination of a maternity focused online forum...

Arun George

China Singles Day – Consensus Is Wrong on Chinese Consumers and Consumption

This strength in consumer spending is counter to the views of most Chinese foreign-based analysts. Consumption is much stronger than consensus is...

Scott Laprise/ 乐天虎

MOGU IPO Preview: Fading Fads

Mogu (MOGU US) is a leading fashion and lifestyle e-commerce platform in China, backed by Tencent Holdings (700 HK) which an 18% shareholder. Users...

Arun George

2018 China’s Singles’ Day GMV Review - First Cut

The initial results of Alibaba Group Holding (BABA US) Singles’ Day Shopping Festival which concluded at 11 am ET today came out to be largely in...

JL Warren Capital

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