Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Equity Bottom-Up

China Distance Education Holdings Ltd (ADR) / Equity Bottom-Up

China Distance Education Holdings Ltd (ADR)

After relying mainly on forced consolidation for many years (with minimal worker redundancies), it appears state-owned enterprise (SOE) reform in China is finally turning towards more aggressive remedies in 2016. Authorities are bolstering the legal framework required to handle bankruptcies in a formal and relatively transparent manner; top officials have identified the sectors suffering the most from excess and / or outdated capacity; and bureaucrats have established detailed targets for capacity reductions and related job losses in those sectors. In addition, the central government has set timetables for achieving these targets, and, importantly, it has earmarked at least 100 bn RMB in funds (US$15 bn) to assist local governments in retraining and redeploying the millions of workers who will be displaced by SOE reforms. In this note we attempt to provide answers to the following questions:<ol><li>Is the apparent acceleration of SOE reforms and planned spending on job re-training and worker redeployment an attractive opportunity for private education providers in China?</li><li>If so, which companies are best positioned to take advantage of this trend?</li></ol>

After relying mainly on forced consolidation for many years (with minimal worker redundancies), it appears state-owned enterprise (SOE) reform in China is finally turning towards more aggressive remedies in 2016. Authorities are bolstering the legal framework required to handle bankruptcies in a formal and relatively transparent manner; top officials have identified the sectors suffering the most from excess and / or outdated capacity; and bureaucrats have established detailed targets for capacity reductions and related job losses in those sectors. In addition, the central government has set timetables for achieving these targets, and, importantly, it has earmarked at least 100 bn RMB in funds (US$15 bn) to assist local governments in retraining and redeploying the millions of workers who will be displaced by SOE reforms. In this note we attempt to provide answers to the following questions:Is the apparent acceleration of SOE reforms and planned spending on job re-training and worker redeployment an attractive opportunity for private education providers in China?If so, which companies are best positioned to take advantage of this trend?

Can Job Retraining Initiatives Linked to China's SOE Reform Boost Growth of Private Education Firms?

China Macroeconomics & Academia

Christopher Balding

Macroeconomics

The latest rebound of the Chinese economy is a reminder of how the country’s financial and industrial sector is in the strong grasp of Beijing. Last month’s unexpected industrial sector growth catapulted the belief of government’s interferance into the market which is leveraged by a strong real estate growth and government spending.Retail sales for August show an increase with the retail sales of consumer goods hiking to 10.6 from 10.2, depicting a strong increase in consumer spending. This…

The latest rebound of the Chinese economy is a reminder of how the country’s financial and industrial sector is in the strong grasp of Beijing. Last month’s unexpected industrial sector growth catapulted the belief of government’s interferance into the market which is leveraged by a strong real estate growth and government spending.Retail sales for August show an increase with the retail sales of consumer goods hiking to 10.6 from 10.2, depicting a strong increase in consumer spending. This…

Underlying Retail Sales Weakness in China

Thematic (Sector/Industry)

<a href="https://www.smartkarma.com/entities/13644" target="_blank" data-smartkarma-citation="entities:13644:1">Coach Inc (COH US)</a> fell another -2.3% today in the US after an analyst downgrade, and the stock is down -14.4% since reporting unexciting Q4 FY16 earnings results on the morning of August 9th. We remain bearish on the stock; in our view, the Street's sales and earnings estimates for FY17 and FY18 remain far too optimistic given weaker spending by Asian tourists in the US and overly aggressive Street assumptions for Japanese and Chinese consumer spending. We also believe that COH will struggle to…

Coach Inc (COH US) fell another -2.3% today in the US after an analyst downgrade, and the stock is down -14.4% since reporting unexciting Q4 FY16 earnings results on the morning of August 9th. We remain bearish on the stock; in our view, the Street's sales and earnings estimates for FY17 and FY18 remain far too optimistic given weaker spending by Asian tourists in the US and overly aggressive Street assumptions for Japanese and Chinese consumer spending. We also believe that COH will struggle to…

July Tourism & Macro Data Suggest Coach Q1 FY17 Will Disappoint

Founder, Riedel Research

David Riedel

Founder

Independent equity research on GEM Markets

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<ul>
<li> In August the MNI China Consumer Sentiment Indicator (CSI) dropped to a very depressed level of 111.5, well under the threshold of 116 indicating consumers are in a state of panic.</li>
<li>A large part of the weakness stems from severe flooding (the worst since 1998) in northern and central China. It is estimated that floods have resulted in $33 billion in losses.</li>
<li>We believe that weakness seen in the CSI during August is the result of panic among consumers in reaction to the flood and not a reflection of…</li>
</ul>


 In August the MNI China Consumer Sentiment Indicator (CSI) dropped to a very depressed level of 111.5, well under the threshold of 116 indicating consumers are in a state of panic.
A large part of the weakness stems from severe flooding (the worst since 1998) in northern and central China. It is estimated that floods have resulted in $33 billion in losses.
We believe that weakness seen in the CSI during August is the result of panic among consumers in reaction to the flood and not a reflection of…


China Consumer Sentiment Drops in August As Flood Causes Panic - Actual Impact Insignificant

The recent spate Chinese data released, seems to be promising due to the slow growth and relative decline in the real economic growth. This phenomenon owes much of the credit to the government’s credit injection into the economy and its subsequent tightening. Nevertheless, official retail sales data for July seems to be projecting the shift of consumer spending depicting the change in consumer choice.The total retail sales of consumer goods in July remained steady at 2,682. Although this…

The recent spate Chinese data released, seems to be promising due to the slow growth and relative decline in the real economic growth. This phenomenon owes much of the credit to the government’s credit injection into the economy and its subsequent tightening. Nevertheless, official retail sales data for July seems to be projecting the shift of consumer spending depicting the change in consumer choice.The total retail sales of consumer goods in July remained steady at 2,682. Although this…

Retail Sales in China Outside Headline Numbers Remain Weak

China

New Oriental Education & Technology Group, Inc. offers educational services. The Company offers foreign language training, test preparation courses for admissions and assessment tests in the United States, the PRC and Commonwealth countries, primary and secondary school education, and other services. New Oriental Education & Technology Group also operates software development.

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New Oriental Education & Techn (EDU US)

Can Job Retraining Initiatives Linked to China's SOE Reform Boost Growth of Private Education Firms?

After relying mainly on forced consolidation for many years (with minimal worker redundancies), it appears state-owned enterprise (SOE) reform in...

Daniel Hellberg

Underlying Retail Sales Weakness in China

The latest rebound of the Chinese economy is a reminder of how the country’s financial and industrial sector is in the strong grasp of Beijing....

Christopher Balding

July Tourism & Macro Data Suggest Coach Q1 FY17 Will Disappoint

Coach Inc (COH US) fell another -2.3% today in the US after an analyst downgrade, and the stock is down -14.4% since reporting unexciting Q4 FY16...

Daniel Hellberg

China Consumer Sentiment Drops in August As Flood Causes Panic - Actual Impact Insignificant

In August the MNI China Consumer Sentiment Indicator (CSI) dropped to a very depressed level of 111.5, well under the threshold of 116 indicating...

David Riedel

Retail Sales in China Outside Headline Numbers Remain Weak

The recent spate Chinese data released, seems to be promising due to the slow growth and relative decline in the real economic growth. This...

Christopher Balding

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