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.

Thematic (Sector/Industry)

Our calls had great successes this year starting off calling out a fraudulent US holding company boasting of “world class” AI development in China.  We detected from out site visits and making acquaintances in the office building that the AI team had only one coder/programmer.  We published detailed research on our findings urging clients to short <a href="https://www.smartkarma.com/entities/26739" target="_blank" data-smartkarma-citation="entities:26739:1">Remark Holdings (MARK US)</a>  in January when the share price was $12.4 and today it closed at $1.2, representing 90% profit.

Our calls had great successes this year starting off calling out a fraudulent US holding company boasting of “world class” AI development in China.  We detected from out site visits and making acquaintances in the office building that the AI team had only one coder/programmer.  We published detailed research on our findings urging clients to short Remark Holdings (MARK US)  in January when the share price was $12.4 and today it closed at $1.2, representing 90% profit.

China’s Rude Awakening - Review of Our Best and Worst Calls in 2018+Top Trade Ideas Q1 2019

Founder and Strategist, Entext Economics & Strategy

Sean Maher

Founder and Strategist

Entext Economics & Strategy

Entext provides institutional investors with distinctive, actionable asset allocation and thematic research, which typically challenges the market consensus. Our clients range from credit, equity and multi-asset hedge and pension funds to family offices and sovereign funds. 
 
We focus on identifying key inflection points in macro data and relative asset performance amid the 'groupthink'  and confirmation bias that characterizes most investment bank analysis.

Macro Driven Investment Insight

I began my recent Asia trip speaking at an investor conference in Vietnam, where I focused on the shift in the EM development model toward value added services as ubiquitous smartphones and broadband created a ‘leapfrog’ effect plugging infrastructure deficits (not just physical, but also including weak institutions). Services only came to dominate growth in developed economies from the 1970s as manufacturing share declined at a relatively high level of per capita income, but for today’s EMs it is happening at a much lower threshold and that trend has been very apparent at the granular level on my week-long China visit and should be borne in mind when parsing the macro data. As covered previously, it seems very likely that services activity is being systematically underestimated in the China GDP data given its ‘kick the tyres’ statistical bias.

I began my recent Asia trip speaking at an investor conference in Vietnam, where I focused on the shift in the EM development model toward value added services as ubiquitous smartphones and broadband created a ‘leapfrog’ effect plugging infrastructure deficits (not just physical, but also including weak institutions). Services only came to dominate growth in developed economies from the 1970s as manufacturing share declined at a relatively high level of per capita income, but for today’s EMs it is happening at a much lower threshold and that trend has been very apparent at the granular level on my week-long China visit and should be borne in mind when parsing the macro data. As covered previously, it seems very likely that services activity is being systematically underestimated in the China GDP data given its ‘kick the tyres’ statistical bias.

China Trip Notes - Education Spend On Korean Path…

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

Johannes Salim, CFA

<ul>
<li>After-school tutoring industry growth of 13% CAGR last five years does not jibe with <a href="https://www.smartkarma.com/entities/1124" target="_blank" data-smartkarma-citation="entities:1124:1">Tal Education (TAL US)</a>'s 49% sales CAGR (excluding faster growing online business).</li>
<li>Our further analysis reveals that "off the charts" learning center productivity growth largely contributes to TAL's spectacular top-line growth, ironically raising more questions than answers.</li>
<li>Subsequently, trading at 68.1x/44.4x FY19/20 PE certainly points to a lot more downside risks to TAL's ADS price.</li>
</ul>


After-school tutoring industry growth of 13% CAGR last five years does not jibe with Tal Education (TAL US)'s 49% sales CAGR (excluding faster growing online business).
Our further analysis reveals that "off the charts" learning center productivity growth largely contributes to TAL's spectacular top-line growth, ironically raising more questions than answers.
Subsequently, trading at 68.1x/44.4x FY19/20 PE certainly points to a lot more downside risks to TAL's ADS price.


TAL Education: Too Good to Be True? Buyer Beware!

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Actionable Charts from Smart Karma’s Most-Searched Tickers.We ran through a list of the most frequently searched tickers on the SmartKarma platform using the Discovery Tool.  See the attached report for a complete list of our recommendations from this list.

Actionable Charts from Smart Karma’s Most-Searched Tickers.We ran through a list of the most frequently searched tickers on the SmartKarma platform using the Discovery Tool.  See the attached report for a complete list of our recommendations from this list.

MD, Blue Lotus Research Institute

Gu Jun, CFA

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

The key to understand education:(1) resource imbalance creates demand for after-school tutoring and in-school teaching. It will persist,(2) burden reduction is for real because China’s birth rate is dangerously low,(3) product will change from after-school tutoring to after-school tutoring+activities,(4) in-school teaching will also see less standardization in products,(5) but channel superiority, not product, is the key success factor in education so EDU and TAL still rule,(6) margin might deteriorate due to reduction in standardization but technology will improve margin,(7) speed of this happening is the key,(8) scalability is the problem for most in-school-teaching institutions. In the long run, we still prefer TAL and EDU.

The key to understand education:(1) resource imbalance creates demand for after-school tutoring and in-school teaching. It will persist,(2) burden reduction is for real because China’s birth rate is dangerously low,(3) product will change from after-school tutoring to after-school tutoring+activities,(4) in-school teaching will also see less standardization in products,(5) but channel superiority, not product, is the key success factor in education so EDU and TAL still rule,(6) margin might deteriorate due to reduction in standardization but technology will improve margin,(7) speed of this happening is the key,(8) scalability is the problem for most in-school-teaching institutions. In the long run, we still prefer TAL and EDU.

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)

China’s Rude Awakening - Review of Our Best and Worst Calls in 2018+Top Trade Ideas Q1 2019

Our calls had great successes this year starting off calling out a fraudulent US holding company boasting of “world class” AI development in...

JL Warren Capital

China Trip Notes - Education Spend On Korean Path…

I began my recent Asia trip speaking at an investor conference in Vietnam, where I focused on the shift in the EM development model toward value...

Sean Maher

TAL Education: Too Good to Be True? Buyer Beware!

After-school tutoring industry growth of 13% CAGR last five years does not jibe with Tal Education (TAL US)'s 49% sales CAGR (excluding faster...

Johannes Salim, CFA

Popular Stocks, Attractive Charts

Actionable Charts from Smart Karma’s Most-Searched Tickers.We ran through a list of the most frequently searched tickers on the SmartKarma platform...

Vermilion Research

China Education Sector Update

The key to understand education:(1) resource imbalance creates demand for after-school tutoring and in-school teaching. It will persist,(2) burden...

Blue Lotus Research Institute

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