Overseas Chinese Equities, Aequitas Research

Ming Lu

A veteran with 19-year experience in equity research.

Geographical coverage:
* Companies operating in China, but listed in Hong Kong and the U.S.
* Previously China A-share (listed in mainland China).

Equity sector coverage:
* Chinese App / Internet-based consumption in China, e.g., Alibaba, Tencent, etc.
* Previously covered education, transportation, telecom, power, bank, advertisement, hotel, etc.

Research methods:
* Generally bottom-up.
* Talk to related people on the ground.  Talk to readers and independent writers for analyzing a news portal.  Talk to parents and teachers for analyzing a tutoring school. 
* Visit stores and show photos as evidence in notes.
* Do technical analysis when finding a short-seller attacking an equity.

Languages:
* English
* Mandarin Chinese (Official language of China)
* Shanghainese (Language of Shanghai, the most developed city in China)
* Cantonese (Language of Hong Kong and Canton Province, one of the most developed provinces in China)

Overseas Chinese Equities

JD.com (JD): Time to Accumulate - Answers to Typical “Buts”

JD.com (JD): 3Q18 Not Slowing Down, As Two Parts of Revenues Not Comparable!

JD.com (JD): Lawsuit Over, Price Falling Back to First Trading Day, Defensive in Bear Market

Alibaba (BABA) – An Accounting Purpose in Venture Capital Investment

Alibaba (BABA) – Kicking Competitors Out of Cloud Computing with a Stable Negative Margin

JD.com Bull Base and Strategic Opportunity

Social Ecommerce Pindoudou: Disruptive Digital Phenomenon in China’s E-Commerce

Equity Bottom-Up

<ul>
<li>JD sets a strategy of “zero net margin”. RMB2.2 bn net losses were not significant to RMB122.3 bn revenues in 2Q18.</li>
<li>In 1H18, JD generated RMB12 bn operating cash inflow. JD’s cash balance increased 40% or RMB14 bn in 1H18.</li>
<li>JD uses its market power to keep suppliers’ money, which is interest free debt.</li>
<li>Based on historical GMV (Gross Merchandise Volume), we believe JD’s stock price has upside of 147%.</li>
</ul>


JD sets a strategy of “zero net margin”. RMB2.2 bn net losses were not significant to RMB122.3 bn revenues in 2Q18.
In 1H18, JD generated RMB12 bn operating cash inflow. JD’s cash balance increased 40% or RMB14 bn in 1H18.
JD uses its market power to keep suppliers’ money, which is interest free debt.
Based on historical GMV (Gross Merchandise Volume), we believe JD’s stock price has upside of 147%.


JD.com (JD): In Wrong Way Market Judges Financials

JD.com Inc (ADR)

JD.com (JD): In Wrong Way Market Judges Financials