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

New Oriental (EDU): Operating Profits Up 54%, as a Main Competitor Goes Bankrupt

New Oriental (EDU): Stock Up 120% in 2019, But Still 23% Upside Due to Excellent Q2

New Oriental (EDU): Reduced Growth Estimate by 10 PP as Epidemic Blocks Students from Going Abroad

New Oriental (EDU): Educator License Not A Concern

New Oriental (EDU): Do Not Fear Q2 Record Losses, 27% Upside

New Oriental (EDU): Growth and Margin Recovered - Positive Signals for Koolearn (1797 HK)

Koolearn: Marketing Expenses Have Taken Operating Profits Down the Drain

Equity Bottom-Up

New Oriental Education & Techn / Equity Bottom-Up

<ul>
<li>We believe it is positive for EDU to move the focus from the growth to the margin.</li>
<li>The operating margin improved YoY for two quarters, therefore we believe the operating margin will improve to 13% in 2020 versus 10% in 2019 (ended May 2019).</li>
<li>Eventually, the stock price reached our target after we promoted EDU for a long time. Downgrade to HOLD.</li>
</ul>


We believe it is positive for EDU to move the focus from the growth to the margin.
The operating margin improved YoY for two quarters, therefore we believe the operating margin will improve to 13% in 2020 versus 10% in 2019 (ended May 2019).
Eventually, the stock price reached our target after we promoted EDU for a long time. Downgrade to HOLD.


New Oriental (EDU): Margin Improved for Two Quarters, But Reached Our Target, Downgrade to Hold