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): Will Stop Declining in Two Quarters, but Over-Optimistic at Current Price

China Internet Weekly (12Oct2020): Tourist Number Recovered to 80% of Last National Day Holidays

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

New Oriental (EDU): Re-Organization, Expected First QoQ Declining May Quarter in Ten Years

New Oriental (EDU): Be Cautious on Profit Surge After Epidemic Outbreak, The Move Cannot Be Repeated

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Bottom-Up

New Oriental Education & Techn / Equity Bottom-Up

<ul class="">
<li>Students declined YoY in 4Q20 for the first time since February 2013.</li>
<li>We believe revenue will decrease by 4% and the operating margin will decline by 2 percentage points in FY2021 (ended May 2021).</li>
<li>On the ground, students began to suspect whether English will be useful due to the tension between China and English-speaking countries.</li>
<li>The P/E band suggests the stock price will have a downside of 45% and the stock has risen for more than 3 months. Sell.</li>
</ul>


Students declined YoY in 4Q20 for the first time since February 2013.
We believe revenue will decrease by 4% and the operating margin will decline by 2 percentage points in FY2021 (ended May 2021).
On the ground, students began to suspect whether English will be useful due to the tension between China and English-speaking countries.
The P/E band suggests the stock price will have a downside of 45% and the stock has risen for more than 3 months. Sell.


New Oriental (EDU): Students Declined YoY for First Time in Seven Years