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): Educator License Not A Concern

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

TAL Education (TAL): Online Courses Improved Margin in 3Q19, Parents Returning, 44% Upside

New Oriental (EDU): Online Subsidiary Koolearn, Significantly Outperforms Peers and Goes Public!

New Oriental (EDU): Laws Harm Private Schools? Not This One

China's After-School Tutoring Continues to Benefit from Secure Growth Trend

Maple Leaf (1317) – Private Schools Plunged Due to Proposed Law

Equity Bottom-Up

New Oriental Education & Techn / Equity Bottom-Up

<ul class="">
<li>The stock price plunged more rapidly than the indexes this morning due to low net profits after a one-time item, but we believe the market is overly concerned about EDU’s 1Q19 financial results.</li>
<li>We find three positive signals for margins in the future:</li>
</ul>
<ol class="">
<li>The rate of opening new learning centers decelerated.</li>
<li>The rise of tuition fee became the main growing momentum.</li>
<li>The Company recorded impairments in the value of its subsidiaries.</li>
</ol>
<ul>
<li>Furthermore, EDU has successfully ducked all three laws that restrict private schools as we discussed in <a href="https://www.smartkarma.com/insights/new-oriental-edu-laws-harm-private-schools-not-this-one" target="_blank" data-smartkarma-citation="insights:25087">New Oriental (EDU): Laws Harm Private Schools? Not This One</a>.</li>
</ul>


The stock price plunged more rapidly than the indexes this morning due to low net profits after a one-time item, but we believe the market is overly concerned about EDU’s 1Q19 financial results.
We find three positive signals for margins in the future:


The rate of opening new learning centers decelerated.
The rise of tuition fee became the main growing momentum.
The Company recorded impairments in the value of its subsidiaries.


Furthermore, EDU has successfully ducked all three laws that restrict private schools as we discussed in New Oriental (EDU): Laws Harm Private Schools? Not This One.


New Oriental (EDU): Three Positive Signals for Margins in 1Q19 Results