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

Baidu (BIDU): IQiyi (IQ) Caught a Hit TV Series

Baidu (BIDU): Returning to Hospital Clients Impacted Margin, But Will Bring Growth, 17%~59% Upside

IQiyi (IQ): Temporary Headwind in Ad Revenues, But Robust Membership Revenues in 3Q18

Baidu (BIDU): To Win Battle with Sogou (SOGO) Over Traffic Hijacking After 4 Years

Baidu (BIDU) – Will Love Affair Rumor Impact Founder's Control?

Baidu – IQIYI IPO Surfaces Value of Core Business – Search Is Undervalued

CDR Pilot Program Update - Xiaomi First, Baidu Next? BABA and JD Coming Behind

Equity Bottom-Up

<ul class="">
<li>It is rumored that Google of <a href="https://www.smartkarma.com/entities/11369" target="_blank" data-smartkarma-citation="entities:11369:1">Alphabet Inc Cl C (GOOG US)</a> will return to China, but we believe this rumor should not be a concern to investors for a number of reasons.</li>
<li>Futhermore, we believe that Baidu set up a competitive strategy of “zero gross margin” for its video business ( subsidiary <a href="https://www.smartkarma.com/entities/26755" target="_blank" data-smartkarma-citation="entities:26755:1">iQIYI Inc (IQ US)</a>) in order to remain its 50%+ market share.</li>
<li>In 2Q18, search revenue growth accelerated and the operating margin improved 1 ppt yoy.</li>
<li>The P/E band suggests an upside of 56%.</li>
</ul>


It is rumored that Google of Alphabet Inc Cl C (GOOG US) will return to China, but we believe this rumor should not be a concern to investors for a number of reasons.
Futhermore, we believe that Baidu set up a competitive strategy of “zero gross margin” for its video business ( subsidiary iQIYI Inc (IQ US)) in order to remain its 50%+ market share.
In 2Q18, search revenue growth accelerated and the operating margin improved 1 ppt yoy.
The P/E band suggests an upside of 56%.


바이두(BIDU) - 구글 루머는 우려할 일이 아니며, 2분기 실적은 양호하고 상승폭은 50% 이상입니다.