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Nurturing the next generation of investment talent in China
APS and China share a long history and an exciting future.
We started our first China office in Shanghai in November 2002, followed by offices in Beijing and Shenzhen in subsequent years. In July 2004, we incepted one of the pioneering QFII products in the market, and a sizable proportion of our assets are in China A shares today.
As we are grateful to have participated in China’s exciting growth story over the past 20 years, we have sought opportunities to contribute back to the community in our own small way.
We present here two of our most recent initiatives:
Internship for Jiaotong University’s Shanghai Advanced Institute of Finance
In March 2015, APS sponsored and trained 6 students during an internship at our Shanghai office. These students were in the 2015 graduating class of the Master of Finance program at the Shanghai Advanced Institute of Finance (SAIF) at Shanghai Jiaotong University, one of the country’s most prestigious and top-ranked finance programs.
|APS passes on an investment approach based on investigative research, rigorous valuation and a long-term view|
These 6 energetic students—Song Ge, He Ji, Li Sheng, Jason Chen, Zhou Yiran, Qian Zhongwei— spent five weeks working with APS Shanghai’s portfolio managers and analysts, and underwent an intensive, hands-on program where they performed fundamental investment research the APS way.
They were tasked to make an investment recommendation on 3 retailers listed in Hong Kong, China A-share and the U.S. respectively.
Developing and executing a research plan in 5 weeks
The team developed and executed a comprehensive research plan over the course of the next 5 weeks. Within 5 days, they had the plan up and approved with individual responsibilities. They next launched a comprehensive customer survey across multiple cities in 16 provinces in China, securing almost 100 respondents through phone, email and Wechat channels. In parallel, an extensive price comparison was conducted via an advanced e-commerce website crawling bot that extracted 118,432 website customer reviews to assess frequency of visits, price satisfaction, quality satisfaction as indicated by the return of goods, and delivery speed.
Following this, the team fielded key questions to home appliance industry experts, sell-side analysts and, armed with growing knowledge and questions, travelled by plane and train to Beijing and Nanjing to interview company executives at the three companies.
Using the information they collected, a sea of figures and at times conflicting opinions from various industry sources, the team was challenged and guided to build their own earnings projection model, formulate independent opinions, and make an eventual recommendation to APS’ CIO Wong Kok Hoi, Professor Charles Chang and their entire graduating class.
As an investment recommendation’s result can only be known over time, APS plans to invite them back for a reunion a year later, to review and reflect on the subsequent outcome and additional investment learnings.
“Thinking Like An Investigator”
Having undergone the challenges of performing primary company research, the interns provided feedback on their experience:
|“The practice is the most valuable part of the project - how to investigate a company, how to perform an expert call, how to communicate with sell-side analysts, how to get useful information from them. This process taught me how top professionals in the industry do equity research. Another valuable experience was the teamwork, which was necessary for completing our assignment efficiently. I highly treasure the work ethic APS demonstrated. You taught me that diligence, humility, and curiosity are the key elements of an outstanding research analyst.”|
|He Ji, from Anqing, Anhui Province|
|“The way to value a company represents the depth of understanding of the industry. Take for example [one of the largest Chinese ecommerce companies]. We learned to split it into three main businesses: retail, logistics and financial services, and value them separately. This broadened our perspective and gave us deeper insights into evaluating the company’s future. I believe this kind of thinking would benefit us a lot in our future investment career.”|
|Li Sheng, from Shanghai|
|“I learned to decompose a company's business and cross check every information source. But the most important lesson is a value-oriented investing philosophy.”|
|Zhou Yiran, from Huai’ an City, Jiangsu Province|
|“I had a wonderful experience with APS and came away thinking that investment may be more an art than a science. The most valuable things I learned include organizing a large volume of data into an investment idea or thesis and updating that thesis over time.”|
|Qian Zhongwei, from Taizhou, Jiangsu province|
|“Before participating in the project, I only knew APS as an outstanding QFII. Through the project, I gained an impressive view of APS’ culture. The staff are very nice. Chris Tan, Wong Kok Hoi, and Wang Kangning have very solid investment knowledge and gave the team a lot of useful suggestions. I think APS is a very good choice for someone pursuing a career in equity research and investment.”|
|Jason Chen, from Hefei, Anhui Province|
APS Case Study at SAIF Master of Finance Year 1 Class
SAIF’s Master of Finance program, under the enterprising leadership of Professor Charles Chang, has also included APS as a case study of a successful asset management firm in China and the Asia-Pacific. In October 2014, APS’ portfolio manager Chris Tan co-taught a class on fundamental long-term investing principles using APS as an example, together with Tan Chin Hwee, Apollo Global Investment’s founding partner in Asia.
|APS’ Chris Tan (at podium) delineates the principles of long-term investing|