 Good day fellow investors! Today we're going to discuss three recent Chinese IPOs. Now when somebody mentions an initial public offering and especially when it comes from China everybody is very very averse to such companies because they say it's too risky, everything can happen, high volatility, blah blah blah and that's correct. There is high volatility however there are some pretty good businesses there and if you can look beyond the temporary volatility fears speculation that surrounds such investments and really look at the quality business. So you have to be a business analyst you can find extreme gems like it was the case for UPI that we discussed in August. Today we're going to discuss three Chinese IPOs, recent IPOs. One is very good, one is not so good and one is questionable. So very interesting video and during the video I will give you some points how to do research on such stocks, what to look and what to be very careful with. So let's immediately start with the first company SOGO or however it's mentioned SOGO. So the best way to analyze a new IPO is to look at its prospectus and its impact in the actual market. SOGO is a Chinese search engine that has just 3% of the market but it is the default search engine on the famous Chinese WeChat backed by Tencent that owns a 37% stake in SOGO. So it is a relation there so about 46% of SOGO's traffic comes from Tencent which is very important thus making the company very very dependent on Tencent. Now the deal is that SOGO remains the default search engine until September 2018 and then if it works well it can expand the collaboration up to 2023. So it is really dependent on the player like Tencent which makes SOGO a very risky play. The company recently raised 585 million in the IPO which immediately made it a 5 billion company. The second thing you have to look at is the valuation of such a company. SOGO's net income was 66 million for the first nine months of 2017 or 15 cents per share. If we assume a 46% increase like it has been the case for the previous nine months I get to an earnings per share of 24 cents which implies a price to earnings ratio of 54. So a small search engine depending on Tencent has a similar price earnings ratio to Alibaba. That's something that puts me off from investing in such a company. Too much risk for the potential. It is a growth company but I would leave that to others. The second company is a very interesting company which has to be researched much more in depth. We are talking here about Kudian, a Chinese micro-landing specialist that is dependent on Alibaba's Alipay platform but is really exploding in China with a lot of users, a lot of users growth and a lot of profits coming from the micro-landing business. Let's first look at the price of Kudian. This is very interesting and really describes perfectly what you can expect when investing in IPOs. The IPO was priced at $24 just a month ago. Then the stock price surged in exuberance to $45 only to drop very fastly to below $22. Now it is $25.26 or something like that. However, again, let's leave the speculation to speculators. Let's look at the business. First, the $900 million that QD received from IPO means that they will have enough money to grow even faster in the next year. If we look at the valuation, QD's earnings in Q3 were $0.33 per share which would make it $1.32 for the whole year and give it the price administration of just $18 which is extremely low for such a growth company. So it's really a company which I would dig deeper into to see what is the potential there if it remains at this low prices. And of course read through the whole IPO prospectus to see what are the risks. Now another company that I already made a video about is ZTO Express but there is now a new logistics company that's just IPO best Inc. And I want to compare the two companies and see which one will do better so that you can make better investment decisions and so that we can learn more about the stock market and stocks. So ZTO Chinese Logistics Company IPOed last year at $17 per share but then the IPO stock fell to $11 because there were fears of much more competition, competition coming from best and now the stock recovered to the current levels. The risk of ZTO is that Alibaba cuts its relations with it and focuses on best because Alibaba owns $27 or a little bit less now after the IPO of best. So if Alibaba switches from its default logistics operator ZTO to best it could really spell trouble for ZTO therefore it makes a risky play. No matter what will happen in the future you have to always look at the risk and the reward. As for best the revenues and the growth is still huge and if it can take the money it gets from the IPO to invest in whatever they are doing to grow it could really, really become a great play. The difference between ZTO is that ZTO is profitable even if it has a price earnings ratio of around $37 while best is still hugely growing but not profitable so best still has to reach profitability and that is something that investors don't like. Nevertheless if you look at the margins they are improving and when they turn into profitability that could really, really be huge for best. If best manages to continue to grow at the rate it's growing and then reach a significant positive margin like it is the case for ZTO which we are talking about 30%. Let's say it grows to 20 billion yuan in revenue and then it has 20% gross margin that's 4 billion and let's say a profit of 2 billion that would make a profit of about $1 per share which can happen in the next year, two years. That would lead to price earnings ratio of 1 which would be extremely low for such a company. Very interesting to see of course this is just the back of an empty calculation but high high potential. If I would choose I would choose best in place of ZTO. On top of everything best's price still didn't explode or something so there is huge potential and the company is much smaller than ZTO but has similar revenues so very very interesting to look and compare because when best shows stability and profitability which is what investors want nobody likes to invest in uncertain IPOs then it could come to ZTO's level. This is my second attempt to put all the stocks we analyze on this channel in a table but this time I think I'll stick to it. So I have put a few of the latest investments I gave them a grade the top grade is 20 the lower grade is 0 so you have the ticker the name the earnings per share what is the growth what is the earnings yield the dividend the value so what is the value offered from the stock the main risk the expected return the expected risk a quick comment what do I think about the company and the catalyst so what we discuss just as a quick reminder at the end of each stock analysis if I forget about it please remind me in the comments as you can see the two companies I really don't like SOGO too risky but I really like QD and I will research more in depth for my own portfolio if I make a real interesting analysis of it perhaps I'll even make a video if it's not too long so comparative high growth for QD and relatively low risk if something doesn't change off there is something financial or regulatory governmental that can happen so that's something that I have to still research. Looking forward to your comments thank you for watching I'll see you in the next video