Preview of JP Morgan’s China Conference

by: Shaun Rein

Next month I am headed up to Beijing to chair the private equity panel for JP Morgan’s (NYSE:JPM) China Conference. I am looking forward to the event for a number of reasons. First off, my panel has Kathy Xu, Managing Partner of China Capital Today; Brandon Lin, Partner of SAIF Partners; and Bob Theleen, Chairman of ChinaVest on it. These guys have been responsible for the growth of some of China’s most successful start-ups, and I am looking forward to hearing their insights on the venture capital and private equity sectors in China.

Kathy backed Netease (NASDAQ:NTES) and Brandon helped back Shanda (NASDAQ:SNDA) and Acorn International (NYSE:ATV). If you are a regular reader of Seeking Alpha, then you know I think Netease is one of the best run companies in China in the tech sector. I sold out my shares a few months ago, but I am looking at getting back in the next time there is a drop in the share price.

Secondly, I am also interested in going to the conference as some companies that I track are going to be there. China Mobile (NYSE:CHL), Petrochina (NYSE:PTR), Ports Design, Shimao Property, Ctrip (NASDAQ:CTRP), New Oriental (NYSE:EDU), and Belle International are the companies that are presenting that I am most interested in. I never base my decisions on investing on conference calls and meetings with senior executives – I prefer to go much further in the investment strategy, such as talking with the companies main clients to determine satisfaction rates as we do for our hedge fund clients. But I like to meet the C-level executives of these companies just to get a feel for what they are like.

As people who read my articles know, I have always been a huge fan of Belle International as I wrote in BusinessWeek in a column entitled “The Key to Successful Branding in China. Belle International has shoes that have created great loyalty amongst their consumers as well as a great retail network. Sadly, I do not own any of their equity stock, but I have stocks of their products in my home as my wife just loves the shoes.

I am also greatly looking forward to the presentations by New Oriental, which I have written about at lengths for years on Seeking Alpha. I sold out my last shares of New Oriental a few months ago. I still think that they have a great business model and strong management team. My concern is how scalable they are compared to say Ctrip (CTRP) -- which I own – as I wrote about in Select Chinese Stocks Have a Way to Go. I would like to see their strategy for dealing with inflation which is a huge concern for me in China right now. Real estate costs are skyrocketing, so I am concerned that New Oriental’s margins will be cut in the near future.

At any rate, the conference looks to be a great one. I am looking forward to meeting the other speakers such as Gao Xiqing, the President of CIC, China’s new sovereign fund. After the conference, I will write about some of the key points and how they should be of interest to investors in China.