HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>The FY22 profit warning for <a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power (916 HK)</a> reflected mostly items of one-off in nature and the weak result should be a matter of the past.</li>
<li>The Jan overall generation growth of 30.6% and wind power growth of 44.4% are very solid performance. With economic rebound and low comparison base, we expect growth to sustain.</li>
<li>Asset injection from CHN Energy and improvement in financial position through subsidy collection are positives, making its below 10x PERs for FY23 and FY24 attractive. </li>
</ul>


The FY22 profit warning for China Longyuan Power (916 HK) reflected mostly items of one-off in nature and the weak result should be a matter of the past.
The Jan overall generation growth of 30.6% and wind power growth of 44.4% are very solid performance. With economic rebound and low comparison base, we expect growth to sustain.
Asset injection from CHN Energy and improvement in financial position through subsidy collection are positives, making its below 10x PERs for FY23 and FY24 attractive. 


China Longyuan (916 HK): The Bull Story Should Continue

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

CGN New Energy Holdings / Equity Bottom-Up

<ul>
<li>A "<em>valuation system with Chinese characteristics</em>" has the media, ostensibly, discussing whether this implies a premium for SOEs and companies aligned with national goals.</li>
<li>In early 2020, SOE-backed clean energy play <strong><a href="https://www.smartkarma.com/entities/cgn-new-energy-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:4295:1" rel="noopener">CGN New Energy Holdings (1811 HK)</a></strong> was subject to a potential privatisation from its parent; but it failed to materialise. </li>
<li>During the 14th and 15th Five-Year Plans (2021-30) period, China's installed capacity for wind and solar power is expected double.</li>
</ul>


A "valuation system with Chinese characteristics" has the media, ostensibly, discussing whether this implies a premium for SOEs and companies aligned with national goals.
In early 2020, SOE-backed clean energy play CGN New Energy Holdings (1811 HK) was subject to a potential privatisation from its parent; but it failed to materialise. 
During the 14th and 15th Five-Year Plans (2021-30) period, China's installed capacity for wind and solar power is expected double.


CGN New Energy Holdings: Character Building

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-longyuan-power-group-corp-ltd" target="_blank" data-smartkarma-citation="entities:14215:1" rel="noopener">China Longyuan Power (916 HK)</a> has a very good 3Q22 with earnings increased 55.1% YoY. This has reversed the trend of lower profit YoY in the last two quarters.</li>
<li>The pressure on margin has lessened relative to 1H22 and this is partly reflected by good cost performance. Tariffs for wind and other renewables also look resilient. </li>
<li>Recent pullback in share price has returned Longyuan to attractive multiples. Its growth stories stay intact and outperformance against national power generation is encouraging.</li>
</ul>



China Longyuan Power (916 HK) has a very good 3Q22 with earnings increased 55.1% YoY. This has reversed the trend of lower profit YoY in the last two quarters.
The pressure on margin has lessened relative to 1H22 and this is partly reflected by good cost performance. Tariffs for wind and other renewables also look resilient. 
Recent pullback in share price has returned Longyuan to attractive multiples. Its growth stories stay intact and outperformance against national power generation is encouraging.


China Longyuan (916 HK): Continuing the Good Upturn

China Power International / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-power-international" target="_blank" data-smartkarma-citation="entities:15548:1" rel="noopener">China Power International (2380 HK)</a> is the hardest hit in this round of market sell-off with a 28.9% plunge in share price in Sep - we think this is overdone. </li>
<li>Coal-Fired margin, which is the key drag in 1H22, will improve in 2H22. Its clean energy segment has performed well, and new capacity acquired will start to provide contribution.</li>
<li>Its strategic transformation target of over 90% of capacity from new energy by 2025, up from 50.7% in 1H22, has not changed. Parent asset injection will generate massive upside potential. </li>
</ul>



China Power International (2380 HK) is the hardest hit in this round of market sell-off with a 28.9% plunge in share price in Sep - we think this is overdone. 
Coal-Fired margin, which is the key drag in 1H22, will improve in 2H22. Its clean energy segment has performed well, and new capacity acquired will start to provide contribution.
Its strategic transformation target of over 90% of capacity from new energy by 2025, up from 50.7% in 1H22, has not changed. Parent asset injection will generate massive upside potential. 


China Power International (2380 HK): We Think Good Opportunities Are Presented

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

China Datang Corp Renewable Power / Equity Bottom-Up

<ul>
<li>Low valuation against peers in China albeit <a href="https://www.smartkarma.com/entities/china-datang-corp-renewable-power-co-ltd" target="_blank" data-smartkarma-citation="entities:15736:1" rel="noopener">China Datang Corp Renewable Power (1798 HK)</a> is one of the few pure-play wind farm operators in HK. </li>
<li>Its free cash flow reached its highest in more than 10 years. </li>
<li>The challenging equity market makes China Datang Renewable Power looks even more attractive.</li>
</ul>


Low valuation against peers in China albeit China Datang Corp Renewable Power (1798 HK) is one of the few pure-play wind farm operators in HK. 
Its free cash flow reached its highest in more than 10 years. 
The challenging equity market makes China Datang Renewable Power looks even more attractive.


China Datang Renewable Power (1798): Ideal Name for ESG Fund.

Hong Kong

CGN New Energy Holdings Co Ltd is a diversified independent power producer in Asia. The Company has a portfolio of gas-fired, coal-fired, oil-fired, hydro, cogen and fuel cell power generation projects in the People's Republic of China and Korea.

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CGN New Energy Holdings (1811 HK)

China Longyuan (916 HK): The Bull Story Should Continue

Focus should be on the encouraging outlook and Longyuan's good Jan generation growth of 44.4% for wind power is a solid evidence. Parent asset...

Osbert Tang, CFA

CGN New Energy Holdings: Character Building

During the 14th and 15th Five-Year Plans (2021-30) period, China's installed capacity for wind and solar power is expected double. CGNNE appears...

David Blennerhassett

China Longyuan (916 HK): Continuing the Good Upturn

Longyuan has a solid 3Q22 profit, reversing the trend of weaker YoY earnings in 1Q22 and 2Q22. It has the ability to outperform national generation...

Osbert Tang, CFA

China Power International (2380 HK): We Think Good Opportunities Are Presented

CPI's share price has overly reacted to market's concern on slowing economic and power demand outlook. Its new energy transformation and parent...

Osbert Tang, CFA

China Datang Renewable Power (1798): Ideal Name for ESG Fund.

Posted highest free cash flow since 2009 while still trading below book value. With a low valuation, high FCF, and CO2 emission reduction, this...

Henry Soediarko

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