HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

<ul>
<li>The China Power Sector has revived on the back of industry tariff reforms, higher consumption driven by AI adoption, and an increase in grid investments. Yet, there are still values.</li>
<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> and <a href="https://www.smartkarma.com/entities/huaneng-power-intl-inc-h" target="_blank" data-smartkarma-citation="entities:28:1" rel="noopener">Huaneng Power Intl Inc H (902 HK)</a> are the power conglomerates that look attractive on fundamentals, earnings and valuations.</li>
<li>Among clean energy names, <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> is a laggard YTD. However, earnings growth should accelerate and its multiples are not stretched.</li>
</ul>


The China Power Sector has revived on the back of industry tariff reforms, higher consumption driven by AI adoption, and an increase in grid investments. Yet, there are still values.

China Power International (2380 HK) and Huaneng Power Intl Inc H (902 HK) are the power conglomerates that look attractive on fundamentals, earnings and valuations.
Among clean energy names, China Longyuan Power (916 HK) is a laggard YTD. However, earnings growth should accelerate and its multiples are not stretched.


China Power Sector: Where Can We Still Find Value?

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 147 stocks over the last week. The average A-H premium was 114.0% as of May 10th.</li>
<li>The average A-H premium changed by -7.0ppt week-on-week, led by energy, utilities, communication services and offset by consumer staples, consumer discretionary.</li>
<li>We highlight weekly changes in A-H premium for Petrochina, CGN Power, Hua Hong Semi, Huaneng Power, Cansino, Pharmaron.</li>
</ul>


We analyse the changes of A-H premium on 147 stocks over the last week. The average A-H premium was 114.0% as of May 10th.
The average A-H premium changed by -7.0ppt week-on-week, led by energy, utilities, communication services and offset by consumer staples, consumer discretionary.
We highlight weekly changes in A-H premium for Petrochina, CGN Power, Hua Hong Semi, Huaneng Power, Cansino, Pharmaron.


A-H Premium Weekly (May 10th): 19 Stocks at 52w Low

<ul>
<li>We analyze the monthly Hong Kong Connect flows with our data engine.</li>
<li>We tabulate the top stocks by inflows, outflows, and holding by mainland investors.</li>
<li>We highlight flows for BOC, Tencent, China Mobile, ZTO Express, Anta Sports.</li>
</ul>


We analyze the monthly Hong Kong Connect flows with our data engine.
We tabulate the top stocks by inflows, outflows, and holding by mainland investors.
We highlight flows for BOC, Tencent, China Mobile, ZTO Express, Anta Sports.


Hong Kong Connect Flows (April): 12M High of $10.7bn Inflows

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>Bloomberg reports that CGN, the parent and largest shareholder, is reconsidering taking <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> private. </li>
<li>CGN New Energy shares have underperformed the median peer's shares since the announcement of CGN's previous aborted privatisation attempt (2 March 2020) and on the last twelve-month basis.</li>
<li>The probability of an offer is high as CGN, an SOE has access to financing, and CGN New Energy’s valuation is low. We estimate a potential offer range of HK$2.80-4.30.</li>
</ul>


Bloomberg reports that CGN, the parent and largest shareholder, is reconsidering taking CGN New Energy Holdings (1811 HK) private. 
CGN New Energy shares have underperformed the median peer's shares since the announcement of CGN's previous aborted privatisation attempt (2 March 2020) and on the last twelve-month basis.
The probability of an offer is high as CGN, an SOE has access to financing, and CGN New Energy’s valuation is low. We estimate a potential offer range of HK$2.80-4.30.


CGN New Energy (1811 HK): Evaluating a Potential Privatisation

Equity Bottom-Up

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>'s earnings should accelerate in FY24, and rebound in hydropower is a key driver. Hydropower generation surged 84.3% YoY in 2M24.</li>
<li>The 9.3GW of capacity acquired in Oct will provide first full-year contribution in FY24. Better economics for coal-fired plants will add to profit momentum.</li>
<li>The 6pp increase in dividend payout signals management's positive view in the outlook, and the Chairman is explicitly confident in good FY24 profit growth. </li>
</ul>



China Power International (2380 HK)'s earnings should accelerate in FY24, and rebound in hydropower is a key driver. Hydropower generation surged 84.3% YoY in 2M24.
The 9.3GW of capacity acquired in Oct will provide first full-year contribution in FY24. Better economics for coal-fired plants will add to profit momentum.
The 6pp increase in dividend payout signals management's positive view in the outlook, and the Chairman is explicitly confident in good FY24 profit growth. 


China Power International (2380 HK): Powering Forward

China

China Longyuan Power Group Corp Ltd designs, develops, manages, and operates wind farms.  The Company also sells the electricity generated by the wind farms.

Price Gauge
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China Longyuan Power (916 HK)

China Power Sector: Where Can We Still Find Value?

China's power sector is thriving with industry reforms and AI adoption, making China Power and Huaneng Power attractive. China Longyuan is a clean...

Osbert Tang, CFA

A-H Premium Weekly (May 10th): 19 Stocks at 52w Low

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Petrochina, CGN Power, Hua Hong Semi, Huaneng Power,...

Ke Yan, CFA, FRM

Hong Kong Connect Flows (April): 12M High of $10.7bn Inflows

We analyzed the Hong Kong Connect Scheme for April and highlight flows for BOC, Tencent, China Mobile, ZTO Express, Anta Sports.

Ke Yan, CFA, FRM

CGN New Energy (1811 HK): Evaluating a Potential Privatisation

The probability of an offer is high as CGN, an SOE has access to financing, and CGN New Energy’s valuation is low. We estimate a potential offer...

Arun George

China Power International (2380 HK): Powering Forward

China Power Intl is set for earnings acceleration in FY24, driven by rebounding hydropower generation and increased capacity acquisition, with...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Power Sector: Where Can We Still Find Value?

​China's power sector is thriving with industry reforms and AI adoption, making China Power and Huaneng Power attractive. China Longyuan is a clean...

Osbert Tang, CFA

A-H Premium Weekly (May 10th): 19 Stocks at 52w Low

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Petrochina, CGN Power, Hua Hong Semi, Huaneng Power,...

Ke Yan, CFA, FRM

Hong Kong Connect Flows (April): 12M High of $10.7bn Inflows

We analyzed the Hong Kong Connect Scheme for April and highlight flows for BOC, Tencent, China Mobile, ZTO Express, Anta Sports.

Ke Yan, CFA, FRM

CGN New Energy (1811 HK): Evaluating a Potential Privatisation

The probability of an offer is high as CGN, an SOE has access to financing, and CGN New Energy’s valuation is low. We estimate a potential offer...

Arun George

China Power International (2380 HK): Powering Forward

​China Power Intl is set for earnings acceleration in FY24, driven by rebounding hydropower generation and increased capacity acquisition, with...

Osbert Tang, CFA

China's power sector is thriving with industry reforms and AI adoption, making China Power and Huaneng Power attractive. China Longyuan is a clean...

China Power Intl is set for earnings acceleration in FY24, driven by rebounding hydropower generation and increased capacity acquisition, with...