Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Equity Bottom-Up

Sinopec Engineering Group H / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sinopec-engineering-group-h" target="_blank" data-smartkarma-citation="entities:18372:1" rel="noopener">Sinopec Engineering Group H (2386 HK)</a> ("SEG") is currently trading 11% below its net cash position.</li>
<li>Net income has steadily increased over the past four years. 1H21 profit increased 6.8% compared to the corresponding period.</li>
<li>The payout ratio has averaged ~60% in the past five years. The current yield is 10%. </li>
</ul>



Sinopec Engineering Group H (2386 HK) ("SEG") is currently trading 11% below its net cash position.
Net income has steadily increased over the past four years. 1H21 profit increased 6.8% compared to the corresponding period.
The payout ratio has averaged ~60% in the past five years. The current yield is 10%. 


Sinopec Engineering (2386 HK): Priced For Liquidation. Again

Chief Economist

Diana Choyleva

Enodo Economics

Enodo Economics is an independent macroeconomic forecasting company that untangles complexity, challenges the consensus, and makes sense of the future. Our focus is on China – one of the most misunderstood economies in the world, but one of the most important to figure out.  Enodo’s chief economist, Diana Choyleva, has been analysing China for almost 20 years, while Enodo’s team boasts a combined 140 years’ experience covering China’s economy, politics and markets. 

Macroeconomics

<h2>China News That Matters</h2><ul>
<li>Beijing steps up tech crackdown</li>
<li>Top planner recovers climate portfolio</li>
<li>Grabbing top spot. Or not</li>
<li>The challenge of US-China relations</li>
<li>Tech giants tout AI-enhanced products</li>
</ul><ul style="list-style-type: none;"><li><div class="content-remarks">In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.</div></li></ul>

China News That Matters
Beijing steps up tech crackdown
Top planner recovers climate portfolio
Grabbing top spot. Or not
The challenge of US-China relations
Tech giants tout AI-enhanced products
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.

Alpha-Centric ESG Research

Kyle Rudden

Shortly after publishing <a href="https://www.smartkarma.com/insights/engine-versus-exxon-activist-hedge-fund-s-proxy-fight-win-reverberates-through-big-oil-boardrooms" target="_blank" data-smartkarma-citation="insights:52318" rel="noopener">Engine Versus Exxon: Activist Hedge Fund's Proxy Fight Win Reverberates Through "Big Oil" Boardrooms</a>, I decided that a follow-up report (such as this one) would be a good supplement. So, consider this an addendum of sorts to that first Insight.Whereas "Engine Versus Exxon" was a mostly qualitative discussion of recent events for Exxon and six other supermajors, this is a more data-driven look of a much larger universe of oil stocks; 50 in total, representing 24 countries (mainly in the Americas, Asia Pacific, and Europe).Together, they are a good proxy for the broader Energy sector – an aggregate market capitalisation of US$4.6 trillion, and responsible for an astounding 20.5 billion MtCO2e in emissions, about 65% of all energy-related greenhouse gas (GHG) emissions.This is a relatively focused Insight, covering four related areas:<ol>
<li>
Carbon Footprints: Scope 1, Scope 2, and Scope 3 emissions for each (ranked and sorted).</li>
<li>
Climate Policies: Where each stands vis-à-vis implementation of climate-related policies.</li>
<li>
Emissions Targets: Which companies are claiming to go net-zero emissions, and by when.</li>
<li>
Capital Investment: How future CapEx is (or is not) aligned with global warming targets.</li>
</ol>

Shortly after publishing Engine Versus Exxon: Activist Hedge Fund's Proxy Fight Win Reverberates Through "Big Oil" Boardrooms, I decided that a follow-up report (such as this one) would be a good supplement. So, consider this an addendum of sorts to that first Insight.Whereas "Engine Versus Exxon" was a mostly qualitative discussion of recent events for Exxon and six other supermajors, this is a more data-driven look of a much larger universe of oil stocks; 50 in total, representing 24 countries (mainly in the Americas, Asia Pacific, and Europe).Together, they are a good proxy for the broader Energy sector – an aggregate market capitalisation of US$4.6 trillion, and responsible for an astounding 20.5 billion MtCO2e in emissions, about 65% of all energy-related greenhouse gas (GHG) emissions.This is a relatively focused Insight, covering four related areas:

Carbon Footprints: Scope 1, Scope 2, and Scope 3 emissions for each (ranked and sorted).

Climate Policies: Where each stands vis-à-vis implementation of climate-related policies.

Emissions Targets: Which companies are claiming to go net-zero emissions, and by when.

Capital Investment: How future CapEx is (or is not) aligned with global warming targets.


Greenhouse Gas Emissions Profiles of 50 of the World's Largest Oil Companies

HK/China Equity Long-Short

Osbert Tang, CFA

Share price of <a href="https://www.smartkarma.com/entities/china-gas-holdings-ltd" target="_blank" data-smartkarma-citation="entities:14315:1" rel="noopener">China Gas Holdings (384 HK)</a> has dropped by 12.3% in the last three days after the 7.5% new share placement to raise HK$11.6bn. While there will be EPS dilution over the next two years, we still see EPS growth at a decent level with ROE staying high at 22.8% for FY22F. In fact, the frequent corporate moves recently including exploring hydrogen energy, developing LNG terminal and co-operating with major central SOEs are encouraging developments.Its cooperation with <a href="https://www.smartkarma.com/entities/cnooc-ltd" target="_blank" data-smartkarma-citation="entities:175:1" rel="noopener">CNOOC Ltd (883 HK)</a> on hydrogen production and hydrogen refueling station will potentially open a growth driver to capture the numerous opportunities in this rapidly growing market segment. Meanwhile, the construction of LNG terminal will provide it a tighter grip on LNG cost and procurement. We see such strategic and operational developments positive to the long-term well-being of China Gas.

Share price of China Gas Holdings (384 HK) has dropped by 12.3% in the last three days after the 7.5% new share placement to raise HK$11.6bn. While there will be EPS dilution over the next two years, we still see EPS growth at a decent level with ROE staying high at 22.8% for FY22F. In fact, the frequent corporate moves recently including exploring hydrogen energy, developing LNG terminal and co-operating with major central SOEs are encouraging developments.Its cooperation with CNOOC Ltd (883 HK) on hydrogen production and hydrogen refueling station will potentially open a growth driver to capture the numerous opportunities in this rapidly growing market segment. Meanwhile, the construction of LNG terminal will provide it a tighter grip on LNG cost and procurement. We see such strategic and operational developments positive to the long-term well-being of China Gas.  

China Gas Holdings (384 HK): Placement, Hydrogen Energy, LNG Terminal and Unicom/Sinopec Co-Ops

<a href="https://www.smartkarma.com/entities/kunlun-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:10054:1" rel="noopener">Kunlun Energy (135 HK)</a>'s post-FY20 result conference call revealed that the company sees a stable growth in FY21, with improvement expected for the natural gas, LNG processing and exploration &amp; production (E&amp;P) segments. The company also highlights that the new management that come on board in Nov 2020 will push for more involvement in new energy. Based on our back-of-the-envelope calculation, Kunlun's earnings growth will range between 25-28% in FY21, depending largely on the extent of the turnaround of the E&amp;P segment. On such expectation, we still see Kunlun trades on undemanding 8.8x PER for FY21, with a net cash position even after paying out the special dividends.

Kunlun Energy (135 HK)'s post-FY20 result conference call revealed that the company sees a stable growth in FY21, with improvement expected for the natural gas, LNG processing and exploration &amp; production (E&amp;P) segments. The company also highlights that the new management that come on board in Nov 2020 will push for more involvement in new energy. Based on our back-of-the-envelope calculation, Kunlun's earnings growth will range between 25-28% in FY21, depending largely on the extent of the turnaround of the E&amp;P segment. On such expectation, we still see Kunlun trades on undemanding 8.8x PER for FY21, with a net cash position even after paying out the special dividends.

Kunlun Energy (135 HK): Key Takeaways from Post-Result Call

China

China Petroleum & Chemical Corporation produces and trades petroleum and petrochemical products. The Company offers gasoline, diesel, jet fuel, kerosene, ethylene, synthetic fibers, synthetic rubber, synthetic resins, and chemical fertilizers. China Petroleum & Chemical markets its products throughout China.

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China Petroleum & Chemical (386 HK)

Sinopec Engineering (2386 HK): Priced For Liquidation. Again

SEG is cheap, currently trading below net cash. With a median trailing P/E and P/B pre-Covid of 7.9x and 1.1x, I see at least 40% upside from here.

David Blennerhassett

Didi/ Carbon/ Economy/ US-China/ Tech

In my weekly digest, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and...

Diana Choyleva

Greenhouse Gas Emissions Profiles of 50 of the World's Largest Oil Companies

A quick overview of the carbon footprints and climate policies of 50 of the world's largest oil stocks (mainly Asia Pacific, Americas, and Europe...

Kyle Rudden

China Gas Holdings (384 HK): Placement, Hydrogen Energy, LNG Terminal and Unicom/Sinopec Co-Ops

We are not too negative on the new share placement by China Gas. We think the recent strategic and operational initiatives position it well in the...

Osbert Tang, CFA

Kunlun Energy (135 HK): Key Takeaways from Post-Result Call

Kunlun's post-result call suggested a stable growth expectation for FY21, and we estimate 25-28% growth. There will be more involvement in new...

Osbert Tang, CFA

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