HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric Holdings (3899 HK)</a> has underperformed benchmark Indices YTD, and its business segments are undervalued based on their earnings performance. </li>
<li>The clean energy segment is only valued at HK$3.4bn, or 24% of the stock's total. However, it is the largest earnings generator in 1H24, contributing 60% of 1H24 profit.</li>
<li>CLPT's earnings contribution is 22% more than CIMC Safeway's, but it is only valued at 27% of the latter, equivalent to an undemanding 9.8x annualised PER.</li>
</ul>



CIMC Enric Holdings (3899 HK) has underperformed benchmark Indices YTD, and its business segments are undervalued based on their earnings performance. 
The clean energy segment is only valued at HK$3.4bn, or 24% of the stock's total. However, it is the largest earnings generator in 1H24, contributing 60% of 1H24 profit.
CLPT's earnings contribution is 22% more than CIMC Safeway's, but it is only valued at 27% of the latter, equivalent to an undemanding 9.8x annualised PER.


CIMC Enric (3899 HK): Mispriced, with Good Upside

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric Holdings (3899 HK)</a>'s 1H24 result is below expectations, but the growth outlook is promising. Management also guided for a solid recovery in 2H24.</li>
<li>Backlog and new orders rose 42.5% and 29.4%, respectively, with chemical and environmental orders rebounded sharply QoQ. The overall margin will be better in 2H24.</li>
<li>Hydrogen revenue should reach Rmb1bn in FY24 (1H24: Rmb450m). New coke oven gas (COG) to hydrogen projects may generate Rmb10bn revenue by FY27, or 43% of FY23 revenue.</li>
</ul>



CIMC Enric Holdings (3899 HK)'s 1H24 result is below expectations, but the growth outlook is promising. Management also guided for a solid recovery in 2H24.
Backlog and new orders rose 42.5% and 29.4%, respectively, with chemical and environmental orders rebounded sharply QoQ. The overall margin will be better in 2H24.
Hydrogen revenue should reach Rmb1bn in FY24 (1H24: Rmb450m). New coke oven gas (COG) to hydrogen projects may generate Rmb10bn revenue by FY27, or 43% of FY23 revenue.


CIMC Enric (3899 HK): Things Are Getting Better

<ul>
<li>Although the 1Q24 revenue of <a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric Holdings (3899 HK)</a> has edged down by 6.8%, this is not a concern as its order backlog suggested a resilient pipeline.</li>
<li>New orders signed increased by 35.7% with that for clean energy surged 100.2%. Order backlog of Rmb26.9bn represents a growth of 41.9% YoY and 17.8% against end-FY23.</li>
<li>Management also commented that there is a marked improvement in gross margin for 1Q24 and expects this trend to continue. Its 10.8x PER is inexpensive.</li>
</ul>


Although the 1Q24 revenue of CIMC Enric Holdings (3899 HK) has edged down by 6.8%, this is not a concern as its order backlog suggested a resilient pipeline.
New orders signed increased by 35.7% with that for clean energy surged 100.2%. Order backlog of Rmb26.9bn represents a growth of 41.9% YoY and 17.8% against end-FY23.
Management also commented that there is a marked improvement in gross margin for 1Q24 and expects this trend to continue. Its 10.8x PER is inexpensive.


CIMC Enric (3899 HK): Robust Order Backlog Outshined Lower 1Q24 Revenue

<ul>
<li>Despite weaker 2H23 results, <a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric Holdings (3899 HK)</a> guided for solid recovery in FY24. Order backlogs reached Rmb22.9bn, which almost equals the full-year revenue.</li>
<li>Clean energy segment will be supported by vessel demand, hydrogen orders, and Angang Steel project contribution. Chemical and environmental segment should rebound in 2H24.</li>
<li>Liquid food spin-off is in process and it has won several domestic whiskey projects. As net cash equals 13% of share price, payout will be maintained at 50% (FY22: 40%). </li>
</ul>


Despite weaker 2H23 results, CIMC Enric Holdings (3899 HK) guided for solid recovery in FY24. Order backlogs reached Rmb22.9bn, which almost equals the full-year revenue.
Clean energy segment will be supported by vessel demand, hydrogen orders, and Angang Steel project contribution. Chemical and environmental segment should rebound in 2H24.
Liquid food spin-off is in process and it has won several domestic whiskey projects. As net cash equals 13% of share price, payout will be maintained at 50% (FY22: 40%). 


CIMC Enric (3899 HK): Positive Takeaways from Post-Result Call

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric Holdings (3899 HK)</a> has applied for its liquid food segment, under CLTP, to be quoted on the NEEQ. Subsequently, it plans to be listed on the BSE.</li>
<li>The move will not only provide an additional funding channel for this business but also enhance the valuations of CIMC Enric. BSE's IPOs have historically performed very well.</li>
<li>Upon successful listing, the attributable market cap of its two listed subsidiaries will be greater than its current market cap. This means its clean energy business is free.</li>
</ul>



CIMC Enric Holdings (3899 HK) has applied for its liquid food segment, under CLTP, to be quoted on the NEEQ. Subsequently, it plans to be listed on the BSE.
The move will not only provide an additional funding channel for this business but also enhance the valuations of CIMC Enric. BSE's IPOs have historically performed very well.
Upon successful listing, the attributable market cap of its two listed subsidiaries will be greater than its current market cap. This means its clean energy business is free.


CIMC Enric (3899 HK): One More Spin-Off Progressing

Hong Kong

CIMC Enric Holdings Ltd. designs, manufactures, and markets gas equipment.  The Company produces compressors, pressure vessels, gas refueling station trailers, and other gas equipment, as well as transportation equipment such as containers, trailers, tank equipments and airport equipments.

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CIMC Enric Holdings (3899 HK)

CIMC Enric (3899 HK): Mispriced, with Good Upside

CIMC Enric has undervalued business segments, with clean energy leading in earnings but underrepresented in value. CLPT is also too cheap due to...

Osbert Tang, CFA

CIMC Enric (3899 HK): Things Are Getting Better

CIMC Enric's controlling shareholder, CIMC Group, has increased its holdings by 0.41% over the peak of the recent Hong Kong market rally (27-Sep to...

Osbert Tang, CFA

CIMC Enric (3899 HK): Robust Order Backlog Outshined Lower 1Q24 Revenue

While CIMC Enric's 1Q24 revenue was down, new orders signed increased by 35.7%. Order backlog also grew 41.9% YoY and 17.8% against end-FY23....

Osbert Tang, CFA

CIMC Enric (3899 HK): Positive Takeaways from Post-Result Call

CIMC Enric expects a solid recovery in FY24 despite weaker 2H23 results. Order backlogs nearly match full-year revenue, with clean energy and...

Osbert Tang, CFA

CIMC Enric (3899 HK): One More Spin-Off Progressing

CIMC Enric has applied to quote its liquid food segment on the NEEQ and then list it on the BSE, providing funding and boosting valuations. A...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

CIMC Enric (3899 HK): Mispriced, with Good Upside

​CIMC Enric has undervalued business segments, with clean energy leading in earnings but underrepresented in value. CLPT is also too cheap due to...

Osbert Tang, CFA

CIMC Enric (3899 HK): Things Are Getting Better

CIMC Enric's controlling shareholder, CIMC Group, has increased its holdings by 0.41% over the peak of the recent Hong Kong market rally (27-Sep to...

Osbert Tang, CFA

CIMC Enric (3899 HK): Robust Order Backlog Outshined Lower 1Q24 Revenue

While CIMC Enric's 1Q24 revenue was down, new orders signed increased by 35.7%. Order backlog also grew 41.9% YoY and 17.8% against end-FY23....

Osbert Tang, CFA

CIMC Enric (3899 HK): Positive Takeaways from Post-Result Call

​CIMC Enric expects a solid recovery in FY24 despite weaker 2H23 results. Order backlogs nearly match full-year revenue, with clean energy and...

Osbert Tang, CFA

CIMC Enric (3899 HK): One More Spin-Off Progressing

​CIMC Enric has applied to quote its liquid food segment on the NEEQ and then list it on the BSE, providing funding and boosting valuations. A...

Osbert Tang, CFA

CIMC Enric has undervalued business segments, with clean energy leading in earnings but underrepresented in value. CLPT is also too cheap due to...

CIMC Enric expects a solid recovery in FY24 despite weaker 2H23 results. Order backlogs nearly match full-year revenue, with clean energy and...

CIMC Enric has applied to quote its liquid food segment on the NEEQ and then list it on the BSE, providing funding and boosting valuations. A...