HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Everbright Environment / Equity Bottom-Up

<ul>
<li>China's special purpose bonds (SPB) issuance by local governments stayed high for 4Q21; but as from NDRC, proceeds of these bonds will be used in 1Q22 to boost economic growth.</li>
<li>NDRC has already made early release of Rmb1.46trn SPB quota for 2022 to local governments, and provided guidance and supervision to ensure speedy and targeted use of proceeds in early-2022.</li>
<li>Both <a href="https://www.smartkarma.com/entities/china-everbright-environment-group-limited" target="_blank" data-smartkarma-citation="entities:15946:1" rel="noopener">China Everbright Environment (257 HK)</a> and <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a> are well placed to capture SPB-funded projects. Yet their valuations are still very appealing despite good YTD performance.</li>
</ul>


China's special purpose bonds (SPB) issuance by local governments stayed high for 4Q21; but as from NDRC, proceeds of these bonds will be used in 1Q22 to boost economic growth.
NDRC has already made early release of Rmb1.46trn SPB quota for 2022 to local governments, and provided guidance and supervision to ensure speedy and targeted use of proceeds in early-2022.
Both China Everbright Environment (257 HK) and China Communications Construction (1800 HK) are well placed to capture SPB-funded projects. Yet their valuations are still very appealing despite good YTD performance.


Special Purpose Bonds in 2022: Benefiting China Everbright Env (257 HK) & China Comm Const (1800 HK)

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Beijing Jingneng Clean Energy / Event-Driven

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<p>On the 17 November, <a href="https://www.smartkarma.com/entities/beijing-jingneng-clean-energy-co-ltd" target="_blank" data-smartkarma-citation="entities:16316:1" rel="noopener">Beijing Jingneng Clean Energy (579 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1117/2020111701054.pdf" target="_blank" rel="noopener">announced</a> a voluntary conditional offer at HK$2.70/share, a 70.89% premium to the undisturbed price. The Offer price is final. No dividends are expected during the Offer period.</p>
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<div>
<p>Jingneng is PRC-incorporated therefore there are no rights to compulsorily acquire shares or to require an Offeror do so. The only mechanism available to privatise is via a Merger by Absorption, incorporating a Scheme-like vote (≥ 75% for, ≤10% against). Additionally, as this is a "<em>voluntary conditional offer</em>", a tendering condition of 90% is also present.</p>
</div>
<div>
<p>At the time, I thought the Offer looked done. I still think that. And in today's <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1231/2020123100105.pdf" target="_blank" rel="noopener">Composite Document</a>, the IFA reckons the Offer is fair and reasonable.</p>
<p>The H-share class meeting is scheduled for the 19 February with an expected payment under the Offer on the 10 March. </p>
</div>
<div>
<p>More below the fold.</p>
</div>


On the 17 November, Beijing Jingneng Clean Energy (579 HK) announced a voluntary conditional offer at HK$2.70/share, a 70.89% premium to the undisturbed price. The Offer price is final. No dividends are expected during the Offer period.


Jingneng is PRC-incorporated therefore there are no rights to compulsorily acquire shares or to require an Offeror do so. The only mechanism available to privatise is via a Merger by Absorption, incorporating a Scheme-like vote (≥ 75% for, ≤10% against). Additionally, as this is a "voluntary conditional offer", a tendering condition of 90% is also present.


At the time, I thought the Offer looked done. I still think that. And in today's Composite Document, the IFA reckons the Offer is fair and reasonable.
The H-share class meeting is scheduled for the 19 February with an expected payment under the Offer on the 10 March. 


More below the fold.


Beijing Jingneng (579 HK): Doc Out. IFA Says Fair & Reasonable

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

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Capital Markets

Hebei Yichen Industrial / Equity Capital Markets

<p>We have covered the basics of the IPO in our earlier insight, <a href="https://www.smartkarma.com/insights/hebei-yichen-industrial-ipo-part-1-is-it-as-good-as-it-sounds" target="_blank">Hebei Yichen Industrial IPO (Part 1): Is It as Good as It Sounds?</a>, where we have touched on the company's business and concerns regarding its market position. In this insight, we will discuss the industry prospects, financials, and valuation, in addition, to running the deal through our framework. </p><h2>Our Thoughts (Continued from Part 1)</h2><h2>Industry - railway investment to plateau, HSR construction to slow</h2><ul><li>China's spending on the railway has…</li></ul>

We have covered the basics of the IPO in our earlier insight, Hebei Yichen Industrial IPO (Part 1): Is It as Good as It Sounds?, where we have touched on the company's business and concerns regarding its market position. In this insight, we will discuss the industry prospects, financials, and valuation, in addition, to running the deal through our framework. Our Thoughts (Continued from Part 1)Industry - railway investment to plateau, HSR construction to slowChina's spending on the railway has…

Hebei Yichen Industrial IPO (Part 2): Past Its Good Old Days; Banker Matters

CRCC High Tech Equipment Corp Ltd (H) / Equity Capital Markets

<p>We have examined CRCC High-Tech's business fundamentals in our <a href="https://www.smartkarma.com/insights/ipo-early-thoughts-crcc-high-tech-domestic-market-peaks-exports-banned" target="_blank">IPO Early Thoughts</a>. The company recently launched its IPO to raise US$360-390m. </p><ul><li>In addition to what we have discussed earlier, we further highlight its under investment in the past, which is in strong contrast with its ambitious future plans</li><li>Growth expectation appears to be too high</li><li>Our Smartkarma framework rates the deal below borderline for participation </li></ul><p><em>More below the fold...</em></p>

We have examined CRCC High-Tech's business fundamentals in our IPO Early Thoughts. The company recently launched its IPO to raise US$360-390m. In addition to what we have discussed earlier, we further highlight its under investment in the past, which is in strong contrast with its ambitious future plansGrowth expectation appears to be too highOur Smartkarma framework rates the deal below borderline for participation More below the fold...

<p>CRCC High-Tech Equipment, a spin-off from CRCC (1186 HK), is said to raise US$400m soon.</p><p>In this insight, we share our thoughts on: 1) The difference between the railway maintenance and machinery business, and where the company is positioned in the value chain; 2) Estimating the potential of the business; and, 3) The limitation and restriction of the company. </p><h2><strong>CRCC High-Tech's machinery business</strong></h2><p>- The company's main business is supplying machinery for railway maintenance, including tamping machine…</p>

CRCC High-Tech Equipment, a spin-off from CRCC (1186 HK), is said to raise US$400m soon.In this insight, we share our thoughts on: 1) The difference between the railway maintenance and machinery business, and where the company is positioned in the value chain; 2) Estimating the potential of the business; and, 3) The limitation and restriction of the company. CRCC High-Tech's machinery business- The company's main business is supplying machinery for railway maintenance, including tamping machine…

(IPO Early Thoughts) CRCC High-Tech: Domestic Market Peaks, Exports Banned

China

CRCC High-Tech Equipment Corporation Limited is a railway maintenance machinery manufacturer. The Company provides machinery and parts sales and overhaul and maintenance services.

CRCC High Tech Equipment Corp Ltd (H) (1786 HK)

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CRCC High Tech Equipment Corp Ltd (H) (1786 HK)

Special Purpose Bonds in 2022: Benefiting China Everbright Env (257 HK) & China Comm Const (1800 HK)

We see local governments' special purpose bonds issuance and uses for 4Q21 and 1Q22 to benefit environmental and infrastructure construction...

Osbert Tang, CFA

Beijing Jingneng (579 HK): Doc Out. IFA Says Fair & Reasonable

Currently trading at a gross/annualised spread of 6.3%/38.1%, assuming payment on the 10 March. The tendering condition is the key risk. However,...

David Blennerhassett

Hebei Yichen Industrial IPO (Part 2): Past Its Good Old Days; Banker Matters

We have covered the basics of the IPO in our earlier insight, Hebei Yichen Industrial IPO (Part 1): Is It as Good as It Sounds?, where we have...

Ke Yan, CFA, FRM

CRCC High-Tech IPO: A High Tech Irony

We have examined CRCC High-Tech's business fundamentals in our IPO Early Thoughts. The company recently launched its IPO to raise US$360-390m. In...

Ke Yan, CFA, FRM

(IPO Early Thoughts) CRCC High-Tech: Domestic Market Peaks, Exports Banned

CRCC High-Tech Equipment, a spin-off from CRCC (1186 HK), is said to raise US$400m soon.In this insight, we share our thoughts on: 1)...

Ke Yan, CFA, FRM

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