Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
<p>Spreads were mixed this week with 48 out of 100 observed pair spreads narrower and 52 wider. The big winner on the week was Financials with spreads 119bp narrower on average. Banks and Big Insurance generally narrowed. </p>
</div>
<div>
<p>Overall, it was a lackluster performance, and one cannot say spreads won't move wider, but at 40% discount (and an arithmetic average upside of 87% for each liquid H to reach parity with its A), this spreads <em>are</em> wide.</p>
</div>
<div>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 211.818px;">
<p><strong>Sector</strong></p>
</td>
<td style="text-align: right; width: 99.0909px;">
<p><strong>Last Week</strong></p>
</td>
<td style="text-align: right; width: 136.364px;">
<p><strong>Previous Week</strong></p>
</td>
<td style="text-align: right; width: 95.4545px;">
<p><strong>3wks Ago</strong></p>
</td>
<td style="text-align: right; width: 97.2727px;">
<p><strong>4wks Ago</strong></p>
</td>
</tr>
<tr>
<td style="width: 211.818px;">
<p>Consumer</p>
</td>
<td style="text-align: right; width: 99.0909px;">
<p>-  0.14%</p>
</td>
<td style="text-align: right; width: 136.364px;">
<p>-  1.65%</p>
</td>
<td style="text-align: right; width: 95.4545px;">
<p>-  1.20%</p>
</td>
<td style="text-align: right; width: 97.2727px;">
<p>+ 2.55%</p>
</td>
</tr>
<tr>
<td style="width: 211.818px;">
<p>Energy</p>
</td>
<td style="text-align: right; width: 99.0909px;">
<p>-  0.36%</p>
</td>
<td style="text-align: right; width: 136.364px;">
<p>+ 0.67%</p>
</td>
<td style="text-align: right; width: 95.4545px;">
<p>+ 1.43%</p>
</td>
<td style="text-align: right; width: 97.2727px;">
<p>-  1.64%</p>
</td>
</tr>
<tr>
<td style="width: 211.818px;">
<p>Financials &amp; Real Estate</p>
</td>
<td style="text-align: right; width: 99.0909px;">
<p>+ 1.19%</p>
</td>
<td style="text-align: right; width: 136.364px;">
<p>-  1.12%</p>
</td>
<td style="text-align: right; width: 95.4545px;">
<p>+ 0.10%</p>
</td>
<td style="text-align: right; width: 97.2727px;">
<p>+ 0.29%</p>
</td>
</tr>
<tr>
<td style="width: 211.818px;">
<p>Health Care &amp; Info Tech</p>
</td>
<td style="text-align: right; width: 99.0909px;">
<p>-  0.54%</p>
</td>
<td style="text-align: right; width: 136.364px;">
<p>-  2.86%</p>
</td>
<td style="text-align: right; width: 95.4545px;">
<p>+ 1.45%</p>
</td>
<td style="text-align: right; width: 97.2727px;">
<p>-  1.52%</p>
</td>
</tr>
<tr>
<td style="width: 211.818px;">
<p>Industrials</p>
</td>
<td style="text-align: right; width: 99.0909px;">
<p>-  0.42%</p>
</td>
<td style="text-align: right; width: 136.364px;">
<p>-  1.20%</p>
</td>
<td style="text-align: right; width: 95.4545px;">
<p>+ 0.26%</p>
</td>
<td style="text-align: right; width: 97.2727px;">
<p>-  0.62%</p>
</td>
</tr>
<tr>
<td style="width: 211.818px;">
<p>Materials</p>
</td>
<td style="text-align: right; width: 99.0909px;">
<p>-  0.33%</p>
</td>
<td style="text-align: right; width: 136.364px;">
<p>-  0.84%</p>
</td>
<td style="text-align: right; width: 95.4545px;">
<p>+ 3.08%</p>
</td>
<td style="text-align: right; width: 97.2727px;">
<p>-  0.57%</p>
</td>
</tr>
<tr>
<td style="width: 211.818px;">
<p>Utilities</p>
</td>
<td style="text-align: right; width: 99.0909px;">
<p>-  1.25%</p>
</td>
<td style="text-align: right; width: 136.364px;">
<p>-  0.14%</p>
</td>
<td style="text-align: right; width: 95.4545px;">
<p>+ 0.99%</p>
</td>
<td style="text-align: right; width: 97.2727px;">
<p>+ 0.25%</p>
</td>
</tr>
<tr>
<td style="width: 211.818px;">
<p><em><strong>Sector Average</strong></em></p>
</td>
<td style="text-align: right; width: 99.0909px;">
<p><em><strong>-  0.26%</strong></em></p>
</td>
<td style="text-align: right; width: 136.364px;">
<p><em><strong>-  1.02%</strong></em></p>
</td>
<td style="text-align: right; width: 95.4545px;">
<p><em><strong>+ 0.87%</strong></em></p>
</td>
<td style="text-align: right; width: 97.2727px;">
<p><em><strong>-  0.18%</strong></em></p>
</td>
</tr>
<tr>
<td style="width: 211.818px;">
<p><strong>All Market Average</strong></p>
</td>
<td style="text-align: right; width: 99.0909px;">
<p><strong>- 0.03%</strong></p>
</td>
<td style="text-align: right; width: 136.364px;">
<p><strong>-  1.22%</strong></p>
</td>
<td style="text-align: right; width: 95.4545px;">
<p><strong>+ 0.76%</strong></p>
</td>
<td style="text-align: right; width: 97.2727px;">
<p><strong>-  0.33%</strong></p>
</td>
</tr>
</tbody>
</table>
</div>
<div>
<div></div>
</div>
<div>
<p>10-day cross-market spread volatility continues to be high at 26% annualised. This is down off highs in the low 30s a couple weeks ago, but the long-term average is quite a bit lower. </p>
</div>
<div>
<div>
<hr>
<h3>The H/A Spread Market</h3>
</div>
</div>
<div>
<p>The past week has seen H-shares come off sharply and spreads widen reasonably dramatically. </p>
</div>
<section>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/192/678/original/Screenshot+2021-03-07+at+8.28.29+PM.png?1615120136" class="editor-image img-responsive" data-smartkarma-image-id="192678"></figure>
</section>
<p></p>
</section>
<div>
<p>The average discount appears not to want to tighten, still. The average spread has kept at around 40.0% for the past four weeks or so (despite that illiquidity-bump around LNY). </p>
</div>
<section>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/192/679/original/Screenshot+2021-03-07+at+8.30.27+PM.png?1615120295" class="editor-image img-responsive" data-smartkarma-image-id="192679"></figure>
</section>
</section>
<hr>
<div>
<h2>Last Week's Recommendations</h2>
</div>
<div>
<ul style="list-style-type: disc;">
<li>There were 80 recommendations last week. This was the first losing week on alpha in several. </li>
<li>The 34 short spread recommendations lost an average of 0.12%, underperforming the market as a whole (which saw the average spread widen 0.03%). That is negative alpha of 9bp after positive alpha of 48bp the previous week on 33 spreads.</li>
<li>The 46 long recommendations averaged losses of 4bp during the week, underperforming the market as a whole by 1bp (vs +46bp outperformance the previous week). The combined total package was up -0.07% for the week vs +0.27% for the prior week, with -10bp of cross-bias alpha (vs 92bp of alpha on the cross-bias the previous week).</li>
<li>There are nearly 80 recommendations this week (turnover remains low).  </li>
</ul>
</div>
<hr>
<div>
<div>
<h2>Consumer Sector</h2>
</div>
</div>
<div>
<p>The first sector discussed is Consumer, where most H-shares fell on the week </p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>Spreads were remarkably tame.</li>
<li>
<a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> ended the week down 1.1% after rising in the first four days, and the shares even fell Friday despite <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0304/2021030401545.pdf" target="_blank" rel="noopener">announcing</a> Thursday after the close that production was up 125%yoy in February, and sales +106%. BYD is down 20+% in four weeks. </li>
<li>
<a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> was only up small in sympathy, outperforming auto names, and significantly outperforming glass names across other sectors. Thursday saw significant selling of glass names. </li>
<li>Southbound was a net seller of nearly HK$585mm after selling HK$2bn in the previous two weeks. Only <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> saw decent Southbound buying on a net basis (+HK$190mm). BYD was the big net sell at -HK$673mm. </li>
</ul>
</div>
<div>
<div>
<div class="content-highlight">
<p>Last week, I recommended staying long the <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> H vs A, and short <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>, and <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> H vs A. </p>
<p>Those four trades lost an average of 0.16% last week in spread terms after gaining 3.58% the previous week.</p>
</div>
</div>
</div>
<div>
<section class="figure">
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/192/669/original/Screenshot+2021-03-07+at+7.38.39+PM.png?1615117130" class="editor-image img-responsive" data-smartkarma-image-id="192669"></figure>
<p></p>
</section>
</section>
</div>
<div>
<section>For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.</section>
</div>


Spreads were mixed this week with 48 out of 100 observed pair spreads narrower and 52 wider. The big winner on the week was Financials with spreads 119bp narrower on average. Banks and Big Insurance generally narrowed. 


Overall, it was a lackluster performance, and one cannot say spreads won't move wider, but at 40% discount (and an arithmetic average upside of 87% for each liquid H to reach parity with its A), this spreads are wide.






Sector


Last Week


Previous Week


3wks Ago


4wks Ago




Consumer


-  0.14%


-  1.65%


-  1.20%


+ 2.55%




Energy


-  0.36%


+ 0.67%


+ 1.43%


-  1.64%




Financials &amp; Real Estate


+ 1.19%


-  1.12%


+ 0.10%


+ 0.29%




Health Care &amp; Info Tech


-  0.54%


-  2.86%


+ 1.45%


-  1.52%




Industrials


-  0.42%


-  1.20%


+ 0.26%


-  0.62%




Materials


-  0.33%


-  0.84%


+ 3.08%


-  0.57%




Utilities


-  1.25%


-  0.14%


+ 0.99%


+ 0.25%




Sector Average


-  0.26%


-  1.02%


+ 0.87%


-  0.18%




All Market Average


- 0.03%


-  1.22%


+ 0.76%


-  0.33%









10-day cross-market spread volatility continues to be high at 26% annualised. This is down off highs in the low 30s a couple weeks ago, but the long-term average is quite a bit lower. 




The H/A Spread Market



The past week has seen H-shares come off sharply and spreads widen reasonably dramatically. 








The average discount appears not to want to tighten, still. The average spread has kept at around 40.0% for the past four weeks or so (despite that illiquidity-bump around LNY). 








Last Week's Recommendations



There were 80 recommendations last week. This was the first losing week on alpha in several. 
The 34 short spread recommendations lost an average of 0.12%, underperforming the market as a whole (which saw the average spread widen 0.03%). That is negative alpha of 9bp after positive alpha of 48bp the previous week on 33 spreads.
The 46 long recommendations averaged losses of 4bp during the week, underperforming the market as a whole by 1bp (vs +46bp outperformance the previous week). The combined total package was up -0.07% for the week vs +0.27% for the prior week, with -10bp of cross-bias alpha (vs 92bp of alpha on the cross-bias the previous week).
There are nearly 80 recommendations this week (turnover remains low).  





Consumer Sector



The first sector discussed is Consumer, where most H-shares fell on the week 



Spreads were remarkably tame.

BYD (1211 HK) ended the week down 1.1% after rising in the first four days, and the shares even fell Friday despite announcing Thursday after the close that production was up 125%yoy in February, and sales +106%. BYD is down 20+% in four weeks. 

Fuyao Glass Industry Group (3606 HK) was only up small in sympathy, outperforming auto names, and significantly outperforming glass names across other sectors. Thursday saw significant selling of glass names. 
Southbound was a net seller of nearly HK$585mm after selling HK$2bn in the previous two weeks. Only Fuyao Glass Industry Group (3606 HK) saw decent Southbound buying on a net basis (+HK$190mm). BYD was the big net sell at -HK$673mm. 





Last week, I recommended staying long the Great Wall Motor (2333 HK) H vs A, and short BYD (1211 HK), Hisense Home Appliances Group Co., Ltd. H (921 HK), and Fuyao Glass Industry Group (3606 HK) H vs A. 
Those four trades lost an average of 0.16% last week in spread terms after gaining 3.58% the previous week.












For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.


Quiddity Weekly H/A: Financials Outpace Everything Else: Marketwide 87% Upside to A-Share Parity

China Suntien Green Energy / Event-Driven

<div>
<p>Several weeks ago, I gave the warning H/A spreads had moved tighter - too far too fast. The next week, spreads widened, they bounced back with a vengeance, then slightly wider in the short week at the start of Chinese New Year, and bouncing back in the post-CNY week.</p>
<p>They have started to move wider again, and given the global form in risk and higher volatility right now, I would not be surprised if they continued a bit wider.</p>
</div><div>
<p>Last week, in the first full week after the end of all the Chinese New Year festivities, all but one sector saw average spreads widen, and market-wide, spreads had their worst week in quite a while.</p>
<table class="table table-striped"><tbody>
<tr>
<td style="width: 198.182px;"><p>Sector</p></td>
<td style="text-align: right; width: 103.636px;"><p>Last Week</p></td>
<td style="text-align: right; width: 135.455px;"><p>Previous Week</p></td>
<td style="text-align: right; width: 100px;"><p>3wks Ago</p></td>
<td style="text-align: right; width: 102.727px;"><p>4wks Ago</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Consumer</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  1.65%</p></td>
<td style="text-align: right; width: 135.455px;"><p>-  1.20%</p></td>
<td style="text-align: right; width: 100px;"><p>+ 2.55%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 2.32%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Energy</p></td>
<td style="text-align: right; width: 103.636px;"><p>+ 0.67%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 1.43%</p></td>
<td style="text-align: right; width: 100px;"><p>-  1.64%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 1.98%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Financials &amp; Real Estate</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  1.12%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 0.10%</p></td>
<td style="text-align: right; width: 100px;"><p>+ 0.29%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 0.62%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Health Care &amp; Info Tech</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  2.86%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 1.45%</p></td>
<td style="text-align: right; width: 100px;"><p>-  1.52%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 2.29%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Industrials</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  1.20%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 0.26%</p></td>
<td style="text-align: right; width: 100px;"><p>-  0.62%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 2.48%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Materials</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  0.84%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 3.08%</p></td>
<td style="text-align: right; width: 100px;"><p>-  0.57%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 2.66%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Utilities</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  0.14%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 0.99%</p></td>
<td style="text-align: right; width: 100px;"><p>+ 0.25%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 1.06%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p>Sector Average</p></td>
<td style="text-align: right; width: 103.636px;"><p>-  1.02%</p></td>
<td style="text-align: right; width: 135.455px;"><p>+ 0.87%</p></td>
<td style="text-align: right; width: 100px;"><p>-  0.18%</p></td>
<td style="text-align: right; width: 102.727px;"><p>+ 1.92%</p></td>
</tr>
<tr>
<td style="width: 198.182px;"><p><strong>All Market Average</strong></p></td>
<td style="text-align: right; width: 103.636px;"><p><strong>-  1.22%</strong></p></td>
<td style="text-align: right; width: 135.455px;"><p><strong>+ 0.76%</strong></p></td>
<td style="text-align: right; width: 100px;"><p><strong>-  0.33%</strong></p></td>
<td style="text-align: right; width: 102.727px;"><p><strong>+ 1.80%</strong></p></td>
</tr>
</tbody></table>
<p>Developers saw their Hs rise dramatically on the week on new rules about land sales which would appear to favor large developers over smaller developers, but few have an H/A spread presence.</p>
</div><div><div>
<hr>
<h3>The H/A Spread Market</h3>
</div></div><div>
<p>The past week has seen H-shares come off sharply and spreads widen reasonably dramatically. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/379/original/Screenshot+2021-02-28+at+7.50.25+PM.png?1614513037" class="editor-image img-responsive" data-smartkarma-image-id="191379"></figure></section>
</div><p>The average discount appears not to want to tighten. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/402/original/Screenshot+2021-02-28+at+9.36.30+PM.png?1614519456" class="editor-image img-responsive" data-smartkarma-image-id="191402"></figure></section><p></p><h2>Last Week's Recommendations</h2><ul>
<li>There were 78 recommendations last week. </li>
<li>The 33 short recommendations gained an average of 1.70%, outperforming the market as a whole (which saw the average spread widen 1.22%). That is alpha of 48bp.</li>
<li>The 45 long recommendations averaged losses of 76bp during the week, outperforming the market as a whole by 46bp. The combined total package was up 0.27% for the week, with 92bp of alpha on the cross-bias. </li>
</ul><hr><section><div><h2>Consumer Sector</h2></div>
<div><p>The first sector discussed is Consumer, where liquid H/A spreads widened on average 1.65% over the past week, with the sector continuing to see significant bumpiness. </p></div>
<div><ul>
<li>
<a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> saw its spread move 2.9% narrower last week after widening 3.1% in the previous two weeks. It is now 3.7% narrower over four weeks.  <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a> narrowed too, but the others in the space widened. </li>
<li>All but one stock in the sector saw its H-share decline in double digit percentages. The average H in the sector moved down 15.9% in the week. Only <a href="https://www.smartkarma.com/entities/guangzhou-automobile-group-co-ltd" target="_blank" data-smartkarma-citation="entities:11082:1" rel="noopener">Guangzhou Automobile Group (2238 HK)</a> was spared that indignity, seeings its H fall 'only' 9.7%.</li>
<li>Southbound was a net seller of nearly HK$2bn of stock since the 10th of February, purchasing only <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> on a net basis.</li>
</ul></div>
<div><div><div class="content-highlight">
<p>Last week, I recommended staying long the <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a>, and short <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>, and <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> H vs A. </p>
<p>Those four trades gained an average of 3.58% in spread terms on the week.</p>
</div></div></div>
<section><section class="figure"><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/191/384/original/Screenshot+2021-02-28+at+8.09.50+PM.png?1614514204" class="editor-image img-responsive" data-smartkarma-image-id="191384"></figure><p></p></section></section></section><section><em>For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.</em></section></section>


Several weeks ago, I gave the warning H/A spreads had moved tighter - too far too fast. The next week, spreads widened, they bounced back with a vengeance, then slightly wider in the short week at the start of Chinese New Year, and bouncing back in the post-CNY week.
They have started to move wider again, and given the global form in risk and higher volatility right now, I would not be surprised if they continued a bit wider.

Last week, in the first full week after the end of all the Chinese New Year festivities, all but one sector saw average spreads widen, and market-wide, spreads had their worst week in quite a while.


Sector
Last Week
Previous Week
3wks Ago
4wks Ago


Consumer
-  1.65%
-  1.20%
+ 2.55%
+ 2.32%


Energy
+ 0.67%
+ 1.43%
-  1.64%
+ 1.98%


Financials &amp; Real Estate
-  1.12%
+ 0.10%
+ 0.29%
+ 0.62%


Health Care &amp; Info Tech
-  2.86%
+ 1.45%
-  1.52%
+ 2.29%


Industrials
-  1.20%
+ 0.26%
-  0.62%
+ 2.48%


Materials
-  0.84%
+ 3.08%
-  0.57%
+ 2.66%


Utilities
-  0.14%
+ 0.99%
+ 0.25%
+ 1.06%


Sector Average
-  1.02%
+ 0.87%
-  0.18%
+ 1.92%


All Market Average
-  1.22%
+ 0.76%
-  0.33%
+ 1.80%


Developers saw their Hs rise dramatically on the week on new rules about land sales which would appear to favor large developers over smaller developers, but few have an H/A spread presence.


The H/A Spread Market

The past week has seen H-shares come off sharply and spreads widen reasonably dramatically. 

The average discount appears not to want to tighten. Last Week's Recommendations
There were 78 recommendations last week. 
The 33 short recommendations gained an average of 1.70%, outperforming the market as a whole (which saw the average spread widen 1.22%). That is alpha of 48bp.
The 45 long recommendations averaged losses of 76bp during the week, outperforming the market as a whole by 46bp. The combined total package was up 0.27% for the week, with 92bp of alpha on the cross-bias. 
Consumer Sector
The first sector discussed is Consumer, where liquid H/A spreads widened on average 1.65% over the past week, with the sector continuing to see significant bumpiness. 


BYD (1211 HK) saw its spread move 2.9% narrower last week after widening 3.1% in the previous two weeks. It is now 3.7% narrower over four weeks.  Great Wall Motor (2333 HK) narrowed too, but the others in the space widened. 
All but one stock in the sector saw its H-share decline in double digit percentages. The average H in the sector moved down 15.9% in the week. Only Guangzhou Automobile Group (2238 HK) was spared that indignity, seeings its H fall 'only' 9.7%.
Southbound was a net seller of nearly HK$2bn of stock since the 10th of February, purchasing only Fuyao Glass Industry Group (3606 HK) on a net basis.


Last week, I recommended staying long the Great Wall Motor (2333 HK), and short BYD (1211 HK), Hisense Home Appliances Group Co., Ltd. H (921 HK), and Fuyao Glass Industry Group (3606 HK) H vs A. 
Those four trades gained an average of 3.58% in spread terms on the week.

For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.

Quiddity Weekly H/A: Strong Dispersion, Strong Alpha; Brokers Beat Banks

<p>Four weeks ago, I gave the warning that H/A spreads had moved tighter - too far too fast. The next week, spreads widened, they bounced back with a vengeance, then slightly wider in the short week at the start of Chinese New Year, and bouncing back in the post-CNY week.</p><p>In the two weeks from before to after Chinese New Year, the average sector spread moved about 70bp tighter, but the average spread moved only 42bp tighter.</p><table class="table table-striped"><tbody>
<tr>
<td><p>Sector</p></td>
<td style="text-align: right;"><p>Last<br>Week</p></td>
<td style="text-align: right;"><p>Previous<br>Week</p></td>
<td style="text-align: right;"><p>3wks<br>Ago</p></td>
<td style="text-align: right;"><p>4wks<br>Ago</p></td>
</tr>
<tr>
<td><p>Consumer</p></td>
<td style="text-align: right;"><p>-  1.20%</p></td>
<td style="text-align: right;"><p>+ 2.55%</p></td>
<td style="text-align: right;"><p>+ 2.32%</p></td>
<td style="text-align: right;"><p>-  2.62%</p></td>
</tr>
<tr>
<td><p>Energy</p></td>
<td style="text-align: right;"><p>+ 1.43%</p></td>
<td style="text-align: right;"><p>-  1.64%</p></td>
<td style="text-align: right;"><p>+ 1.98%</p></td>
<td style="text-align: right;"><p>-  0.59%</p></td>
</tr>
<tr>
<td><p>Financials &amp; Real Estate</p></td>
<td style="text-align: right;"><p>+ 0.10%</p></td>
<td style="text-align: right;"><p>+ 0.29%</p></td>
<td style="text-align: right;"><p>+ 0.62%</p></td>
<td style="text-align: right;"><p>-  1.73%</p></td>
</tr>
<tr>
<td><p>Health Care &amp; Info Tech</p></td>
<td style="text-align: right;"><p>+ 1.45%</p></td>
<td style="text-align: right;"><p>-  1.52%</p></td>
<td style="text-align: right;"><p>+ 2.29%</p></td>
<td style="text-align: right;"><p>-  0.27%</p></td>
</tr>
<tr>
<td><p>Industrials</p></td>
<td style="text-align: right;"><p>+ 0.26%</p></td>
<td style="text-align: right;"><p>-  0.62%</p></td>
<td style="text-align: right;"><p>+ 2.48%</p></td>
<td style="text-align: right;"><p>-  1.30%</p></td>
</tr>
<tr>
<td><p>Materials</p></td>
<td style="text-align: right;"><p>+ 3.08%</p></td>
<td style="text-align: right;"><p>-  0.57%</p></td>
<td style="text-align: right;"><p>+ 2.66%</p></td>
<td style="text-align: right;"><p>-  0.95%</p></td>
</tr>
<tr>
<td><p>Utilities</p></td>
<td style="text-align: right;"><p>+ 0.99%</p></td>
<td style="text-align: right;"><p>+ 0.25%</p></td>
<td style="text-align: right;"><p>+ 1.06%</p></td>
<td style="text-align: right;"><p>-  2.45%</p></td>
</tr>
<tr>
<td><p>Sector Average</p></td>
<td style="text-align: right;"><p>+ 0.87%</p></td>
<td style="text-align: right;"><p>-  0.18%</p></td>
<td style="text-align: right;"><p>+ 1.92%</p></td>
<td style="text-align: right;"><p>-  1.41%</p></td>
</tr>
</tbody></table><p>This week, the data is a bit cut short as the China Securities Depository and Clearing has not reported Southbound position data since the 10th as far as I can tell. </p><div class="content-highlight"><p>There were 75 recommendations last week.  The 32 short recommendations lost an average of 48bp, slightly underperforming the market as a whole. The 43 long recommendations averaged gains of 50bp over the two weeks, outperforming the market as a whole. The combined total package was up 0.084% over the two weeks. </p></div><div><div><h3>The H/A Spread Market</h3></div></div><div>
<p>The past two weeks straddling Chinese New Year saw mixed movement in H/A spreads, with 63 of 98 liquid spreads (64%) narrowing an average of 42bp. They are on average 92bp tighter over four weeks. </p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/832/original/Screenshot+2021-02-20+at+5.17.17+PM.png?1613812651" class="editor-image img-responsive" data-smartkarma-image-id="189832"></figure></section><hr>
</div><div><div><h3>Consumer Sector</h3></div></div><div>
<p>The first sector discussed is Consumer, where liquid H/A spreads narrowed on average 1.35% over the two weeks, but with some bumpiness. </p>
<p><a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a> saw its spread move 3.1% wider over the two weeks and is now 7.1% wider over four weeks and it is no longer the narrowest liquid H/A spread in the sector, with <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> taking its place moving 2.4% in the two weeks and 10.7% in four.</p>
</div><div class="content-highlight">
<p>Two weeks ago, I recommended staying long the <a href="https://www.smartkarma.com/entities/great-wall-motor-co-ltd-cb302af9-398c-4d2d-ba39-023e43287eef" target="_blank" data-smartkarma-citation="entities:128:1" rel="noopener">Great Wall Motor (2333 HK)</a>, and short <a href="https://www.smartkarma.com/entities/byd-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20962:1" rel="noopener">BYD (1211 HK)</a>, <a href="https://www.smartkarma.com/entities/hisense-home-appliances-group-co-ltd-h" target="_blank" data-smartkarma-citation="entities:20107:1" rel="noopener">Hisense Home Appliances Group Co., Ltd. H (921 HK)</a>, and <a href="https://www.smartkarma.com/entities/fuyao-glass-industry-group-co-ltd" target="_blank" data-smartkarma-citation="entities:330:1" rel="noopener">Fuyao Glass Industry Group (3606 HK)</a> H vs A. </p>
<p>Those four trades gained an average of 1.67% in spread terms on the week.</p>
</div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/189/833/original/Screenshot+2021-02-20+at+5.28.45+PM.png?1613813350" class="editor-image img-responsive" data-smartkarma-image-id="189833"></figure></section><p>For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.</p>

Four weeks ago, I gave the warning that H/A spreads had moved tighter - too far too fast. The next week, spreads widened, they bounced back with a vengeance, then slightly wider in the short week at the start of Chinese New Year, and bouncing back in the post-CNY week.In the two weeks from before to after Chinese New Year, the average sector spread moved about 70bp tighter, but the average spread moved only 42bp tighter.

Sector
Last Week
Previous Week
3wks Ago
4wks Ago


Consumer
-  1.20%
+ 2.55%
+ 2.32%
-  2.62%


Energy
+ 1.43%
-  1.64%
+ 1.98%
-  0.59%


Financials &amp; Real Estate
+ 0.10%
+ 0.29%
+ 0.62%
-  1.73%


Health Care &amp; Info Tech
+ 1.45%
-  1.52%
+ 2.29%
-  0.27%


Industrials
+ 0.26%
-  0.62%
+ 2.48%
-  1.30%


Materials
+ 3.08%
-  0.57%
+ 2.66%
-  0.95%


Utilities
+ 0.99%
+ 0.25%
+ 1.06%
-  2.45%


Sector Average
+ 0.87%
-  0.18%
+ 1.92%
-  1.41%

This week, the data is a bit cut short as the China Securities Depository and Clearing has not reported Southbound position data since the 10th as far as I can tell. There were 75 recommendations last week.  The 32 short recommendations lost an average of 48bp, slightly underperforming the market as a whole. The 43 long recommendations averaged gains of 50bp over the two weeks, outperforming the market as a whole. The combined total package was up 0.084% over the two weeks. The H/A Spread Market
The past two weeks straddling Chinese New Year saw mixed movement in H/A spreads, with 63 of 98 liquid spreads (64%) narrowing an average of 42bp. They are on average 92bp tighter over four weeks. 

Consumer Sector
The first sector discussed is Consumer, where liquid H/A spreads narrowed on average 1.35% over the two weeks, but with some bumpiness. 
BYD (1211 HK) saw its spread move 3.1% wider over the two weeks and is now 7.1% wider over four weeks and it is no longer the narrowest liquid H/A spread in the sector, with Fuyao Glass Industry Group (3606 HK) taking its place moving 2.4% in the two weeks and 10.7% in four.

Two weeks ago, I recommended staying long the Great Wall Motor (2333 HK), and short BYD (1211 HK), Hisense Home Appliances Group Co., Ltd. H (921 HK), and Fuyao Glass Industry Group (3606 HK) H vs A. 
Those four trades gained an average of 1.67% in spread terms on the week.
For this week's recommendations on Consumer, and discussion of the Energy, Financials &amp; Real Estate, Health Care, Tech, Industrials, Materials, and Utilities sectors, and all trade recommendations, please read on.

Quiddity Weekly H/A: High Volatility in Materials and Industrials and Spreads Over Lunar New Year

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<p><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 Group Corp (916 HK)</a> has a very strong turnout in Jan as its overall power generation was up by 47.5% YoY, with wind generation (+50.8%) being the most important driver. We do not think that a low base and distortion from timing of the Chinese New Year are the reasons for the impressive growth, and we see underlying momentum very solid. While Jan is a record-breaking month for generation, we believe the peak generation in this year is yet to come.</p><p>Longyuan has an attractive long term story, supported by factors including: 1.) beneficiary of government support, 2.) access to the A-share market, 3.) acquisition of Pingzhuang renewable assets, and 4.) increased potential from parent injection. Share price has rallied 59.5% YTD but valuations are still not too stretched. We believe any pull-back is opportunity for taking position in this encouraging long-term story of renewable energy development. </p>

China Longyuan Power Group Corp (916 HK) has a very strong turnout in Jan as its overall power generation was up by 47.5% YoY, with wind generation (+50.8%) being the most important driver. We do not think that a low base and distortion from timing of the Chinese New Year are the reasons for the impressive growth, and we see underlying momentum very solid. While Jan is a record-breaking month for generation, we believe the peak generation in this year is yet to come.Longyuan has an attractive long term story, supported by factors including: 1.) beneficiary of government support, 2.) access to the A-share market, 3.) acquisition of Pingzhuang renewable assets, and 4.) increased potential from parent injection. Share price has rallied 59.5% YTD but valuations are still not too stretched. We believe any pull-back is opportunity for taking position in this encouraging long-term story of renewable energy development. 

China Longyuan (916 HK): Record-Breaking Jan, and Strategically Positioned for the Long Term

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<h2>Summary and Conclusion</h2>
<p><strong>What's Original?</strong></p>
<p>This insight is an in-depth look into the Asian wind energy industry, covering the value chain and related companies at each key stage of the value chain. Our research includes the following:</p>
<p><strong>Industry Background:</strong> This includes an in-depth analysis on the wind energy sector with an overview of wind energy, including the growth of global installed capacity wind energy and analysis of the Asian wind energy market.</p>
<p>We examine both global onshore and offshore wind energy and differences in installation costs, annual investments, levelised cost of electricity (LCoE) and the declining trend in installation costs.</p>
<p>The potential capacity level of offshore wind energy is higher than onshore, though installation costs, O&amp;M and transportation costs are currently higher for offshore which is clearly reflected in the LCoE of the two categories.</p>
<p>When comparing total global wind capacity against the Asian market alone, over the last decade the Asian market’s growth rate was higher than the global rate and 51% of global new capacity additions were made in the Asian region.</p>
<p>The majority of Asian new capacity installed in Asian market was in APAC and China remained the world’s largest onshore market accounting for 37% of total onshore installations in 2019 while in the offshore market China accounted for a slightly more modest 23% of installations, trailing the UK and Germany.</p>
<p>The total installed capacity of onshore wind is expected to grow at a CAGR of 9.2% and to reach 1,787 GW globally in 2030 and then 5,044 GW by 2050. Furthermore, Asia (mostly China) should continue to dominate the onshore wind power industry, with more than 50% of global installations by 2050. Offshore wind energy in Asia should grow at a CAGR of 28% during 2018-30 and reach 613 GW while the Asian onshore market is expected to grow at a 13% CAGR and reach 2,646 GW. We examine the leading Asian countries (India, Japan and China) in the sector and their growth potential.</p>
<p>We believe that, over the next decade, the Asian market will outperform in wind energy growth compared to Europe and the US. Further, the trend towards offshore wind energy development in the Asian region will start to gather steam. The growth will be still mainly driven by China, India and Japan, however, apart from those countries South Korea, Taiwan and Vietnam also demonstrate some potential to develop wind energy.</p>
<p><strong>Value Chain Analysis:</strong> We detail the value chain for wind energy highlighting the critical stages of the value chain (raw material supply, design and development services, component supply, wind turbine manufacturers, construction &amp; installation services and wind farm developers) and the leading players in those stages.</p>
<p><strong>Wind Farm Owners - </strong>By the end of 2019, the top 15 wind farm owner-operators held over 1/3 of the total 650 GW of onshore and offshore assets globally.  Chinese utilities continue to dominate the top 15 ranking of wind asset owners as China is the leader in the market. We believe that this situation will continue as wind energy installation in China is expected to grow at higher rate than other leading countries in the world.</p>
<p><strong>Original Equipment Manufacturing </strong>- OEMs usually manufacture some of the critical components such as the nacelle in-house, and blades and towers are produced either by the OEM or fabricated to the OEM's specifications by a supplier. The tower, gearbox, shafts, bearings, blades, generator, power converter and control systems accounted more than 80% of total costs.</p>
<p>Although most Asian suppliers have historically relied on turbine technologies licensed from Europe to enter the wind industry, the Asia Pacific has now become the world’s largest wind turbine manufacturing hub after a decade of development. In 2019, some 33 wind turbine manufacturers installed an estimated 22,893 wind turbines globally with a combined capacity of 63,076 MW. Of the 33 suppliers, 20 are from APAC.</p>
<p>Further, we have noticed that Chinese and Indian players have maintained their leading market position in the Asian region while international players like Siemens Gamesa and GE were able to obtain market share in the region.</p>
<p><strong>Rotors -</strong> Turbine rotor diameters have been getting larger as a result of greater pressure for turbine OEMs to reduce the LCOE by launching new turbines with larger rotors that allow for better capacity factors and an improvement in AEP (Annual Energy Production). China is the key driver behind the trend of larger wind turbine rotors as out of the 6,691 units of 2.0 MW wind turbines installed globally in 2018, nearly 80% are located in China, of which more than half the turbines installed are equipped with rotors that are 120m or larger. We see the trend of building larger and light weight rotors continuing, especially with Asian market started to develop more offshore wind projects.</p>
<p><strong>Blades -</strong> Blade core material balsa shortages have prompted turbine OEMs and blade manufacturers to switch to PET and hybrid designs with Balsa and PET. Wood Mackenzie forecasts the share of PET to increase from 20% in 2018 to more than 55% by 2023.</p>
<p><strong>Gearboxes - </strong>GWEC predicted that annual global wind gearbox demand is likely to reach 56.4 GW in 2019 and then peak in 2020 at 59.1GW driven by the installation rush in China and the US. Regionally, around 40-48% of total demand is likely to be produced in South East Asia between 2019-2023. Furthermore, around 75 GW of gearbox manufacturing capacity is available globally, thus GWEC does not expect any major bottleneck. Around 70% of the global market share is represented by three main players, Winergy, NGC and ZF. Winergy and NGC have maintained similar levels of wind turbine gear box market share over a decade while ZF was increase its market share by acquiring other leading companies around the globe.</p>
<p><strong>Towers -</strong> The tower has low technical requirements compared to other components and is thus usually sourced locally. A considerable percentage of Asian tower manufacturers ship their wind towers to North American and European countries, as production costs are lower in Asian countries and they are able to offer towers at competitive prices. Some players like Suzlon have invented lower cost hybrid tower structures which can be built at much lower cost than traditional designs.</p>
<p><strong>Services &amp; Support Opportunities</strong> – Broadly speaking, the services opportunities can be categorised into: Project development Geotechnical services Logistics support for wind farm Construction opportunities Operations and maintenance. These service providing companies generate higher margins compared to OEMs and wind turbine manufactures and as with solar power, we see a trend for OEM and component manufactures to expand services segments by introducing new technological innovation.</p>

Summary and Conclusion
What's Original?
This insight is an in-depth look into the Asian wind energy industry, covering the value chain and related companies at each key stage of the value chain. Our research includes the following:
Industry Background: This includes an in-depth analysis on the wind energy sector with an overview of wind energy, including the growth of global installed capacity wind energy and analysis of the Asian wind energy market.
We examine both global onshore and offshore wind energy and differences in installation costs, annual investments, levelised cost of electricity (LCoE) and the declining trend in installation costs.
The potential capacity level of offshore wind energy is higher than onshore, though installation costs, O&amp;M and transportation costs are currently higher for offshore which is clearly reflected in the LCoE of the two categories.
When comparing total global wind capacity against the Asian market alone, over the last decade the Asian market’s growth rate was higher than the global rate and 51% of global new capacity additions were made in the Asian region.
The majority of Asian new capacity installed in Asian market was in APAC and China remained the world’s largest onshore market accounting for 37% of total onshore installations in 2019 while in the offshore market China accounted for a slightly more modest 23% of installations, trailing the UK and Germany.
The total installed capacity of onshore wind is expected to grow at a CAGR of 9.2% and to reach 1,787 GW globally in 2030 and then 5,044 GW by 2050. Furthermore, Asia (mostly China) should continue to dominate the onshore wind power industry, with more than 50% of global installations by 2050. Offshore wind energy in Asia should grow at a CAGR of 28% during 2018-30 and reach 613 GW while the Asian onshore market is expected to grow at a 13% CAGR and reach 2,646 GW. We examine the leading Asian countries (India, Japan and China) in the sector and their growth potential.
We believe that, over the next decade, the Asian market will outperform in wind energy growth compared to Europe and the US. Further, the trend towards offshore wind energy development in the Asian region will start to gather steam. The growth will be still mainly driven by China, India and Japan, however, apart from those countries South Korea, Taiwan and Vietnam also demonstrate some potential to develop wind energy.
Value Chain Analysis: We detail the value chain for wind energy highlighting the critical stages of the value chain (raw material supply, design and development services, component supply, wind turbine manufacturers, construction &amp; installation services and wind farm developers) and the leading players in those stages.
Wind Farm Owners - By the end of 2019, the top 15 wind farm owner-operators held over 1/3 of the total 650 GW of onshore and offshore assets globally.  Chinese utilities continue to dominate the top 15 ranking of wind asset owners as China is the leader in the market. We believe that this situation will continue as wind energy installation in China is expected to grow at higher rate than other leading countries in the world.
Original Equipment Manufacturing - OEMs usually manufacture some of the critical components such as the nacelle in-house, and blades and towers are produced either by the OEM or fabricated to the OEM's specifications by a supplier. The tower, gearbox, shafts, bearings, blades, generator, power converter and control systems accounted more than 80% of total costs.
Although most Asian suppliers have historically relied on turbine technologies licensed from Europe to enter the wind industry, the Asia Pacific has now become the world’s largest wind turbine manufacturing hub after a decade of development. In 2019, some 33 wind turbine manufacturers installed an estimated 22,893 wind turbines globally with a combined capacity of 63,076 MW. Of the 33 suppliers, 20 are from APAC.
Further, we have noticed that Chinese and Indian players have maintained their leading market position in the Asian region while international players like Siemens Gamesa and GE were able to obtain market share in the region.
Rotors - Turbine rotor diameters have been getting larger as a result of greater pressure for turbine OEMs to reduce the LCOE by launching new turbines with larger rotors that allow for better capacity factors and an improvement in AEP (Annual Energy Production). China is the key driver behind the trend of larger wind turbine rotors as out of the 6,691 units of 2.0 MW wind turbines installed globally in 2018, nearly 80% are located in China, of which more than half the turbines installed are equipped with rotors that are 120m or larger. We see the trend of building larger and light weight rotors continuing, especially with Asian market started to develop more offshore wind projects.
Blades - Blade core material balsa shortages have prompted turbine OEMs and blade manufacturers to switch to PET and hybrid designs with Balsa and PET. Wood Mackenzie forecasts the share of PET to increase from 20% in 2018 to more than 55% by 2023.
Gearboxes - GWEC predicted that annual global wind gearbox demand is likely to reach 56.4 GW in 2019 and then peak in 2020 at 59.1GW driven by the installation rush in China and the US. Regionally, around 40-48% of total demand is likely to be produced in South East Asia between 2019-2023. Furthermore, around 75 GW of gearbox manufacturing capacity is available globally, thus GWEC does not expect any major bottleneck. Around 70% of the global market share is represented by three main players, Winergy, NGC and ZF. Winergy and NGC have maintained similar levels of wind turbine gear box market share over a decade while ZF was increase its market share by acquiring other leading companies around the globe.
Towers - The tower has low technical requirements compared to other components and is thus usually sourced locally. A considerable percentage of Asian tower manufacturers ship their wind towers to North American and European countries, as production costs are lower in Asian countries and they are able to offer towers at competitive prices. Some players like Suzlon have invented lower cost hybrid tower structures which can be built at much lower cost than traditional designs.
Services &amp; Support Opportunities – Broadly speaking, the services opportunities can be categorised into: Project development Geotechnical services Logistics support for wind farm Construction opportunities Operations and maintenance. These service providing companies generate higher margins compared to OEMs and wind turbine manufactures and as with solar power, we see a trend for OEM and component manufactures to expand services segments by introducing new technological innovation.

Asian Wind Energy: Efficiency and Cost Reduction in Focus as Players Eye a Post FiT Future

China

Xinjiang Goldwind Science & Technology Co., Ltd. manufactures wind generator sets, provides consulting service in building and operating wind generating plants, builds and operates middle-sized wind generating plants.

Xinjiang Goldwind Science & Technology (002202 CH)

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Xinjiang Goldwind Science & Technology (002202 CH)

Quiddity Weekly H/A: Strong Dispersion, Strong Alpha; Brokers Beat Banks

Great alpha last week as shorts beat by 48bp, longs beat by 46bp. Southbound saw one really big sell day, but on the week, buying continued apace...

Travis Lundy

Quiddity Weekly H/A: High Volatility in Materials and Industrials and Spreads Over Lunar New Year

H/A spreads have been reasonably volatile over the CNY period, but again they net narrowed over two weeks. There are still several sectors where...

Travis Lundy

China Longyuan (916 HK): Record-Breaking Jan, and Strategically Positioned for the Long Term

China Longyuan has a strong Jan generation with 50.8% YoY growth in wind generation. We expect it to benefit from China's clean energy initiatives...

Osbert Tang, CFA

Asian Wind Energy: Efficiency and Cost Reduction in Focus as Players Eye a Post FiT Future

This Smartkarma Original is an in-depth look into the Asian wind energy industry, covering the value chain and related companies at each key stage...

Mio Kato

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Quiddity Weekly H/A: Financials Outpace Everything Else: Marketwide 87% Upside to A-Share Parity

H/A spreads were largely unchanged on the week but more widened than narrowed. Financials was the only sector narrower on the whole. With average...

Travis Lundy

Quiddity Weekly H/A: Strong Dispersion, Strong Alpha; Brokers Beat Banks

Great alpha last week as shorts beat by 48bp, longs beat by 46bp. Southbound saw one really big sell day, but on the week, buying continued apace...

Travis Lundy

Quiddity Weekly H/A: High Volatility in Materials and Industrials and Spreads Over Lunar New Year

H/A spreads have been reasonably volatile over the CNY period, but again they net narrowed over two weeks. There are still several sectors where...

Travis Lundy

China Longyuan (916 HK): Record-Breaking Jan, and Strategically Positioned for the Long Term

China Longyuan has a strong Jan generation with 50.8% YoY growth in wind generation. We expect it to benefit from China's clean energy initiatives...

Osbert Tang, CFA

Asian Wind Energy: Efficiency and Cost Reduction in Focus as Players Eye a Post FiT Future

This Smartkarma Original is an in-depth look into the Asian wind energy industry, covering the value chain and related companies at each key stage...

Mio Kato