Brief China: US Lake Charles LNG Liquefaction Plant Tendering for Contractors: Positive for TechnipFMC and more

In this briefing:

1. US Lake Charles LNG Liquefaction Plant Tendering for Contractors: Positive for TechnipFMC
2. Yunji IPO Preview: Balance Sheet Points to Waning Engagement
3. HK Connect Discovery Weekly: Mainland Investors Buying WH Group (2019-03-22)
4. China New Higher Education: Negatives Mostly Baked-In
5. Dongzheng Auto Finance (东正汽车金融) IPO Review – Relaunched at Lower Price

1. US Lake Charles LNG Liquefaction Plant Tendering for Contractors: Positive for TechnipFMC

Energy Transfer LP (ET US) and Royal Dutch Shell (RDSA LN) have signed a Project Framework Agreement to further develop a large-scale LNG export facility in Lake Charles, Louisiana and move toward a potential final investment decision (FID). They have started actively engaging with LNG Engineering, Procurement and Contracting (EPC) companies with a plan to issue an Invitation to Tender (ITT) in the weeks ahead. We look at the potential contract size and winners and also the other US LNG projects that could be negatively impacted. More detail on the LNG project queue for this year in: A Huge Wave of New LNG Projects Coming in the Next 18 Months: Positive for The E&C Companies.

2. Yunji IPO Preview: Balance Sheet Points to Waning Engagement

Yunji Inc. (YJ US) is a leading membership-based social e-commerce platform in China which primarily sells merchandise through its Yunji app. Yunji is also referred to as a multi-level revenue sharing platform as the business model is based on providing incentives to members to promote products and invite new members through their social networks. Yunji is seeking to raise $200 million through a Nasdaq IPO.

3. HK Connect Discovery Weekly: Mainland Investors Buying WH Group (2019-03-22)

In our Discover HK Connect series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by mainland investors in the past seven days.

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

In this insight, we highlight the WH Group, which led the inflows last week. 

4. China New Higher Education: Negatives Mostly Baked-In

• China New Higher Education’s (CNHE) share price has more than halved since my bearish note in June last year.
• The fall in share price was caused by a few factors, namely uncertainties caused by regulations, a negative report by a short-seller, and below-consensus earnings.
• Market expectations of the education provider’s growth have come down, providing us an opportunity to relook at the stock.

5. Dongzheng Auto Finance (东正汽车金融) IPO Review – Relaunched at Lower Price

Dongzheng Automotive Finance (2718 HK) (DAF) re-launched its IPO at a lower fixed price of HK$3.06 per share, expecting to raise about US$208m. We have covered the fundamentals and valuation of the company in:

• Dongzheng Auto Finance (东正汽车金融) Pre-IPO Review – Dependent on Dealership Network for Growth
• Dongzheng Auto Finance (东正汽车金融) IPO Review – Better off Buying the Parent

In this insight, we will only look at the company’s updated valuation and re-run the deal through IPO framework.