HK/China Equity Long-Short

Osbert Tang, CFA

Osbert Tang is an equity analyst with over 20 years of experience with focuses on China transport, infrastructure, industrials and utilities sectors. He has been based in Shanghai since 2003, accumulated nearly 20 years of on-ground knowledge on the Chinese economy and financial markets, and has a wealth of contacts with China corporates and government entities. 

Osbert has received votes from top-tier institutional investors and has been a highly-ranked transport and infrastructure analyst in the Asiamoney, Institutional Investors and Greenwich surveys. In addition to his extensive experience with international investment banks including RBS, ABN AMRO (both served as Shanghai Chief Representative), Paribas Asia Equity, Maybank Kim Eng and DBS Securities, he has been a senior analyst with Moody’s Investors Service with focus on ratings of China infrastructure and related LGFV issuers. He has also worked in the area of strategic development at Sun Hung Kai Properties Limited. 

Osbert holds a BBA from the Chinese University of Hong Kong, an MBA from the University of Texas at Austin and a MSSc in Applied Psychology from the City University of Hong Kong. He was accredited with the CFA charter in 1997, and is a member of both British Psychological Society and Hong Kong Psychological Society.

Kunlun Energy (135 HK): No Immediate Impact from National Pipeline Company

Kunlun Energy (135 HK): Solid Growth in Downstream Gas Sales Is the Driver

China Infrastructure Deep Dive: Gas Utilities H & A Shares

Kunlun Energy (135 HK): Deserves a Gas Utilities Valuation?

Equity Bottom-Up

<p>Following our initial note on <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>, we are taking a further look on its gas sales business and relative valuations. While Kunlun generates a lower profitability, in terms of ROE, when compared with other gas utilities peers, it is partly due to the company's smaller dependence on connection fees in its natural gas sales business and its lower corporate gearing. In our view, these two factors should not be used to penalize the company.</p><p>Our relative valuation analysis showed that Kunlun is grossly undervalued, both in terms of P/B vs. ROE and PEG against its peers. By using a sum-of-the-parts estimate, we calculate the stock's value at HK$9.6 per share, or 34% higher than the current share price. </p>

Following our initial note on Kunlun Energy (135 HK), we are taking a further look on its gas sales business and relative valuations. While Kunlun generates a lower profitability, in terms of ROE, when compared with other gas utilities peers, it is partly due to the company's smaller dependence on connection fees in its natural gas sales business and its lower corporate gearing. In our view, these two factors should not be used to penalize the company.Our relative valuation analysis showed that Kunlun is grossly undervalued, both in terms of P/B vs. ROE and PEG against its peers. By using a sum-of-the-parts estimate, we calculate the stock's value at HK$9.6 per share, or 34% higher than the current share price. 

Kunlun Energy (135 HK): Deep Dig into Valuation