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.

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Equity Bottom-Up

<p>We think <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> will become an attractive gas utilities company after it completed the transaction to dispose of its Beijing Pipeline and Dalian LNG. By then, we see over 70% of its earnings will derive from natural gas sales business, a profile that compares well with its peers in the gas utilities sector.</p><p>In valuation terms, the new Kunlun will trade on just 10.5x PER for FY22F, well below 14x for its peers. While its ROE is lower than peers, this is due to its huge cash on hand even after the distribution of special dividends. Its FY22F P/B of 0.64x (on ex-special dividend basis) appears undemanding, especially given that, before making any investment in natural gas end-user sales business with the proceeds as planned, net cash (after special dividend) will still amount to 57% of the share price. </p>

We think Kunlun Energy (135 HK) will become an attractive gas utilities company after it completed the transaction to dispose of its Beijing Pipeline and Dalian LNG. By then, we see over 70% of its earnings will derive from natural gas sales business, a profile that compares well with its peers in the gas utilities sector.In valuation terms, the new Kunlun will trade on just 10.5x PER for FY22F, well below 14x for its peers. While its ROE is lower than peers, this is due to its huge cash on hand even after the distribution of special dividends. Its FY22F P/B of 0.64x (on ex-special dividend basis) appears undemanding, especially given that, before making any investment in natural gas end-user sales business with the proceeds as planned, net cash (after special dividend) will still amount to 57% of the share price. 

Kunlun Energy (135 HK): How Will the New Kunlun Look Like?