HK/China Equity Long-Short

Osbert Tang, CFA

Thematic (Sector/Industry)

China has stepped up its push for more utilisation of hydrogen energy in its efforts to achieve the target of carbon neutrality before 2060.  Various government policies have been put in place to encourage the research and use of hydrogen energy, and some sources have projected hydrogen will represent 10% of China's final energy consumed by 2050. In other words, there is huge room for the growth of China's hydrogen economy.Share prices of many hydrogen-concept stocks have rallied sharply lately. Most of them have projects in the early-stage of development and still do not derive any meaningful contribution from such hydrogen ventures. However, we looked into some interesting names which potentially to be significant players over the long term. They are: <a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">Cimc Enric Holdings (3899 HK)</a>, <a href="https://www.smartkarma.com/entities/dongfang-electric-corporation-limited" target="_blank" data-smartkarma-citation="entities:1251:1" rel="noopener">Dongfang Electric Corporation (1072 HK)</a>, <a href="https://www.smartkarma.com/entities/weichai-power-co-ltd-h" target="_blank" data-smartkarma-citation="entities:12508:1" rel="noopener">Weichai Power Co Ltd H (2338 HK)</a> and <a href="https://www.smartkarma.com/entities/dongyue-group-ltd" target="_blank" data-smartkarma-citation="entities:20429:1" rel="noopener">Dongyue Group (189 HK)</a>. Please follow below for details.

China has stepped up its push for more utilisation of hydrogen energy in its efforts to achieve the target of carbon neutrality before 2060.  Various government policies have been put in place to encourage the research and use of hydrogen energy, and some sources have projected hydrogen will represent 10% of China's final energy consumed by 2050. In other words, there is huge room for the growth of China's hydrogen economy.Share prices of many hydrogen-concept stocks have rallied sharply lately. Most of them have projects in the early-stage of development and still do not derive any meaningful contribution from such hydrogen ventures. However, we looked into some interesting names which potentially to be significant players over the long term. They are: Cimc Enric Holdings (3899 HK), Dongfang Electric Corporation (1072 HK), Weichai Power Co Ltd H (2338 HK) and Dongyue Group (189 HK). Please follow below for details.  

China's Hydrogen Economy: Some HK-Listed Names to Watch

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Reportedly SOE-backed <a href="https://www.smartkarma.com/entities/angang-steel-co-ltd-h" target="_blank" data-smartkarma-citation="entities:203:1" rel="noopener">Angang Steel Co Ltd (H) (347 HK)</a> is planning a potential merger with regional player <a href="https://www.smartkarma.com/entities/bengang-steel-plates-co-ltd" target="_blank" data-smartkarma-citation="entities:29319:1" rel="noopener">Bengang Steel (000761 CH)</a>. Angang is a top four steel producer in China and Bengang is the number nine player.
Bengang recently disclosed that its parent, Bengang Group, which in turn is owned by Liaoning SASAC, had received interest in its ~69% stake into Bengang. Such discussions remain in the planning stages, with any sale subject to approval from relevant regulatory bodies, 
A merger between Angang and Bengang, both of which are headquartered in Liaoning, is not a new development; it was first floated back in 2005. However, the State Council - or Central SASAC -  Angang's parent, and Liaoning SASAC, could not reach an agreement on terms.
Where it could get funky, is that Angang has both A and H shares, and is part of both the Shanghai and Shenzhen <a href="https://www.hkex.com.hk/Mutual-Market/Stock-Connect/Eligible-Stocks/View-All-Eligible-Securities?sc_lang=en" target="_blank" rel="noopener">Stock Connect</a> whereas Bengang has A and B shares, no Hs, and is not part of the Connect program. 
More below the fold.

Reportedly SOE-backed Angang Steel Co Ltd (H) (347 HK) is planning a potential merger with regional player Bengang Steel (000761 CH). Angang is a top four steel producer in China and Bengang is the number nine player.
Bengang recently disclosed that its parent, Bengang Group, which in turn is owned by Liaoning SASAC, had received interest in its ~69% stake into Bengang. Such discussions remain in the planning stages, with any sale subject to approval from relevant regulatory bodies, 
A merger between Angang and Bengang, both of which are headquartered in Liaoning, is not a new development; it was first floated back in 2005. However, the State Council - or Central SASAC -  Angang's parent, and Liaoning SASAC, could not reach an agreement on terms.
Where it could get funky, is that Angang has both A and H shares, and is part of both the Shanghai and Shenzhen Stock Connect whereas Bengang has A and B shares, no Hs, and is not part of the Connect program. 
More below the fold.

Amalgamated Steel: Merging Angang & Bengang As, Bs, and Hs

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

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 124.6% as of Mar 22nd.</li>
<li>The average A-H premium changed by 1.4ppt week-on-week, led by consumer staples, information technology, utilities and offset by financials, health care.</li>
<li>We highlight weekly changes in A-H premium for ZTE, CRCC Times Electric, Air China, Longyuan, Shanghai Fudan, Hua Hong Semi.</li>
</ul>


We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 124.6% as of Mar 22nd.
The average A-H premium changed by 1.4ppt week-on-week, led by consumer staples, information technology, utilities and offset by financials, health care.
We highlight weekly changes in A-H premium for ZTE, CRCC Times Electric, Air China, Longyuan, Shanghai Fudan, Hua Hong Semi.


A-H Premium Weekly (Mar 22nd): ZTE, CRCC Times Electric, Air China, Longyuan, Shanghai Fudan

<ul>
<li>We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 123.2% as of Mar 8th.</li>
<li>The average A-H premium changed by -1.4ppt week-on-week, led by consumer staples, industrials, financials and offset by information technology, consumer discretionary, energy.</li>
<li>We highlight weekly changes in A-H premium for CNOOC, Air China, China Southern Air, Guangzhou Auto.</li>
</ul>


We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 123.2% as of Mar 8th.
The average A-H premium changed by -1.4ppt week-on-week, led by consumer staples, industrials, financials and offset by information technology, consumer discretionary, energy.
We highlight weekly changes in A-H premium for CNOOC, Air China, China Southern Air, Guangzhou Auto.


A-H Premium Weekly (Mar 8th): CNOOC, Air China, China Southern Air, Guangzhou Auto

<ul>
<li>We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 122.6% as of Feb 23rd.</li>
<li>The average A-H premium changed by -2.1ppt week-on-week, led by utilities, materials, health care and offset by consumer staples, consumer discretionary, information technology.</li>
<li>We highlight weekly changes in A-H premium for SMIC, Flat Glass Group, GWM, China Longyuan, Wuxi Apptec, Shandong Gold.</li>
</ul>


We analyse the changes of A-H premium on 146 stocks over the last week. The average A-H premium was 122.6% as of Feb 23rd.
The average A-H premium changed by -2.1ppt week-on-week, led by utilities, materials, health care and offset by consumer staples, consumer discretionary, information technology.
We highlight weekly changes in A-H premium for SMIC, Flat Glass Group, GWM, China Longyuan, Wuxi Apptec, Shandong Gold.


A-H Premium Weekly (Feb 23rd): SMIC, Flat Glass Group, GWM, China Longyuan, Wuxi Apptec

China

Angang Steel Company Limited produces steel products which include cold rolled sheets, steel rail, pipe billets, wire rods, thick plates, and other steel products.

Angang Steel Co Ltd (H) (347 HK)

China's Hydrogen Economy: Some HK-Listed Names to Watch

We looked into how CIMC Enric, Dongfang Electric, Weichai Power and Dongyue Group position in China's rapidly developing hydrogen economy amid the...

Osbert Tang, CFA

Amalgamated Steel: Merging Angang & Bengang As, Bs, and Hs

I would buy Bengang's B shares, Should a merger unfold, those shares should be offered the same value as the As. Or buy Bengang's As, and hedge...

David Blennerhassett

A-H Premium Weekly (Mar 22nd): ZTE, CRCC Times Electric, Air China, Longyuan, Shanghai Fudan

We analyzed A-H premium changes in the past week and highlight A-H premium changes for ZTE, CRCC Times Electric, Air China, Longyuan, Shanghai...

Ke Yan, CFA, FRM

A-H Premium Weekly (Mar 8th): CNOOC, Air China, China Southern Air, Guangzhou Auto

Analysis of A-H premium changes on 146 stocks shows average premium of 123.2% on Mar 8th, with a -1.4ppt. We highlight changes for for CNOOC, Air...

Ke Yan, CFA, FRM

A-H Premium Weekly (Feb 23rd): SMIC, Flat Glass Group, GWM, China Longyuan, Wuxi Apptec

We analyzed A-H premium changes in the past week and highlight A-H premium changes for SMIC, Flat Glass Group, GWM, China Longyuan, Wuxi Apptec,...

Ke Yan, CFA, FRM

China's Hydrogen Economy: Some HK-Listed Names to Watch

We looked into how CIMC Enric, Dongfang Electric, Weichai Power and Dongyue Group position in China's rapidly developing hydrogen economy amid the...

Osbert Tang, CFA

Amalgamated Steel: Merging Angang & Bengang As, Bs, and Hs

I would buy Bengang's B shares, Should a merger unfold, those shares should be offered the same value as the As. Or buy Bengang's As, and hedge...

David Blennerhassett

A-H Premium Weekly (Mar 22nd): ZTE, CRCC Times Electric, Air China, Longyuan, Shanghai Fudan

We analyzed A-H premium changes in the past week and highlight A-H premium changes for ZTE, CRCC Times Electric, Air China, Longyuan, Shanghai...

Ke Yan, CFA, FRM

A-H Premium Weekly (Mar 8th): CNOOC, Air China, China Southern Air, Guangzhou Auto

​Analysis of A-H premium changes on 146 stocks shows average premium of 123.2% on Mar 8th, with a -1.4ppt. We highlight changes for for CNOOC, Air...

Ke Yan, CFA, FRM

A-H Premium Weekly (Feb 23rd): SMIC, Flat Glass Group, GWM, China Longyuan, Wuxi Apptec

We analyzed A-H premium changes in the past week and highlight A-H premium changes for SMIC, Flat Glass Group, GWM, China Longyuan, Wuxi Apptec,...

Ke Yan, CFA, FRM

Analysis of A-H premium changes on 146 stocks shows average premium of 123.2% on Mar 8th, with a -1.4ppt. We highlight changes for for CNOOC, Air...