HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>
<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 (916 HK)</a> is now attractively priced at 5.9x and 5.2x PERs for FY23 and FY24, respectively. The 2Q23 result clearly showed that business is gathering momentum.</li>
<li>Margins have demonstrated good improvement despite weaker tariffs and coal sale business. With a very low base in last year, its 2H23 earnings growth will be impressive.</li>
<li>There is positive progress on new project sign-up which has secured its pipeline. Asset injection from parent will stay as a major theme in the next two years.</li>
</ul>



China Longyuan Power (916 HK) is now attractively priced at 5.9x and 5.2x PERs for FY23 and FY24, respectively. The 2Q23 result clearly showed that business is gathering momentum.
Margins have demonstrated good improvement despite weaker tariffs and coal sale business. With a very low base in last year, its 2H23 earnings growth will be impressive.
There is positive progress on new project sign-up which has secured its pipeline. Asset injection from parent will stay as a major theme in the next two years.


China Longyuan (916 HK): Value Has Definitely Emerged

<ul>
<li>The FY22 profit warning for <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 (916 HK)</a> reflected mostly items of one-off in nature and the weak result should be a matter of the past.</li>
<li>The Jan overall generation growth of 30.6% and wind power growth of 44.4% are very solid performance. With economic rebound and low comparison base, we expect growth to sustain.</li>
<li>Asset injection from CHN Energy and improvement in financial position through subsidy collection are positives, making its below 10x PERs for FY23 and FY24 attractive. </li>
</ul>


The FY22 profit warning for China Longyuan Power (916 HK) reflected mostly items of one-off in nature and the weak result should be a matter of the past.
The Jan overall generation growth of 30.6% and wind power growth of 44.4% are very solid performance. With economic rebound and low comparison base, we expect growth to sustain.
Asset injection from CHN Energy and improvement in financial position through subsidy collection are positives, making its below 10x PERs for FY23 and FY24 attractive. 


China Longyuan (916 HK): The Bull Story Should Continue

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

CGN New Energy Holdings / Equity Bottom-Up

<ul>
<li>A "<em>valuation system with Chinese characteristics</em>" has the media, ostensibly, discussing whether this implies a premium for SOEs and companies aligned with national goals.</li>
<li>In early 2020, SOE-backed clean energy play <strong><a href="https://www.smartkarma.com/entities/cgn-new-energy-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:4295:1" rel="noopener">CGN New Energy Holdings (1811 HK)</a></strong> was subject to a potential privatisation from its parent; but it failed to materialise. </li>
<li>During the 14th and 15th Five-Year Plans (2021-30) period, China's installed capacity for wind and solar power is expected double.</li>
</ul>


A "valuation system with Chinese characteristics" has the media, ostensibly, discussing whether this implies a premium for SOEs and companies aligned with national goals.
In early 2020, SOE-backed clean energy play CGN New Energy Holdings (1811 HK) was subject to a potential privatisation from its parent; but it failed to materialise. 
During the 14th and 15th Five-Year Plans (2021-30) period, China's installed capacity for wind and solar power is expected double.


CGN New Energy Holdings: Character Building

<ul>
<li>
<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 (916 HK)</a> has a very good 3Q22 with earnings increased 55.1% YoY. This has reversed the trend of lower profit YoY in the last two quarters.</li>
<li>The pressure on margin has lessened relative to 1H22 and this is partly reflected by good cost performance. Tariffs for wind and other renewables also look resilient. </li>
<li>Recent pullback in share price has returned Longyuan to attractive multiples. Its growth stories stay intact and outperformance against national power generation is encouraging.</li>
</ul>



China Longyuan Power (916 HK) has a very good 3Q22 with earnings increased 55.1% YoY. This has reversed the trend of lower profit YoY in the last two quarters.
The pressure on margin has lessened relative to 1H22 and this is partly reflected by good cost performance. Tariffs for wind and other renewables also look resilient. 
Recent pullback in share price has returned Longyuan to attractive multiples. Its growth stories stay intact and outperformance against national power generation is encouraging.


China Longyuan (916 HK): Continuing the Good Upturn

China Power International / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-power-international" target="_blank" data-smartkarma-citation="entities:15548:1" rel="noopener">China Power International (2380 HK)</a> is the hardest hit in this round of market sell-off with a 28.9% plunge in share price in Sep - we think this is overdone. </li>
<li>Coal-Fired margin, which is the key drag in 1H22, will improve in 2H22. Its clean energy segment has performed well, and new capacity acquired will start to provide contribution.</li>
<li>Its strategic transformation target of over 90% of capacity from new energy by 2025, up from 50.7% in 1H22, has not changed. Parent asset injection will generate massive upside potential. </li>
</ul>



China Power International (2380 HK) is the hardest hit in this round of market sell-off with a 28.9% plunge in share price in Sep - we think this is overdone. 
Coal-Fired margin, which is the key drag in 1H22, will improve in 2H22. Its clean energy segment has performed well, and new capacity acquired will start to provide contribution.
Its strategic transformation target of over 90% of capacity from new energy by 2025, up from 50.7% in 1H22, has not changed. Parent asset injection will generate massive upside potential. 


China Power International (2380 HK): We Think Good Opportunities Are Presented

Hong Kong

CGN New Energy Holdings Co Ltd is a diversified independent power producer in Asia. The Company has a portfolio of gas-fired, coal-fired, oil-fired, hydro, cogen and fuel cell power generation projects in the People's Republic of China and Korea.

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CGN New Energy Holdings (1811 HK)

China Longyuan (916 HK): Value Has Definitely Emerged

Longyuan is attractively priced and showing strong business momentum, with improved margins and impressive growth. New project sign-ups and asset...

Osbert Tang, CFA

China Longyuan (916 HK): The Bull Story Should Continue

Focus should be on the encouraging outlook and Longyuan's good Jan generation growth of 44.4% for wind power is a solid evidence. Parent asset...

Osbert Tang, CFA

CGN New Energy Holdings: Character Building

During the 14th and 15th Five-Year Plans (2021-30) period, China's installed capacity for wind and solar power is expected double. CGNNE appears...

David Blennerhassett

China Longyuan (916 HK): Continuing the Good Upturn

Longyuan has a solid 3Q22 profit, reversing the trend of weaker YoY earnings in 1Q22 and 2Q22. It has the ability to outperform national generation...

Osbert Tang, CFA

China Power International (2380 HK): We Think Good Opportunities Are Presented

CPI's share price has overly reacted to market's concern on slowing economic and power demand outlook. Its new energy transformation and parent...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Longyuan (916 HK): Value Has Definitely Emerged

​Longyuan is attractively priced and showing strong business momentum, with improved margins and impressive growth. New project sign-ups and asset...

Osbert Tang, CFA

China Longyuan (916 HK): The Bull Story Should Continue

Focus should be on the encouraging outlook and Longyuan's good Jan generation growth of 44.4% for wind power is a solid evidence. Parent asset...

Osbert Tang, CFA

CGN New Energy Holdings: Character Building

During the 14th and 15th Five-Year Plans (2021-30) period, China's installed capacity for wind and solar power is expected double. CGNNE appears...

David Blennerhassett

China Longyuan (916 HK): Continuing the Good Upturn

Longyuan has a solid 3Q22 profit, reversing the trend of weaker YoY earnings in 1Q22 and 2Q22. It has the ability to outperform national generation...

Osbert Tang, CFA

China Power International (2380 HK): We Think Good Opportunities Are Presented

CPI's share price has overly reacted to market's concern on slowing economic and power demand outlook. Its new energy transformation and parent...

Osbert Tang, CFA

Longyuan is attractively priced and showing strong business momentum, with improved margins and impressive growth. New project sign-ups and asset...