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> will see accelerating earnings momentum in the rest of the year - after a weak start due to high base for YoY comparison.</li>
<li>We believe the combination of increase in utilisation hours, growth in installed capacity, improvement in power tariff and better cash flow and cost performance are the major drivers.</li>
<li>Share price has been weak in this year, and has returned the stock to less demanding level of 13.3x FY22 PER which we think cannot adequately reflects earnings prospects.</li>
</ul>



China Longyuan Power (916 HK) will see accelerating earnings momentum in the rest of the year - after a weak start due to high base for YoY comparison.
We believe the combination of increase in utilisation hours, growth in installed capacity, improvement in power tariff and better cash flow and cost performance are the major drivers.
Share price has been weak in this year, and has returned the stock to less demanding level of 13.3x FY22 PER which we think cannot adequately reflects earnings prospects.


China Longyuan (916 HK): On Your Mark, Get Set, Go!

Xinjiang Goldwind Science & Technology / Equity Bottom-Up

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<li>
<a href="https://www.smartkarma.com/entities/xinjiang-goldwind-science-technology-h" target="_blank" data-smartkarma-citation="entities:10112:1" rel="noopener">Xinjiang Goldwind Science &amp; Technology (2208 HK)</a> sees recent recovery in WTG price to be positive; and the increase in average unit size should be good to unit costs.</li>
<li>Gross margin contracted 3.1pp YoY in 1Q22 and it has put in place many cost reduction initiatives to contain cost inflation. It expects more impacts can be realised in 2H22.</li>
<li>External order backlog up 6.3% YoY to 16.97GW, with an encouraging 37.7% growth for overseas contracts. We think its 9.9x FY22F PER is inexpensive relative to the clean energy plays.</li>
</ul>



Xinjiang Goldwind Science &amp; Technology (2208 HK) sees recent recovery in WTG price to be positive; and the increase in average unit size should be good to unit costs.
Gross margin contracted 3.1pp YoY in 1Q22 and it has put in place many cost reduction initiatives to contain cost inflation. It expects more impacts can be realised in 2H22.
External order backlog up 6.3% YoY to 16.97GW, with an encouraging 37.7% growth for overseas contracts. We think its 9.9x FY22F PER is inexpensive relative to the clean energy plays.


Xinjiang Goldwind (2208 HK): Key Takeaways from 1Q22 Call

<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 Group Corp (916 HK)</a> is expected to see an exciting year on the back of faster capacity growth, increase in utilisation hours and higher average tariff.</li>
<li>Potential asset injection from its parent CHN Energy remains a wild card. It may grow its capacity by an average of 30% over the next three years if materialises.</li>
<li>Lower funding costs and the return to A-share are positive to Longyuan's expansion. We think consensus forecasts for next 2 years are too low and represent potential upside surprises.</li>
</ul>



China Longyuan Power Group Corp (916 HK) is expected to see an exciting year on the back of faster capacity growth, increase in utilisation hours and higher average tariff.
Potential asset injection from its parent CHN Energy remains a wild card. It may grow its capacity by an average of 30% over the next three years if materialises.
Lower funding costs and the return to A-share are positive to Longyuan's expansion. We think consensus forecasts for next 2 years are too low and represent potential upside surprises.


China Longyuan (916 HK): It Deserves the Premium

<ul>
<li>FY21 result of <a href="https://www.smartkarma.com/entities/xinjiang-goldwind-science-technology-h" target="_blank" data-smartkarma-citation="entities:10112:1" rel="noopener">Xinjiang Goldwind (2208 HK)</a> is healthy, though behind expectations due to impairments. We see them not recurrent into FY22, and this should be positive to earnings.  </li>
<li>Management sees some margin decline for WTG segment but the expectation of over 30% volume growth should offset the impact. Orderbook is secured at 16,874.4MW.</li>
<li>Growth in power servicing is the bright sport with target revenue growth for 50%. Goldwind also plans to also add 0.5-1GW of generating capacity annually at wind farm development segment.</li>
</ul>


FY21 result of Xinjiang Goldwind (2208 HK) is healthy, though behind expectations due to impairments. We see them not recurrent into FY22, and this should be positive to earnings.  
Management sees some margin decline for WTG segment but the expectation of over 30% volume growth should offset the impact. Orderbook is secured at 16,874.4MW.
Growth in power servicing is the bright sport with target revenue growth for 50%. Goldwind also plans to also add 0.5-1GW of generating capacity annually at wind farm development segment.


Xinjiang Goldwind (2208 HK): Positive Messages from Post-FY21 Call

China Power International / Equity Bottom-Up

<ul>
<li>2H21 is bad for <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> as coal price surged. But the positive news is that its wind and solar segments logged a 50.6% full-year profit growth.</li>
<li>There is good progress on transformation and it has 7GW of clean energy capacity to come on stream in FY22. This is equivalent to 46% of the existing capacity.</li>
<li>CPI said coal-fired plants are marginally profitable in Jan-Feb; meanwhile, hydropower will do better in this year. Overall, these set the stage for a turnaround.</li>
</ul>


2H21 is bad for China Power International (2380 HK) as coal price surged. But the positive news is that its wind and solar segments logged a 50.6% full-year profit growth.
There is good progress on transformation and it has 7GW of clean energy capacity to come on stream in FY22. This is equivalent to 46% of the existing capacity.
CPI said coal-fired plants are marginally profitable in Jan-Feb; meanwhile, hydropower will do better in this year. Overall, these set the stage for a turnaround.


China Power International (2380 HK): Transformation to Soon Bear Fruits

China

China Longyuan Power Group Corp Ltd designs, develops, manages, and operates wind farms.  The Company also sells the electricity generated by the wind farms.

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China Longyuan Power (916 HK)

China Longyuan (916 HK): On Your Mark, Get Set, Go!

Longyuan should see better growth prospects in the rest of the year with drivers from improvement in utilisation hours, increase in capacity,...

Osbert Tang, CFA

Xinjiang Goldwind (2208 HK): Key Takeaways from 1Q22 Call

Goldwind has cost management initiatives to counter margin contraction and its overseas backlog has witnessed good growth. Strategic disposal of...

Osbert Tang, CFA

China Longyuan (916 HK): It Deserves the Premium

FY22 will be an exciting year - higher utilisation, improvement in tariff, faster capacity growth and potential asset injection. All these factors...

Osbert Tang, CFA

Xinjiang Goldwind (2208 HK): Positive Messages from Post-FY21 Call

WTG is set for a 30% growth in capacity delivery in FY22, offsetting the impact of lower margin. Both power servicing and wind farm development...

Osbert Tang, CFA

China Power International (2380 HK): Transformation to Soon Bear Fruits

CPI is making good progress in transformation into a clean energy play. Profitability will improve in FY22, providing room for valuations to catch...

Osbert Tang, CFA

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