HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Power International Development / Equity Bottom-Up

China Power International Development (2380 HK)

<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> will enjoy another year of strong earnings improvement in FY23, as coal-fired segment returns to profit and new energy capacity drives growth.</li>
<li>Solar and wind capacity will increase 66.5% and 23.1%, respectively, raising new energy's proportion to over 70%. Profitability for hydropower also looks to recover in this year.</li>
<li>There is huge room for asset injection from SPIC given the parent's new energy capacity of 139GW, with only 20GW in CPI. Its FY23 PER of 8.4x PER is attractive. </li>
</ul>



China Power International (2380 HK) will enjoy another year of strong earnings improvement in FY23, as coal-fired segment returns to profit and new energy capacity drives growth.
Solar and wind capacity will increase 66.5% and 23.1%, respectively, raising new energy's proportion to over 70%. Profitability for hydropower also looks to recover in this year.
There is huge room for asset injection from SPIC given the parent's new energy capacity of 139GW, with only 20GW in CPI. Its FY23 PER of 8.4x PER is attractive. 


China Power International (2380 HK): This Will Be a Rewarding Year

<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> announced positive profit alert for FY22 at Rmb2.3-2.7bn, vs. Rmb516m losses in FY21. Such guidances are 14-34% ahead of current consensus forecasts.</li>
<li>Disposal and acquisition gains of Rmb2.15bn are the main contributors. As we see further clean energy injections and coal-fired disposals going forward, there is room for more such gains. </li>
<li>Losses for core operations are Rmb300-700m in 2H22, a huge 73.5% YoY reduction. We will not read too much into HoH profitability retreat as this is due to hydropower seasonality.  </li>
</ul>



China Power International (2380 HK) announced positive profit alert for FY22 at Rmb2.3-2.7bn, vs. Rmb516m losses in FY21. Such guidances are 14-34% ahead of current consensus forecasts.
Disposal and acquisition gains of Rmb2.15bn are the main contributors. As we see further clean energy injections and coal-fired disposals going forward, there is room for more such gains. 
Losses for core operations are Rmb300-700m in 2H22, a huge 73.5% YoY reduction. We will not read too much into HoH profitability retreat as this is due to hydropower seasonality.  


China Power International (2380 HK): A Look into the Positive Profit Alert

<ul>
<li>The three recent transactions of <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> provide solid evidences that it is accelerating its progress in transformation into a giant green energy play.</li>
<li>Partial disposal of coal-fired assets will generate significant disposal gain and reduce exposure to loss-making business. Introduction of CCB Investment as green power shareholder will improve cash flow.  </li>
<li>Acquisition of 579MW of wind power capacity will raise proportion of clean energy in its total installed capacity by 0.9pp. This also showcases strong support from its parent SPIC. </li>
</ul>


The three recent transactions of China Power International (2380 HK) provide solid evidences that it is accelerating its progress in transformation into a giant green energy play.
Partial disposal of coal-fired assets will generate significant disposal gain and reduce exposure to loss-making business. Introduction of CCB Investment as green power shareholder will improve cash flow.  
Acquisition of 579MW of wind power capacity will raise proportion of clean energy in its total installed capacity by 0.9pp. This also showcases strong support from its parent SPIC. 


China Power International (2380 HK): Stepping up Transformation Strategy

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyze the monthly Hong Kong Connect flows with our data engine.</li>
<li>We tabulate the top stocks by inflows, outlfows, and holding by mainland investors.</li>
<li>We highlight inflows into Tencent, Meituan, Wuxi Biologics, Li Auto, Kuaishou, and outflows from Tsingtao Brewery.</li>
</ul>


We analyze the monthly Hong Kong Connect flows with our data engine.
We tabulate the top stocks by inflows, outlfows, and holding by mainland investors.
We highlight inflows into Tencent, Meituan, Wuxi Biologics, Li Auto, Kuaishou, and outflows from Tsingtao Brewery.


Hong Kong Connect Flows Monthly: $8.1bn Inflows in October

<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

China Power International Development Ltd. is an investment holding company primarily engaged in the generation and sale of electricity. It develops, constructs, owns, operates, and manages power plants in the People's Republic of China, encompassing hydropower, wind power, photovoltaic power, thermal power, natural gas power, environmental power, and energy storage, as well as green power transportation and integrated intelligent energy solution services. The company was incorporated in Hong Kong on March 24, 2004, and its headquarters are located in Hong Kong, China.

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China Power International Development (2380 HK)

China Power International (2380 HK): This Will Be a Rewarding Year

FY23 will be an exciting year for CPI as coal-fired, wind & solar, hydro and new innovation segments will all see better profitability. Potential...

Osbert Tang, CFA

China Power International (2380 HK): A Look into the Positive Profit Alert

FY22 positive profit alert at Rmb2.3-2.7bn is 14-34% ahead of consensus forecasts. While exceptional gains are key contributors, CPI's 2H22 core...

Osbert Tang, CFA

China Power International (2380 HK): Stepping up Transformation Strategy

CPI's recent transactions provide evidences that it is accelerating progress in transformation into a giant green energy play. Having come down by...

Osbert Tang, CFA

Hong Kong Connect Flows Monthly: $8.1bn Inflows in October

We analyzed the Hong Kong Connect Scheme for October and highlight flows for Tencent, Meituan, Wuxi Biologics, Li Auto, Kuaishou, Tsingtao Brewery.

Ke Yan, CFA, FRM

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

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