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Cross Asset Strategy

<ul><li>In Depth: China’s Renewable Energy Boom Runs Into Market Reality On July 2, China Resources New Energy Holdings Co. Ltd. (CRNE) pulled off the largest ever IPO on the Shenzhen Stock Exchange, with its shares soaring 137% on debut and briefly lifting the company’s market value above 300 billion yuan ($44 billion).</li><li>China’s booming tourism industry broke more records last year.</li><li>Domestic travelers took 6.52 billion trips and spent 6.3 trillion yuan ($930 billion), according to the Ministry of Culture and Tourism. </li></ul>

In Depth: China’s Renewable Energy Boom Runs Into Market Reality On July 2, China Resources New Energy Holdings Co. Ltd. (CRNE) pulled off the largest ever IPO on the Shenzhen Stock Exchange, with its shares soaring 137% on debut and briefly lifting the company’s market value above 300 billion yuan ($44 billion).China’s booming tourism industry broke more records last year.Domestic travelers took 6.52 billion trips and spent 6.3 trillion yuan ($930 billion), according to the Ministry of Culture and Tourism. 

CX Daily: China’s Renewable Energy Boom Runs Into Market Reality 

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Stay long <a href="https://www.smartkarma.com/entities/kakaku-com-inc" target="_blank" data-smartkarma-citation="entities:7408:1" rel="noopener">Kakaku.com Inc (2371 JP)</a>. Don't sell yet. And definitely stay long <a href="https://www.smartkarma.com/entities/digital-garage-inc" target="_blank" data-smartkarma-citation="entities:13747:1" rel="noopener">Digital Garage (4819 JP)</a>.</li>
<li>The <a href="https://www.smartkarma.com/entities/yamada-corp" target="_blank" data-smartkarma-citation="entities:16273:1" rel="noopener">Yamada Corp (6392 JP)</a>/<a href="https://www.smartkarma.com/entities/edion-corp" target="_blank" data-smartkarma-citation="entities:14358:1" rel="noopener">Edion Corp (2730 JP)</a> combination gives both a platform. What they do with it is the question that the initial announcement left entirely unanswered.</li>
<li>At a multi-year low implied stub; and an all-time low simple ratio (<a href="https://www.smartkarma.com/entities/ytl-corp-bhd" target="_blank" data-smartkarma-citation="entities:8553:1" rel="noopener">YTL (YTL MK)</a>/<a href="https://www.smartkarma.com/entities/ytl-power-international-bhd" target="_blank" data-smartkarma-citation="entities:1239:1" rel="noopener">YTL Power (YTLP MK)</a>), if you can set up the stub here cleanly, do so.</li>
</ul>


Stay long Kakaku.com Inc (2371 JP). Don't sell yet. And definitely stay long Digital Garage (4819 JP).
The Yamada Corp (6392 JP)/Edion Corp (2730 JP) combination gives both a platform. What they do with it is the question that the initial announcement left entirely unanswered.
At a multi-year low implied stub; and an all-time low simple ratio (YTL (YTL MK)/YTL Power (YTLP MK)), if you can set up the stub here cleanly, do so.


Last Week In Event SPACE: Digital Garage/Kakaku.com, Yamada Corp/Edion Corp, YTL/YTL Power, Strategy

<ul>
<li>Priced at RM10.11/share, <a href="https://www.smartkarma.com/entities/china-resources-new-energy-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:50306:1" rel="noopener">China Resources New Energy (001248 CH)</a> (CRNE) appeared fairly priced on a trailing P/B; to possibly "cheap" on a trailing PER metric, depending on your forecast viewpoint. </li>
<li>However, at ~700x oversubscribed, and given CRNE is part of the vast SOE China Resources Holdings, a pop on debut was a safe bet. CRNE is now up 109%.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-resources-power-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:5385:1" rel="noopener">China Resources Power (836 HK)</a>'s 81.8% stake in CRNE accounts for 307% of its market cap. And places the discount to NAV at ~74%,  That's not sustainable. </li>
</ul>


Priced at RM10.11/share, China Resources New Energy (001248 CH) (CRNE) appeared fairly priced on a trailing P/B; to possibly "cheap" on a trailing PER metric, depending on your forecast viewpoint. 
However, at ~700x oversubscribed, and given CRNE is part of the vast SOE China Resources Holdings, a pop on debut was a safe bet. CRNE is now up 109%.

China Resources Power (836 HK)'s 81.8% stake in CRNE accounts for 307% of its market cap. And places the discount to NAV at ~74%,  That's not sustainable. 


Buy CR Power (836 HK) As CRNE (More Than) Doubles On Debut

<ul>
<li>
<a href="https://www.smartkarma.com/entities/digital-garage-inc" target="_blank" data-smartkarma-citation="entities:13747:1" rel="noopener">Digital Garage (4819 JP)</a> is probably too cheap. There is a fair bit of "easy" value there even assuming all the equity affiliate stakes are worth, well, nothing.</li>
<li>
<a href="https://www.smartkarma.com/entities/china-resources-power-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:5385:1" rel="noopener">China Resources Power (836 HK)</a> (CRP)'s 81.81%-held <a href="https://www.smartkarma.com/entities/china-resources-new-energy-holdings-company-limited" target="_blank" data-smartkarma-citation="entities:50306:1" rel="noopener">China Resources New Energy (001248 CH)</a> xlosed up ~137% on debut, and worth ~350% of CRP's market cap. That's not sustainable.</li>
<li>
<a href="https://www.smartkarma.com/entities/atlas-arteria-ltd" target="_blank" data-smartkarma-citation="entities:14430:1" rel="noopener">Atlas Arteria (ALX AU)</a> sticks to its guns, urging shareholders to hold their stock, signalling IFM can pay more. But realistically, IFM has declared terms best &amp; final.</li>
</ul>



Digital Garage (4819 JP) is probably too cheap. There is a fair bit of "easy" value there even assuming all the equity affiliate stakes are worth, well, nothing.

China Resources Power (836 HK) (CRP)'s 81.81%-held China Resources New Energy (001248 CH) xlosed up ~137% on debut, and worth ~350% of CRP's market cap. That's not sustainable.

Atlas Arteria (ALX AU) sticks to its guns, urging shareholders to hold their stock, signalling IFM can pay more. But realistically, IFM has declared terms best &amp; final.


Last Week In Event SPACE: Digital Garage/Kakaku, Chine Resources Power, Atlas Arteria

China

China Resources New Energy Holdings Company Limited provides energy generation services. The Company generates and transmits thermal, wind, hydroelectric, and solar energy for energy generation, electricity wholesale, and coal mining industries. China Resources New Energy Holdings serves clients in China and Hong Kong.

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China Resources New Energy (001248 CH)

CX Daily: China’s Renewable Energy Boom Runs Into Market Reality

In Depth: China’s Renewable Energy Boom Runs Into Market Reality On July 2, China Resources New Energy Holdings Co. Ltd. (CRNE) pulled...

Caixin Global

Last Week In Event SPACE: Digital Garage/Kakaku.com, Yamada Corp/Edion Corp, YTL/YTL Power, Strategy

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

Buy CR Power (836 HK) As CRNE (More Than) Doubles On Debut

CRP has barely registered CRNE's bigly price gain on debut. The question is whether it will. CRP is totally misproced versus its holding in CRNE....

David Blennerhassett

Last Week In Event SPACE: Digital Garage/Kakaku, Chine Resources Power, Atlas Arteria

It’s Sunday! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed during the...

David Blennerhassett

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