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> should see a mean reversion of its valuations. It has rebounded 36% from the the 2024 trough, but has only gone up 0.3% YTD.</li>
<li>There are three catalysts in place to drive the move: acceleration in power generation, cash flow improvement, and recovery in the wind power market.</li>
<li>Its P/B is at a 40% discount to average, and a return to such level will generate a 60% upside. Even after reversion, its PER of 7.8x is not stretched.</li>
</ul>



China Longyuan Power (916 HK) should see a mean reversion of its valuations. It has rebounded 36% from the the 2024 trough, but has only gone up 0.3% YTD.
There are three catalysts in place to drive the move: acceleration in power generation, cash flow improvement, and recovery in the wind power market.
Its P/B is at a 40% discount to average, and a return to such level will generate a 60% upside. Even after reversion, its PER of 7.8x is not stretched.


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>'s Jan power sales showed a sharp 41.2% YoY growth. More importantly, this marks sustaining a solid MoM trend in the last few months. </li>
<li>Recovery of the hydropower generation is encouraging as this was a drag last year. Meanwhile, higher coal-fired generation will capture the better profitability of this segment.</li>
<li>CPI's strongest earnings CAGR in the sector has made its earnings multiples increasingly cheap over the next two years. After +15.7% YTD in its share price, there is further upside.</li>
</ul>



China Power International (2380 HK)'s Jan power sales showed a sharp 41.2% YoY growth. More importantly, this marks sustaining a solid MoM trend in the last few months. 
Recovery of the hydropower generation is encouraging as this was a drag last year. Meanwhile, higher coal-fired generation will capture the better profitability of this segment.
CPI's strongest earnings CAGR in the sector has made its earnings multiples increasingly cheap over the next two years. After +15.7% YTD in its share price, there is further upside.


China Power International (2380 HK): We See More Upside

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>A bad week for HK and Chinese shares. National Team buying seems lighter into the waning days of the Year of the Rabbit.</li>
<li>Net SOUTHBOUND buying was HK$4.0bn in the shortened pre-holiday week.</li>
<li>Remarkable this past week, again, was the tendency to net sell names which were down hard, and net buy names which have been performing well.</li>
</ul>


A bad week for HK and Chinese shares. National Team buying seems lighter into the waning days of the Year of the Rabbit.
Net SOUTHBOUND buying was HK$4.0bn in the shortened pre-holiday week.
Remarkable this past week, again, was the tendency to net sell names which were down hard, and net buy names which have been performing well.


HK Connect SOUTHBOUND Flows (To 9 Feb 2024); Net Tech Selling STILL, Net SOE Buying, STILL

<ul>
<li>Power output 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> is healthy in Jul-Aug, following the solid trend in 1H23. The drop in hydropower has moderated and wind and solar stayed decent.</li>
<li>Capacity growth will reach 43% in FY23. With just 7.8% YoY in 1H23, most of the new capacity will be added in 4Q23, accelerating both output and profitability.</li>
<li>The parent SPIC's massive clean energy assets are candidates for potential injection. CPI's high EPS CAGR of 28.8% means that it well deserves premium valuation multiples. </li>
</ul>


Power output for China Power International (2380 HK) is healthy in Jul-Aug, following the solid trend in 1H23. The drop in hydropower has moderated and wind and solar stayed decent.
Capacity growth will reach 43% in FY23. With just 7.8% YoY in 1H23, most of the new capacity will be added in 4Q23, accelerating both output and profitability.
The parent SPIC's massive clean energy assets are candidates for potential injection. CPI's high EPS CAGR of 28.8% means that it well deserves premium valuation multiples. 


China Power International (2380 HK): Continuing the Turnaround Trend

<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

Hong Kong

China Resources Power Holdings Company Limited is a power generation company. The Company invests, develops, owns, and operates coal-fired power plants in China.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

China Resources Power (836 HK)

China Longyuan (916 HK): Mean Reversion

China Longyuan is poised for a valuation mean reversion with three catalysts: power generation acceleration, cash flow improvement, and wind power...

Osbert Tang, CFA

China Power International (2380 HK): We See More Upside

CPI saw a strong 41.2% growth in Jan power sales, sustaining a solid MoM trend. Recovery in hydropower and higher coal-fired generation will boost...

Osbert Tang, CFA

HK Connect SOUTHBOUND Flows (To 9 Feb 2024); Net Tech Selling STILL, Net SOE Buying, STILL

SOUTHBOUND saw net buying on this shortened week pre-CNY as stocks rebounded from the previous week's dramatic selloff. High Div SOEs were bought...

Travis Lundy

China Power International (2380 HK): Continuing the Turnaround Trend

CPI's capacity growth is expected to reach 43% in FY23, with most of them to be added in 4Q23, boosting output and profitability. Its high EPS CAGR...

Osbert Tang, CFA

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

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Longyuan (916 HK): Mean Reversion

​China Longyuan is poised for a valuation mean reversion with three catalysts: power generation acceleration, cash flow improvement, and wind power...

Osbert Tang, CFA

China Power International (2380 HK): We See More Upside

CPI saw a strong 41.2% growth in Jan power sales, sustaining a solid MoM trend. Recovery in hydropower and higher coal-fired generation will boost...

Osbert Tang, CFA

HK Connect SOUTHBOUND Flows (To 9 Feb 2024); Net Tech Selling STILL, Net SOE Buying, STILL

SOUTHBOUND saw net buying on this shortened week pre-CNY as stocks rebounded from the previous week's dramatic selloff. High Div SOEs were bought...

Travis Lundy

China Power International (2380 HK): Continuing the Turnaround Trend

CPI's capacity growth is expected to reach 43% in FY23, with most of them to be added in 4Q23, boosting output and profitability. Its high EPS CAGR...

Osbert Tang, CFA

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 is poised for a valuation mean reversion with three catalysts: power generation acceleration, cash flow improvement, and wind power...

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