HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Yangtze Power Co, Ltd. / Equity Bottom-Up

Despite outperformance against the Shanghai Composite Index, <a href="https://www.smartkarma.com/entities/china-yangtze-power-co-ltd" target="_blank" data-smartkarma-citation="entities:3210:1" rel="noopener">China Yangtze Power Co, Ltd. (600900 CH)</a> will continue to see positive factors driving its outlook and supporting its valuations. These factors include its excellent position to capture China's clean energy initiative, improvement in profitability, likely asset injections in the future and good overseas track record that underpins geographical expansion.The stock is currently trading on 19.5x PER and 3x P/B for FY20F; and these are premium valuations compared with its peers. However, its growth potential from asset injection, immense size (market cap of Rmb467bn) and GDR listing are edges that make it stands out against A-share peers like <a href="https://www.smartkarma.com/entities/huaneng-lancang-river-hydr-a" target="_blank" data-smartkarma-citation="entities:26585:1" rel="noopener">Huaneng Lancang River Hydr-A (600025 CH)</a>, <a href="https://www.smartkarma.com/entities/sichuan-chuantou-energy-stock-co-ltd" target="_blank" data-smartkarma-citation="entities:2557:1" rel="noopener">Sichuan Chuantou Energy Stock (600674 CH)</a> and <a href="https://www.smartkarma.com/entities/guangxi-guiguan-electric-a" target="_blank" data-smartkarma-citation="entities:20919:1" rel="noopener">Guangxi Guiguan Electric A (600236 CH)</a>.

Despite outperformance against the Shanghai Composite Index, China Yangtze Power Co, Ltd. (600900 CH) will continue to see positive factors driving its outlook and supporting its valuations. These factors include its excellent position to capture China's clean energy initiative, improvement in profitability, likely asset injections in the future and good overseas track record that underpins geographical expansion.The stock is currently trading on 19.5x PER and 3x P/B for FY20F; and these are premium valuations compared with its peers. However, its growth potential from asset injection, immense size (market cap of Rmb467bn) and GDR listing are edges that make it stands out against A-share peers like Huaneng Lancang River Hydr-A (600025 CH), Sichuan Chuantou Energy Stock (600674 CH) and Guangxi Guiguan Electric A (600236 CH). 

China Yangtze Power (600900 CH): Well Positioned to Capture China's Clean Energy Initiative

Equity Capital Markets

China Yangtze Power Co, Ltd. / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/china-yangtze-power-co-ltd" target="_blank" data-smartkarma-citation="entities:3210:1" rel="noopener">China Yangtze Power Co, Ltd. (600900 CH)</a> (CYPC), the world's largest hydropower company, will put forward its GDR issuance proposal for shareholder voting in an EGM on 30 Jun. We take a look on this proposal which may raise up to ~US$3.3bn based on the current share price. We believe the key merits for CYPC are: 1.) largest hydropower company globally with protected franchise; 2.) benefit from government's clean energy initiatives; 3.) track record of stable earnings; and 4.) solid support from parent company.Key risks, however, are: 1.) CYPC relies on one single type of generation mode; 2.) capex on acquisitions may further elevate gearing; 3.) slowdown in power demand; and 4.) overseas investment risks. The stock now trades on 17.9x FY20F PER, not excessive relative to the 5-year range of 13-27x, and upside will come from further asset injections from parent China Three Gorges Corporation (CTG).

China Yangtze Power Co, Ltd. (600900 CH) (CYPC), the world's largest hydropower company, will put forward its GDR issuance proposal for shareholder voting in an EGM on 30 Jun. We take a look on this proposal which may raise up to ~US$3.3bn based on the current share price. We believe the key merits for CYPC are: 1.) largest hydropower company globally with protected franchise; 2.) benefit from government's clean energy initiatives; 3.) track record of stable earnings; and 4.) solid support from parent company.Key risks, however, are: 1.) CYPC relies on one single type of generation mode; 2.) capex on acquisitions may further elevate gearing; 3.) slowdown in power demand; and 4.) overseas investment risks. The stock now trades on 17.9x FY20F PER, not excessive relative to the 5-year range of 13-27x, and upside will come from further asset injections from parent China Three Gorges Corporation (CTG).

China Yangtze Power (600900 CH): Pre-GDR Initial Thoughts

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

In our weekly Shanghai/Shenzhen Connect Snippet series, we aim to help our investors understand the flow of northbound trades via the Shanghai and Shenzhen Connect, as analyzed by our proprietary data engine and highlight interesting trade ideas. We split the stocks eligible for the Shanghai/Shenzhen Connect trade into two groups: stocks with a market capitalization above USD 5 billion, as well as between USD 1 billion and USD 5 billion. In this insight, we will highlight the consecutive three weeks of net outflow from the A-share market. We will also briefly discuss the outflows from <a href="https://www.smartkarma.com/entities/1553" target="_blank" data-smartkarma-citation="entities:1553:1">Kweichow Moutai Co Ltd A (600519 CH)</a> and <a href="https://www.smartkarma.com/entities/7152" target="_blank" data-smartkarma-citation="entities:7152:1">Hangzhou Hikvision (002415 CH)</a>.

In our weekly Shanghai/Shenzhen Connect Snippet series, we aim to help our investors understand the flow of northbound trades via the Shanghai and Shenzhen Connect, as analyzed by our proprietary data engine and highlight interesting trade ideas. We split the stocks eligible for the Shanghai/Shenzhen Connect trade into two groups: stocks with a market capitalization above USD 5 billion, as well as between USD 1 billion and USD 5 billion. In this insight, we will highlight the consecutive three weeks of net outflow from the A-share market. We will also briefly discuss the outflows from Kweichow Moutai Co Ltd A (600519 CH) and Hangzhou Hikvision (002415 CH).

Shanghai/​Shenzhen Connect Snippet: 3 Weeks of Outflows, Moutai, Hikvision (2019-05-24)

China

China Yangtze Power Company Ltd. owns the Gezhouba Power Station and the Three Gorges Power Station. The Company generates hydroelectric power, which is supplied to central China, east China, Guangdong province, Chongqing city, and other areas.

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China Yangtze Power Co, Ltd. (600900 CH)

China Yangtze Power (600900 CH): Well Positioned to Capture China's Clean Energy Initiative

China Yangtze Power's outlook will be driven by China's clean energy initiative, profitability improvement, asset injections and overseas...

Osbert Tang, CFA

China Yangtze Power (600900 CH): Pre-GDR Initial Thoughts

China Yangtze Power Co, Ltd. (600900 CH) (CYPC), the world's largest hydropower company, will put forward its GDR issuance proposal for shareholder...

Osbert Tang, CFA

Shanghai/Shenzhen Connect Snippet: 3 Weeks of Outflows, Moutai, Hikvision (2019-05-24)

In our weekly Shanghai/Shenzhen Connect Snippet series, we aim to help our investors understand the flow of northbound trades via the Shanghai and...

Ke Yan, CFA, FRM

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

China Yangtze Power (600900 CH): Well Positioned to Capture China's Clean Energy Initiative

China Yangtze Power's outlook will be driven by China's clean energy initiative, profitability improvement, asset injections and overseas...

Osbert Tang, CFA

China Yangtze Power (600900 CH): Pre-GDR Initial Thoughts

China Yangtze Power Co, Ltd. (600900 CH) (CYPC), the world's largest hydropower company, will put forward its GDR issuance proposal for shareholder...

Osbert Tang, CFA

Shanghai/​Shenzhen Connect Snippet: 3 Weeks of Outflows, Moutai, Hikvision (2019-05-24)

In our weekly Shanghai/Shenzhen Connect Snippet series, we aim to help our investors understand the flow of northbound trades via the Shanghai and...

Ke Yan, CFA, FRM

Shanghai/Shenzhen Connect Snippet: 3 Weeks of Outflows, Moutai, Hikvision (2019-05-24)