HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>While <a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric Holdings (3899 HK)</a>'s share price has lagged YTD, its 3Q25 and 9M25 results look decent with 6.2% and 12.9% YoY increase, respectively.</li>
<li>Its backlog orders amount of Rmb30.8bn, up by 10.9% YoY, is a record high. This is already enough to cover the full-year FY26 projected revenue.</li>
<li>With a 13.4% 3-year EPS CAGR, its PERs are inexpensive. Meanwhile, it is in an excellent position to thrive under China's 15th Five-Year Plan (2026-2030).</li>
</ul>


While CIMC Enric Holdings (3899 HK)'s share price has lagged YTD, its 3Q25 and 9M25 results look decent with 6.2% and 12.9% YoY increase, respectively.
Its backlog orders amount of Rmb30.8bn, up by 10.9% YoY, is a record high. This is already enough to cover the full-year FY26 projected revenue.
With a 13.4% 3-year EPS CAGR, its PERs are inexpensive. Meanwhile, it is in an excellent position to thrive under China's 15th Five-Year Plan (2026-2030).


CIMC Enric (3899 HK): A Laggard That Is Poised to Revive

<ul>
<li>
<a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric Holdings (3899 HK)</a>'s YTD decline in share price provides an opportunity to pick up this name, which sees a solid sequential earnings improvement this year. </li>
<li>1Q25 revenue growth accelerated to 24.4%, from 2.9% in 2H25. While 1Q25 new orders have dropped, there is a sharp rebound in Apr, with a more positive 2H25 outlook.</li>
<li>At 9.3x FY25 PER after going ex-dividend (27 May), it is cheap relative to 14.7% 3-year EPS CAGR. The stock is also trading at the low-bound of the 3-year range.  </li>
</ul>



CIMC Enric Holdings (3899 HK)'s YTD decline in share price provides an opportunity to pick up this name, which sees a solid sequential earnings improvement this year. 
1Q25 revenue growth accelerated to 24.4%, from 2.9% in 2H25. While 1Q25 new orders have dropped, there is a sharp rebound in Apr, with a more positive 2H25 outlook.
At 9.3x FY25 PER after going ex-dividend (27 May), it is cheap relative to 14.7% 3-year EPS CAGR. The stock is also trading at the low-bound of the 3-year range.  


Thematic (Sector/Industry)

<ul>
<li>As Rmb moved from appreciation in 1Q23 to depreciation in 2Q23, there is a total change in the beneficiaries discussed in <a href="https://www.smartkarma.com/insights/china-strategy-it-is-the-foreign-exchange-impact-stupid" target="_blank" data-smartkarma-citation="insights:99729" rel="noopener">China Strategy: It Is the Foreign Exchange Impact, Stupid!</a> </li>
<li>The new beneficiaries are <a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric Holdings (3899 HK)</a>, <a href="https://www.smartkarma.com/entities/china-energy-engineering-group" target="_blank" data-smartkarma-citation="entities:21017:1" rel="noopener">China Energy Engineering (3996 HK)</a>, <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a>, <a href="https://www.smartkarma.com/entities/sinotrans-limited-h" target="_blank" data-smartkarma-citation="entities:1321:1" rel="noopener">Sinotrans (598 HK)</a> and <a href="https://www.smartkarma.com/entities/avichina-industry-technology-h" target="_blank" data-smartkarma-citation="entities:16315:1" rel="noopener">AviChina Industry &amp; Technology H (2357 HK)</a>. </li>
<li>
<a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric Holdings (3899 HK)</a> generated 20.2% of FY22 earnings from exchange gain as Rmb depreciated. Revenue from outside China rose 10% in 1H23 and accounted for 54.4% of total.  </li>
</ul>


As Rmb moved from appreciation in 1Q23 to depreciation in 2Q23, there is a total change in the beneficiaries discussed in China Strategy: It Is the Foreign Exchange Impact, Stupid! 
The new beneficiaries are CIMC Enric Holdings (3899 HK), China Energy Engineering (3996 HK), China Communications Construction (1800 HK), Sinotrans (598 HK) and AviChina Industry &amp; Technology H (2357 HK). 

CIMC Enric Holdings (3899 HK) generated 20.2% of FY22 earnings from exchange gain as Rmb depreciated. Revenue from outside China rose 10% in 1H23 and accounted for 54.4% of total.  


China Strategy: The RMB Reversal Is Just Too Fast!

<ul>
<li>Although the 1Q24 revenue of <a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric Holdings (3899 HK)</a> has edged down by 6.8%, this is not a concern as its order backlog suggested a resilient pipeline.</li>
<li>New orders signed increased by 35.7% with that for clean energy surged 100.2%. Order backlog of Rmb26.9bn represents a growth of 41.9% YoY and 17.8% against end-FY23.</li>
<li>Management also commented that there is a marked improvement in gross margin for 1Q24 and expects this trend to continue. Its 10.8x PER is inexpensive.</li>
</ul>


Although the 1Q24 revenue of CIMC Enric Holdings (3899 HK) has edged down by 6.8%, this is not a concern as its order backlog suggested a resilient pipeline.
New orders signed increased by 35.7% with that for clean energy surged 100.2%. Order backlog of Rmb26.9bn represents a growth of 41.9% YoY and 17.8% against end-FY23.
Management also commented that there is a marked improvement in gross margin for 1Q24 and expects this trend to continue. Its 10.8x PER is inexpensive.


CIMC Enric (3899 HK): Robust Order Backlog Outshined Lower 1Q24 Revenue

<ul>
<li>Despite weaker 2H23 results, <a href="https://www.smartkarma.com/entities/cimc-enric-holdings-ltd" target="_blank" data-smartkarma-citation="entities:47:1" rel="noopener">CIMC Enric Holdings (3899 HK)</a> guided for solid recovery in FY24. Order backlogs reached Rmb22.9bn, which almost equals the full-year revenue.</li>
<li>Clean energy segment will be supported by vessel demand, hydrogen orders, and Angang Steel project contribution. Chemical and environmental segment should rebound in 2H24.</li>
<li>Liquid food spin-off is in process and it has won several domestic whiskey projects. As net cash equals 13% of share price, payout will be maintained at 50% (FY22: 40%). </li>
</ul>


Despite weaker 2H23 results, CIMC Enric Holdings (3899 HK) guided for solid recovery in FY24. Order backlogs reached Rmb22.9bn, which almost equals the full-year revenue.
Clean energy segment will be supported by vessel demand, hydrogen orders, and Angang Steel project contribution. Chemical and environmental segment should rebound in 2H24.
Liquid food spin-off is in process and it has won several domestic whiskey projects. As net cash equals 13% of share price, payout will be maintained at 50% (FY22: 40%). 


CIMC Enric (3899 HK): Positive Takeaways from Post-Result Call

Hong Kong

CIMC Enric Holdings Ltd. designs, manufactures, and markets gas equipment.  The Company produces compressors, pressure vessels, gas refueling station trailers, and other gas equipment, as well as transportation equipment such as containers, trailers, tank equipments and airport equipments.

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CIMC Enric Holdings (3899 HK)

CIMC Enric (3899 HK): A Laggard That Is Poised to Revive

CIMC Enric announced that it will buy back no more than 30m shares, equivalent to 1.5% of the total outstanding shares. The total consideration...

Osbert Tang, CFA

CIMC Enric (3899 HK): Deep Value

We see an opportunity to pick up CIMC Enric as the share price underperformed YTD despite solid earnings improvement and a positive 2H25 outlook....

Osbert Tang, CFA

China Strategy: The RMB Reversal Is Just Too Fast!

Trump's presidency is expected to escalate the trade war and increase the possibility of a higher USD rate. That said, the Rmb will be under...

Osbert Tang, CFA

CIMC Enric (3899 HK): Robust Order Backlog Outshined Lower 1Q24 Revenue

While CIMC Enric's 1Q24 revenue was down, new orders signed increased by 35.7%. Order backlog also grew 41.9% YoY and 17.8% against end-FY23....

Osbert Tang, CFA

CIMC Enric (3899 HK): Positive Takeaways from Post-Result Call

CIMC Enric expects a solid recovery in FY24 despite weaker 2H23 results. Order backlogs nearly match full-year revenue, with clean energy and...

Osbert Tang, CFA

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52-week Range

Market Cap (USDm)

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CIMC Enric (3899 HK): A Laggard That Is Poised to Revive

CIMC Enric announced that it will buy back no more than 30m shares, equivalent to 1.5% of the total outstanding shares. The total consideration...

Osbert Tang, CFA

CIMC Enric (3899 HK): Deep Value

​We see an opportunity to pick up CIMC Enric as the share price underperformed YTD despite solid earnings improvement and a positive 2H25 outlook....

Osbert Tang, CFA

China Strategy: The RMB Reversal Is Just Too Fast!

Trump's presidency is expected to escalate the trade war and increase the possibility of a higher USD rate. That said, the Rmb will be under...

Osbert Tang, CFA

CIMC Enric (3899 HK): Robust Order Backlog Outshined Lower 1Q24 Revenue

While CIMC Enric's 1Q24 revenue was down, new orders signed increased by 35.7%. Order backlog also grew 41.9% YoY and 17.8% against end-FY23....

Osbert Tang, CFA

CIMC Enric (3899 HK): Positive Takeaways from Post-Result Call

​CIMC Enric expects a solid recovery in FY24 despite weaker 2H23 results. Order backlogs nearly match full-year revenue, with clean energy and...

Osbert Tang, CFA

We see an opportunity to pick up CIMC Enric as the share price underperformed YTD despite solid earnings improvement and a positive 2H25 outlook....

CIMC Enric expects a solid recovery in FY24 despite weaker 2H23 results. Order backlogs nearly match full-year revenue, with clean energy and...