Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Back on the 9 May, <strong><a href="https://www.smartkarma.com/entities/inner-mongolia-yitai-coal-company-ltd" target="_blank" data-smartkarma-citation="entities:14904:1" rel="noopener">Inner Mongolia Yitai Coal Company Ltd (3948 HK)</a></strong> announced an H-share buyback at HK$17.50/share.</li>
<li>With no pre-conditions attached to this hybrid Scheme/Tender Offer, my expectation was this could be wrapped up by mid-August. </li>
<li>The dispatch of the Offer Document yesterday evening indicates even this timeline was conservative, with payment potentially occurring in the third week of July.</li>
</ul>


Back on the 9 May, Inner Mongolia Yitai Coal Company Ltd (3948 HK) announced an H-share buyback at HK$17.50/share.
With no pre-conditions attached to this hybrid Scheme/Tender Offer, my expectation was this could be wrapped up by mid-August. 
The dispatch of the Offer Document yesterday evening indicates even this timeline was conservative, with payment potentially occurring in the third week of July.


Yitai Coal (3948 HK): H-Shareholders To Vote on 30th June

<ul>
<li>Timing is everything. Yesterday afternoon I flagged <strong><a href="https://www.smartkarma.com/entities/inner-mongolia-yitai-coal-company-ltd" target="_blank" data-smartkarma-citation="entities:14904:1" rel="noopener">Inner Mongolia Yitai Coal Company Ltd (3948 HK)</a></strong>'s possible H-share buyback at HK$17/share.</li>
<li>Roughly five hours later a firm HK$17.50/share Offer was announced. The Offer Price is final.</li>
<li>Other terms and approvals were largely as expected. Payment under the Offer may occur mid-August.</li>
</ul>


Timing is everything. Yesterday afternoon I flagged Inner Mongolia Yitai Coal Company Ltd (3948 HK)'s possible H-share buyback at HK$17/share.
Roughly five hours later a firm HK$17.50/share Offer was announced. The Offer Price is final.
Other terms and approvals were largely as expected. Payment under the Offer may occur mid-August.


Yitai Coal (3948 HK): H-Share Buyback Firmed At HK$17.50

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

<ul>
<li>The market should be happy with the 43.9% YoY growth in recurring earnings at <a href="https://www.smartkarma.com/entities/dongfang-electric-corporation-limited" target="_blank" data-smartkarma-citation="entities:1251:1" rel="noopener">Dongfang Electric (1072 HK)</a> in 1Q23. Gross margin of 18.7% is the highest since 2Q21.</li>
<li>New orders surged 26.1% YoY and 92.4% QoQ to a record Rmb22.6bn in 1Q23. We estimate backlog equals to 1.42x FY23F consensus revenue, meaning a very secured pipeline.</li>
<li>While EPS dilution is a concern, this has already been reflected in share price. The acquisitions of subsidiaries will enhance FY23 earnings. Its 8x PER and 0.8x P/B are inexpensive.</li>
</ul>


The market should be happy with the 43.9% YoY growth in recurring earnings at Dongfang Electric (1072 HK) in 1Q23. Gross margin of 18.7% is the highest since 2Q21.
New orders surged 26.1% YoY and 92.4% QoQ to a record Rmb22.6bn in 1Q23. We estimate backlog equals to 1.42x FY23F consensus revenue, meaning a very secured pipeline.
While EPS dilution is a concern, this has already been reflected in share price. The acquisitions of subsidiaries will enhance FY23 earnings. Its 8x PER and 0.8x P/B are inexpensive.


Dongfang Electric (1072 HK): Profit Surged, Record New Orders Signed

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dongfang-electric-corporation-limited" target="_blank" data-smartkarma-citation="entities:1251:1" rel="noopener">Dongfang Electric (1072 HK)</a>'s management update suggested that its outlook remains encouraging. Order backlog of Rmb87.8bn well covers the FY22 revenue at 1.57x.  </li>
<li>It is positive towards pumped storage, alternative power storage and hydrogen energy. Although they may not have significant near-term contribution, DEC is well-positioned in the long term.</li>
<li>While new A-shares issue will dilute EPS, this should lower gearing (including contract liabilities) to 32.1%, from 49.2%, and is positive to H-share holders as book value will be enhanced.</li>
</ul>



Dongfang Electric (1072 HK)'s management update suggested that its outlook remains encouraging. Order backlog of Rmb87.8bn well covers the FY22 revenue at 1.57x.  
It is positive towards pumped storage, alternative power storage and hydrogen energy. Although they may not have significant near-term contribution, DEC is well-positioned in the long term.
While new A-shares issue will dilute EPS, this should lower gearing (including contract liabilities) to 32.1%, from 49.2%, and is positive to H-share holders as book value will be enhanced.


Dongfang Electric (1072 HK): Positive Takeaways from Post-Result Presentation

<ul>
<li>
<a href="https://www.smartkarma.com/entities/dongfang-electric-corporation-limited" target="_blank" data-smartkarma-citation="entities:1251:1" rel="noopener">Dongfang Electric (1072 HK)</a>'s 35.1% increase in FY22 recurring earnings demonstrated its healthy operations. Slowdown in 4Q22 (+14.4% YoY) is more a result of pandemic disruption. </li>
<li>Record new orders of Rmb65.6bn were signed FY22 (+16.3% YoY), and 4Q22 even saw a 25% growth. End-FY22 backlog is estimated to be enough to cover 1.66x FY22 revenue.</li>
<li>DEC targets a 35% growth in power generation equipment production volume in FY23. Power storage, including pumped storage, and hydrogen energy are important engines going forward.</li>
</ul>



Dongfang Electric (1072 HK)'s 35.1% increase in FY22 recurring earnings demonstrated its healthy operations. Slowdown in 4Q22 (+14.4% YoY) is more a result of pandemic disruption. 
Record new orders of Rmb65.6bn were signed FY22 (+16.3% YoY), and 4Q22 even saw a 25% growth. End-FY22 backlog is estimated to be enough to cover 1.66x FY22 revenue.
DEC targets a 35% growth in power generation equipment production volume in FY23. Power storage, including pumped storage, and hydrogen energy are important engines going forward.


Dongfang Electric (1072 HK): Heading Towards Another Fruitful Year

China

Harbin Electric Company Limited is primarily engaged in the manufacturing and sales of power-generation equipment. Its core activities include manufacturing complete sets of large-scale thermal, hydro, and nuclear power generation equipment, providing turnkey engineering for power plant projects, and developing marine propulsion systems and electric drive units. The company was founded in October 1994 and is headquartered in Harbin, China.

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Harbin Electric (1133 HK)

Yitai Coal (3948 HK): H-Shareholders To Vote on 30th June

HK$17.50/share is a full and fair price. The tendering condition is the key risk to the deal. At HK$16.72/share, this is trading at a 4.7%/47.3%...

David Blennerhassett

Dongfang Electric (1072 HK): Profit Surged, Record New Orders Signed

Dongfang Electric has a marvelous 1Q23 with recurring earnings surged 43.9% and new orders reached record Rmb22.6bn (+26.1% YoY). Concerns on new...

Osbert Tang, CFA

Dongfang Electric (1072 HK): Positive Takeaways from Post-Result Presentation

Order backlog of Rmb87.8bn well covers the FY22 revenue at 1.57x. New A-shares issue will dilute EPS but this should lower gearing and is positive...

Osbert Tang, CFA

Dongfang Electric (1072 HK): Heading Towards Another Fruitful Year

After a solid FY22, FY23 will still be impressive. Record new orders and healthy backlog will propel growth. We believe DEC has excellent exposure...

Osbert Tang, CFA

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Yitai Coal (3948 HK): H-Shareholders To Vote on 30th June

HK$17.50/share is a full and fair price. The tendering condition is the key risk to the deal. At HK$16.72/share, this is trading at a 4.7%/47.3%...

David Blennerhassett

Yitai Coal (3948 HK): H-Share Buyback Firmed At HK$17.50

HK$17.50/share is a full and fair price. The tendering condition is the key risk to the deal. Buy up to HK$16.90/share, or 4%/15% gross/annualised,...

David Blennerhassett

Dongfang Electric (1072 HK): Profit Surged, Record New Orders Signed

Dongfang Electric has a marvelous 1Q23 with recurring earnings surged 43.9% and new orders reached record Rmb22.6bn (+26.1% YoY). Concerns on new...

Osbert Tang, CFA

Dongfang Electric (1072 HK): Positive Takeaways from Post-Result Presentation

Order backlog of Rmb87.8bn well covers the FY22 revenue at 1.57x. New A-shares issue will dilute EPS but this should lower gearing and is positive...

Osbert Tang, CFA

Dongfang Electric (1072 HK): Heading Towards Another Fruitful Year

After a solid FY22, FY23 will still be impressive. Record new orders and healthy backlog will propel growth. We believe DEC has excellent exposure...

Osbert Tang, CFA