Chief Economist

Diana Choyleva

Enodo Economics

Enodo Economics is an independent macroeconomic forecasting company that untangles complexity, challenges the consensus, and makes sense of the future. Our focus is on China – one of the most misunderstood economies in the world, but one of the most important to figure out.  Enodo’s chief economist, Diana Choyleva, has been analysing China for almost 20 years, while Enodo’s team boasts a combined 140 years’ experience covering China’s economy, politics and markets. 

Macroeconomics

<h2>China News That Matters</h2><ul>
<li>Exports surge with global virus needs </li>
<li>Bonds and defaults in 2021</li>
<li>Rejuvenate China with rural revitalisation</li>
<li>US blacklists more Chinese firms</li>
<li>US and UK ban Xinjiang “forced labour” products </li>
</ul><div class="content-remarks">In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.</div>

China News That Matters
Exports surge with global virus needs 
Bonds and defaults in 2021
Rejuvenate China with rural revitalisation
US blacklists more Chinese firms
US and UK ban Xinjiang “forced labour” products 
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.

Exports/ Bonds/ Rural/ US-China/ Xinjiang

China Specialist, Auto and Industrial Specialist

Victoria Li

Equity Bottom-Up

We see more risks to the NIO story from the information given NIO Day on 9th Jan. Sooner rather than later, NIO's monthly car delivery would be overtaken by Xpeng and Li Auto - and that would be the start point of its share performance weakness.NIO has no new car model this year. This would be a risk to the company's market share, while Tesla Shanghai's Model Y and Xpeng P5 would definitely gain market share. eT7, the first sedan of NIO to be delivered in 1Q2021, is almost twice as expensive as Xpeng P7, with very close performance and looks. This makes eT7 difficult to have big sales volume.Promised solid-state battery with1000km NEDC range is still under R&amp;D and  would not come until 4Q2020. NIO cars NEDC range would remain shorter than its peers for at least another two years.What exactly NAD could do is unclear. Only information about NAD is that the hardware employed would have 7 times TOPs as Tesla's. While Xpeng's navigated autopilot (NGP) is coming in 1Q2021 with great feedback on its trial version.Second generation battery swap station doubled battery capacity, but the overall station network build-up would remain behind original schedule.

We see more risks to the NIO story from the information given NIO Day on 9th Jan. Sooner rather than later, NIO's monthly car delivery would be overtaken by Xpeng and Li Auto - and that would be the start point of its share performance weakness.NIO has no new car model this year. This would be a risk to the company's market share, while Tesla Shanghai's Model Y and Xpeng P5 would definitely gain market share. eT7, the first sedan of NIO to be delivered in 1Q2021, is almost twice as expensive as Xpeng P7, with very close performance and looks. This makes eT7 difficult to have big sales volume.Promised solid-state battery with1000km NEDC range is still under R&amp;D and  would not come until 4Q2020. NIO cars NEDC range would remain shorter than its peers for at least another two years.What exactly NAD could do is unclear. Only information about NAD is that the hardware employed would have 7 times TOPs as Tesla's. While Xpeng's navigated autopilot (NGP) is coming in 1Q2021 with great feedback on its trial version.Second generation battery swap station doubled battery capacity, but the overall station network build-up would remain behind original schedule.

Equity Research in HK and Mainland China

Li Tang

Thematic (Sector/Industry)

Ministry of Finance released the NEV subsidy program for 2021, cutting them by 20% compared to the 2020 level for private purchases Xinhua reported. The subsidy for NEVs designated for public sector use, including buses, taxi, logistics, postal vehicles and public fleets, will be cut by 10% in 2021 from the 2020 level, coming into effect on 1 January 2021. The subsidies are dependent on a range of indicators including driving range and battery density.
<div>
China has bet big on NEVs as a strategically important industry, the government has five essential policy support tools for NEVs include reduced taxes, direct subsidies to manufacturers, consumer subsidies, mandated government procurements.
We are still positive on NEV makers (<a href="https://www.smartkarma.com/entities/li-auto-inc" target="_blank" rel="noopener">Li Auto Inc. (LI US)</a> , <a href="https://www.smartkarma.com/entities/nio-inc" target="_blank" data-smartkarma-citation="entities:27399:1" rel="noopener">NIO Inc (NIO US)</a> and <a href="https://www.smartkarma.com/entities/xpeng-motors" target="_blank" data-smartkarma-citation="entities:29217:1" rel="noopener">Xpeng Motors (XPEV US)</a>) and NEV charging infrastructure (<a href="https://www.smartkarma.com/entities/china-titans-energy-technology-group-co" target="_blank" data-smartkarma-citation="entities:3953:1" rel="noopener">China Titans Energy Technology Group Co (2188 HK)</a> ,  <a href="https://www.smartkarma.com/entities/ten-pao-group-holdings-ltd" target="_blank" data-smartkarma-citation="entities:27241:1" rel="noopener">Ten Pao Group Holdings Ltd (1979 HK)</a> as both segments stand to gain from an improvement in NEV sales after NEV sales lagged the recovery in traditional auto sales, and with local governments providing various support measures.
</div>

Ministry of Finance released the NEV subsidy program for 2021, cutting them by 20% compared to the 2020 level for private purchases Xinhua reported. The subsidy for NEVs designated for public sector use, including buses, taxi, logistics, postal vehicles and public fleets, will be cut by 10% in 2021 from the 2020 level, coming into effect on 1 January 2021. The subsidies are dependent on a range of indicators including driving range and battery density.

China has bet big on NEVs as a strategically important industry, the government has five essential policy support tools for NEVs include reduced taxes, direct subsidies to manufacturers, consumer subsidies, mandated government procurements.
We are still positive on NEV makers (Li Auto Inc. (LI US) , NIO Inc (NIO US) and Xpeng Motors (XPEV US)) and NEV charging infrastructure (China Titans Energy Technology Group Co (2188 HK) ,  Ten Pao Group Holdings Ltd (1979 HK) as both segments stand to gain from an improvement in NEV sales after NEV sales lagged the recovery in traditional auto sales, and with local governments providing various support measures.


China Will Reduce Its Subsidies for Regular New Energy Vehicles by 20% in 2021

With the start of the delivery of local produced Model Y, sales NIO ES6 and EC6 might decline  in short term, in our view. Model Y's sales prices were announced at Rmb339.9k and above, on 1st Jan 2021, which is lower than NIO's corresponding models, but with better features. Also, Tesla has the best electric control system and battery quality among all the peers based on users' feedback.We also noticed some NIO customers who ordered EC6 were seeking for order cancellation on the same day and switching to Model Y. It would be a tough year for NIO.We suggest to sell NIO

With the start of the delivery of local produced Model Y, sales NIO ES6 and EC6 might decline  in short term, in our view. Model Y's sales prices were announced at Rmb339.9k and above, on 1st Jan 2021, which is lower than NIO's corresponding models, but with better features. Also, Tesla has the best electric control system and battery quality among all the peers based on users' feedback.We also noticed some NIO customers who ordered EC6 were seeking for order cancellation on the same day and switching to Model Y. It would be a tough year for NIO.We suggest to sell NIO

NIO: Will It Survive the Fight with Tesla?

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Tianneng Power International / Equity Bottom-Up

On the 9 November 2018, <a href="https://www.smartkarma.com/entities/tianneng-power-intl-ltd" target="_blank" data-smartkarma-citation="entities:18978:1" rel="noopener">Tianneng Power Intl (819 HK)</a> ("TPI") <a href="http://www3.hkexnews.hk/listedco/listconews/SEHK/2018/1109/LTN201811091011.pdf" target="_blank" rel="noopener">announced</a> the possible spin-off and separate listing of Tianneng Battery Group ("TBG"). This is the same entity TPI attempted to list back in <a href="http://www3.hkexnews.hk/listedco/listconews/SEHK/2015/1123/LTN20151123195.pdf" target="_blank" rel="noopener">November 2015</a>. 
Further announcements followed, culminating in a circular to shareholders on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0624/ltn201906241058.pdf" target="_blank" rel="noopener">24 June 2019</a> seeking shareholder approval to list TBG on the Science and Technology Innovation Board of the Shanghai Stock Exchange - better known as the Star Market. That approval was received at an EGM on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0712/ltn20190712674.pdf" target="_blank" rel="noopener">12 July 2019</a>. 
A <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2019/1230/2019123001609.pdf" target="_blank" rel="noopener">December 2019</a> announcement discussed the potential to raise RMB3.6bn from the listing. 
Finally, on the <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0706/2020070602268.pdf" target="_blank" rel="noopener">6 July</a>, the Star Market listing committee approved the listing. This week, TPI announced that proposed A-share listing on the Star Board has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1215/2020121501202.pdf" target="_blank" rel="noopener">approved</a> by the CSRC.
The majority of TPI's assets and earnings are sourced from TBG. Shares gained 17% on the CSRC approval news and are now up 180% in the past 12 months. Is there more left in the tank?
More below the fold.

On the 9 November 2018, Tianneng Power Intl (819 HK) ("TPI") announced the possible spin-off and separate listing of Tianneng Battery Group ("TBG"). This is the same entity TPI attempted to list back in November 2015. 
Further announcements followed, culminating in a circular to shareholders on the 24 June 2019 seeking shareholder approval to list TBG on the Science and Technology Innovation Board of the Shanghai Stock Exchange - better known as the Star Market. That approval was received at an EGM on the 12 July 2019. 
A December 2019 announcement discussed the potential to raise RMB3.6bn from the listing. 
Finally, on the 6 July, the Star Market listing committee approved the listing. This week, TPI announced that proposed A-share listing on the Star Board has been approved by the CSRC.
The majority of TPI's assets and earnings are sourced from TBG. Shares gained 17% on the CSRC approval news and are now up 180% in the past 12 months. Is there more left in the tank?
More below the fold.

Tianneng (819 HK): Battery Spin-Off And The Tesla Effect

China

NIO Inc. manufactures and sells automobiles. The Company offers electric vehicles and parts, as well as provides battery charging services. NIO serves customers worldwide.

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NIO (NIO US)

Exports/ Bonds/ Rural/ US-China/ Xinjiang

In my weekly digest, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and...

Diana Choyleva

NIO: NIO Day Unveils Downside Risks

We see more risks to the NIO story from the information given NIO Day on 9th Jan. Sooner rather than later, NIO's monthly car delivery would be...

Victoria Li

China Will Reduce Its Subsidies for Regular New Energy Vehicles by 20% in 2021

China Cuts Nev Subsidy in 2021,looking ahead from a policy perspective, removing local subsidies after 2022 should lead to greater consolidation in...

Li Tang

NIO: Will It Survive the Fight with Tesla?

With the start of the delivery of local produced Model Y, sales NIO ES6 and EC6 might decline in short term, in our view. Model Y's sales prices...

Victoria Li

Tianneng (819 HK): Battery Spin-Off And The Tesla Effect

The Star Market will welcome another battery manufacturer, one that is an up & coming supplier of lithium batteries, and one that promotes and...

David Blennerhassett

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