Category

Utilities Sector

Brief Utlilities: Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend
  2. HK Connect Ideas: Tencent Inflows and Geely Outflows (2019-05-10)
  3. HK Connect Ideas – April Snapshot (WH Group, Ping An, Geely)
  4. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)

1. Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend

Valuation%20comp%20may%2014%202019

Xinyi Energy, the subsidiary holding solar assets of Xinyi Solar Holdings (968 HK), started book building today. In our previous insights, we have discussed the company’s fundamentals, and the valuation based on future cash flow. In this insight, we will provide our final view on the deal.

Our previous coverage on Xinyi Energy

2. HK Connect Ideas: Tencent Inflows and Geely Outflows (2019-05-10)

Geely automobile holdings limited %28175 hk%29 daily southbound inflow

In our weekly HK Connect Ideas series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting trade ideas. 

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

In this insight, we will highlight that the recent inflow into Tencent (700 HK) was particularly strong while Geely experienced continuous outflows by mainland investors at the backdrop of a weak passenger vehicle market in China. 

3. HK Connect Ideas – April Snapshot (WH Group, Ping An, Geely)

Hscei%20outflow%2004 30

This is a monthly version of our HK Connect Ideas weekly note, in which I highlight Hong Kong-listed companies leading the southbound flow on a weekly basis. Over the past month, we have seen a stronger inflow vs a month ago. Chinese investors were buying WH Group and Ping An Insurance stocks and selling Geely.

Our April Coverage of Hong Kong Connect southbound flow

4. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)

Dcf%20sensitivity%20may%206th%20

After its failed IPO attempt in last December, Xinyi Energy re-file for listing in Hong Kong. In our previous two insights (links provided below), we discuss the company’s fundamentals and our thoughts on the deal. In this insight, we will look at new numbers provided in the refiled prospectus and provide an update on the development of the solar industry in China.


Our previous coverage on Xinyi Energy

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Utlilities: ECM Weekly (25 May 2019) – ESR Cayman, Hansoh Pharma, Tai Hing, China East Edu, Haitong UniTrust and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. ECM Weekly (25 May 2019) – ESR Cayman, Hansoh Pharma, Tai Hing, China East Edu, Haitong UniTrust
  2. SPINOFF:  Xinyi Solar Spinoff of Xinyi Energy
  3. SPINOFF: Haitong Securities Spinoff of Haitong UniTrust Int’l Leasing
  4. U.S. Equity Strategy: Neutral Outlook; Opportunities Within Staples and Utilities
  5. M&A LNG Theme Back in the Spotlight with Total’s Entry in Mozambique LNG

1. ECM Weekly (25 May 2019) – ESR Cayman, Hansoh Pharma, Tai Hing, China East Edu, Haitong UniTrust

Upcoming

Aequitas Research puts out a weekly update on the deals that have been covered by Smartkarma Insight Providers recently, along with updates for upcoming IPOs.

This will be the third week in a row we are saying: there are more IPOs coming in Hong Kong!Momentum seems to be holding up as we head into the end of Q2. First off, there will be 4 IPOs starting to trade throughout next week. Mulsanne Group Holding Ltd (1817 HK) will debut first on Monday.

This would be interesting to watch because the IPO utilized the new pricing mechanism in Hong Kong to price its IPO below the bottom end of its indicated price range rather than withdraw and refile. This mechanism reminds us of the pricing flexibility of US IPOs wherein companies could price below its indicative price range to ensure that it performs well on its debut despite poor demand during bookbuild. Xinyi Energy Holdings Ltd (3868 HK), Frontage Holdings (1521 HK), and MabPharm (2181 HK) will trade on Tuesday, Thursday, and Friday respectively.

For upcoming bookbuilds, Tai Hing (1719303D HK) and China Tobacco International (GHALPZ CH) have filed their PHIP this week and will be likely be opening their books next week. We are also hearing that CSSC Hong Kong Shipping Co Ltd (0931049D CH) and China East Education (EASTEDU HK) will open books on Monday while Hansoh Pharmaceutical (HANSOH HK) will be on Tuesday.

IPO activity in other countries have been fairly muted. Eagle Hospitality Trust (EAGLEHT SP)  finally started trading in Singapore. Its share price closed 6% down as the IPO was undersubscribed. We will leave the updates on the IPO to Sumeet Singh on Monday.

In the U.S, GSX Techedu (GSX US) will launch its book next week while Meten (MEDU US) which just filed its US$100m IPO with the SEC will be premarketing next week.

Accuracy Rate:

Our overall accuracy rate is 72.4% for IPOs and 63.9% for Placements 

(Performance measurement criteria is explained at the end of the note)

New IPO filings

  • Sinic Holdings (Hong Kong, >US$100m)
  • Meten International Edu (the U.S, US$100m)

Below is a snippet of our IPO tool showing upcoming events for the next week. The IPO tool is designed to provide readers with timely information on all IPO related events (Book open/closing, listing, initiation, lock-up expiry, etc) for all the deals that we have worked on. You can access the tool here or through the tools menu.

Source: Aequitas Research, Smartkarma

News on Upcoming IPOs

Analysis on Upcoming IPOs

NameInsight
Hong Kong
AB InbevAb InBev Asia Pre-IPO – A Brief History of the Asia Pacific Operations – Eeking Out Growth in China
AB InbevAb InBev Asia Pre-IPO – Quick Note – More like CR Beer Rather than Tsingtao
AB InbevAb InBev Asia Pre-IPO – On Its Way to Potentially Being the Biggest HK IPO This Year
AB Inbev

Budweiser Brewing APAC Pre-IPO – It Will Be a US$5bn+ Raise Owing to Its Clean Balance Sheet

AscentageAscentage Pharma (亚盛医药) IPO: Too Early for an IPO
Ant FinancialAnt Financial IPO Early Thought: Understand Fintech Empire, Growth & Risk Factors
CIMC VehCIMC Vehicle (中集车辆): Market Leader of Semi-Trailers but Little Growth Ahead
ClarityClarity Medical (清晰医疗) IPO: Proxy to HK SMILE Surgery Demand
ByteDance

ByteDance (字节跳动) IPO: How Jinri Toutiao Paves The Way for a Bigger Empire (Part 1)

ByteDance

ByteDance (字节跳动) IPO: Tiktok the No.1 Short Video App for a Good Reason (Part 2)

East EduChina East Education (中国东方教育) Pre-IPO – The Company Known for Its Culinary School
China TobacChina Tobacco International (IPO): The Monopolist Will Not Recover
China TobacChina Tobacco Intl (HK) IPO: Proxy For the Chinese Cigarette Consumption
CSSCCSSC (HK) Shipping IPO: A Cyclical Business Masked as an Income Stock
ESRESR Cayman Pre-IPO – A Giant in the Making
ESR

ESR Cayman Pre-IPO – Earnings and Segment Analysis 

ESR

ESR Cayman Pre-IPO- First Stab at Valuation

ESR

ESR Cayman Pre-IPO – Updates from PHIP – Growth Remains on Track 

ESR

ESR Cayman Pre-IPO – Updated Valuation and Key Risks

ESR

ESR Cayman Pre-IPO – Peer Comparison Quick Take – Bigger than Some, Much Smaller than Others 

Hansoh

Hansoh Pharma (翰森制药) IPO: New Numbers, Pre-IPO Dividend and Boyu Investment (Part 3)

Hansoh

Hansoh Pharma (翰森制药) IPO: Thoughts on Valuation

Hansoh

Hansoh Pharma (翰森制药) IPO: Competitive Landscape of HS-10296

Helenbergh

Helenbergh (海伦堡) Early Thoughts – The Usual Red Flag – Related Party Transactions

Hut Chi-Med

Hutchison-China Med (和黄医药) H-Share Listing: MNC Partnerships Endorsed Its R&D Capabilities

Jinxin

Jinxin Fertility (锦欣生殖) Pre-IPO: Strong Foothold in Sichuan but Weak Sentiment for Sector

MicuRxMicuRx Pharma (盟科医药) IPO: Betting on Single Drug in the Not so Attractive Antibiotic Segment
MabPharmMabPharma (迈博医药) IPO: Assembled for a Trade?
MabPharmMabPharm (迈博医药) IPO: Thoughts on Valuation (Part 2)
SH Henlius

Shanghai Henlius (复宏汉霖) IPO: Not an Impressive Biosimilar Portfolio 

TubatuTubatu Group Pre-IPO – Performing Better than Qeeka but Growing Much Slower, US$1bn a Stretch
TubatuTubatu Group Pre-IPO – Online -> Online + Offline -> Online -> ?
South Korea
KMH ShillaKMH Shilla Leisure IPO Preview (Part 1) – Highly Profitable Operator of Public Golf Courses in Korea
KMH ShillaKMH Shilla Leisure IPO Preview (Part 2) – Valuation Analysis
Plakor

Plakor IPO Preview (Part 1)

ZinusZinus IPO Preview (Part 1) – An Amazing Comeback Story (#1 Mattress Brand on Amazon)
India
Aakash EduAakash Education Pre-IPO – Fast Growth in an Attractive Sector
Anmol IndAnmol Industries Pre-IPO Quick Take – No Growth, Generous Payments to Founders
Bharat Hotels

Bharat Hotels Pre-IPO – Catching up with Peers 

CMS InfoCMS Info Systems Pre-IPO – When a PE Sells to Another PE… Only One Gets the Timing Right
Crystal CropCrystal Crop Protection Pre-IPO – DRHP Raises More Questions than in Answers
Flemingo Flemingo Travel Retail Pre-IPO – Its a Different Business in Every Country
NSENSE IPO Preview- Not Only Fast..its Risky and Expensive
NSENational Stock Exchange Pre-IPO Review – Bigger, Better, Stronger but a Little Too Fast for Some
MazagonMazagon Dock IPO Preview: A Monopoly Submarine Yard in India with Captive Navy Spending
Mrs. BectorMrs. Bectors Food Specialities Pre-IPO Quick Take – Sales for Its Main Segment Have Been Sta

Lodha

Lodha Developers Pre-IPO – Second Time Lucky but Not Really that Much Affordable
LodhaLodha Developers IPO: Presence in Affordable Segment Saves Lodha the Blushes in a Sluggish Mkt
IndiaMartIndiaMART Pre-IPO – Getting and Retaining Subscribers Seems to Be Difficult
PNB MetPNB Metlife Pre-IPO Quick Take – Doesn’t Stack up Well Versus Its Larger Peers
Malaysia
QSRQSR Brands Pre-IPO – As Healthy as Fast Food
The U.S
DouyuDouyu (斗鱼直播) IPO: Leader At a Cost
DouyuDouyu (斗鱼直播) IPO: Comparison with Huya (Part 2)
GSXGSX Techedu (跟谁学) IPO Early Thoughts – Successful Pivot Away from Marketplace Model
MetenMeten International Edu (美联国际教育) Early Thoughts – Unclear Strategies

2. SPINOFF:  Xinyi Solar Spinoff of Xinyi Energy

Xinyi%20stub

XSH is spinning off its subsidiary Xinyi Energy Holdings Ltd (3868 HK).

According to the prospectus, XEH will issue 1.88bn – or up to 2.165bn (inclusive of the over-allotment) new shares, at an issue price between HK$1.89-$2.35/share, raising US$456mn-US$652mn. After the listing, XSH will hold ~53.7%. 

My interest is whether these spin-offs create new parent/subsidiary relationships leading to relative value trade ideas going forward, which will be dependent on the spin-off’s liquidity and the % market cap held by the parent.

Using available information from the prospectus/red herrings and various HKEx announcements, it is also possible to back out a rudimentary implied stub value of the unlisted parent’s operations ahead of these spin-offs.

At between 35-45% of Xinyi Solar market cap, this will be a new Holdco/subsidiary relationship to follow, depending on XEH’s volume.

Discussion of the spinoff and stub valuations continues below.

3. SPINOFF: Haitong Securities Spinoff of Haitong UniTrust Int’l Leasing

Haitongspinoff

A number of Hong Kong spin-offs, including  Haitong UniTrust International Leasing Co Ltd (1905 HK) and Xinyi Energy Holdings Ltd (3868 HK), have been announced recently. Clicking on the company names will take you to a home page providing a list of recent insights by various Smartkarma contributors.

There are other situations where they have been announced but conditions (approvals, market conditions) are unmet and they may never arrive.

My interest is whether these spin-offs create new parent/subsidiary relationships leading to relative value trade ideas going forward, which will be dependent on the spin-off’s liquidity and the % market cap held by the parent.

Using available information from the prospectus/red herrings and various HKEx announcements, it is also possible to back out a rudimentary implied stub value of the unlisted parent’s operations ahead of these spin-offs.

The first to be addressed is Haitong Securities’ spin-off of Haitong UniTrust International Leasing.

4. U.S. Equity Strategy: Neutral Outlook; Opportunities Within Staples and Utilities

Untitled

In last week’s Compass (5/14) we laid our case for a more cautious outlook as a result of several negative developments, including breakdowns for EM (EEM) and China (MCHI, FXI), steep price and RS uptrend violations for Technology (XLK, RYT), improving RS for defensive areas of the market, and weakness in copper. Our outlook remains neutral. In today’s report we highlight attractive Groups and stocks within Consumer Staples and Utilities.

5. M&A LNG Theme Back in the Spotlight with Total’s Entry in Mozambique LNG

Picture5

This insight has been produced in collaboration with Anish Kapadia as a joint effort of the Smartkarma Energy and Commodities Team.

With the acquisition of Anadarko Petroleum (APC US) ’s African assets from Occidental Petroleum (OXY US) for $8.8bn, Total Sa (FP FP) is adding a new LNG export position in East Africa to its growing global LNG portfolio. The acquired assets also include high-quality low cost producing fields offshore Ghana.

Total has been one of the most aggressive oil majors pursuing countercyclical upstream M&A during the oil downturn to expand its resource base at low cost. Is the French major paying a reasonable price for Anadarko’s assets?

The ongoing “re-gasification” of the oil majors’ portfolios is underpinning a growing interest among LNG buyers and portfolio players for quality LNG assets. Total’s entry in the prolific East Africa gas play is the latest example highlighting the LNG “theme” as one of the main strategic drivers of recent and likely future M&A activity in the oil and gas industry.

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Utlilities: HK Connect Ideas: Tencent Inflows and Geely Outflows (2019-05-10) and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. HK Connect Ideas: Tencent Inflows and Geely Outflows (2019-05-10)
  2. HK Connect Ideas – April Snapshot (WH Group, Ping An, Geely)
  3. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)

1. HK Connect Ideas: Tencent Inflows and Geely Outflows (2019-05-10)

Geely automobile holdings limited %28175 hk%29 daily southbound inflow

In our weekly HK Connect Ideas series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting trade ideas. 

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

In this insight, we will highlight that the recent inflow into Tencent (700 HK) was particularly strong while Geely experienced continuous outflows by mainland investors at the backdrop of a weak passenger vehicle market in China. 

2. HK Connect Ideas – April Snapshot (WH Group, Ping An, Geely)

Hscei%20outflow%2004 30

This is a monthly version of our HK Connect Ideas weekly note, in which I highlight Hong Kong-listed companies leading the southbound flow on a weekly basis. Over the past month, we have seen a stronger inflow vs a month ago. Chinese investors were buying WH Group and Ping An Insurance stocks and selling Geely.

Our April Coverage of Hong Kong Connect southbound flow

3. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)

Dcf%20sensitivity%20may%206th%20

After its failed IPO attempt in last December, Xinyi Energy re-file for listing in Hong Kong. In our previous two insights (links provided below), we discuss the company’s fundamentals and our thoughts on the deal. In this insight, we will look at new numbers provided in the refiled prospectus and provide an update on the development of the solar industry in China.


Our previous coverage on Xinyi Energy

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Utlilities: SPINOFF:  Xinyi Solar Spinoff of Xinyi Energy and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. SPINOFF:  Xinyi Solar Spinoff of Xinyi Energy
  2. SPINOFF: Haitong Securities Spinoff of Haitong UniTrust Int’l Leasing
  3. U.S. Equity Strategy: Neutral Outlook; Opportunities Within Staples and Utilities
  4. M&A LNG Theme Back in the Spotlight with Total’s Entry in Mozambique LNG
  5. Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend

1. SPINOFF:  Xinyi Solar Spinoff of Xinyi Energy

Xinyi%20stub

XSH is spinning off its subsidiary Xinyi Energy Holdings Ltd (3868 HK).

According to the prospectus, XEH will issue 1.88bn – or up to 2.165bn (inclusive of the over-allotment) new shares, at an issue price between HK$1.89-$2.35/share, raising US$456mn-US$652mn. After the listing, XSH will hold ~53.7%. 

My interest is whether these spin-offs create new parent/subsidiary relationships leading to relative value trade ideas going forward, which will be dependent on the spin-off’s liquidity and the % market cap held by the parent.

Using available information from the prospectus/red herrings and various HKEx announcements, it is also possible to back out a rudimentary implied stub value of the unlisted parent’s operations ahead of these spin-offs.

At between 35-45% of Xinyi Solar market cap, this will be a new Holdco/subsidiary relationship to follow, depending on XEH’s volume.

Discussion of the spinoff and stub valuations continues below.

2. SPINOFF: Haitong Securities Spinoff of Haitong UniTrust Int’l Leasing

Haitongspinoff

A number of Hong Kong spin-offs, including  Haitong UniTrust International Leasing Co Ltd (1905 HK) and Xinyi Energy Holdings Ltd (3868 HK), have been announced recently. Clicking on the company names will take you to a home page providing a list of recent insights by various Smartkarma contributors.

There are other situations where they have been announced but conditions (approvals, market conditions) are unmet and they may never arrive.

My interest is whether these spin-offs create new parent/subsidiary relationships leading to relative value trade ideas going forward, which will be dependent on the spin-off’s liquidity and the % market cap held by the parent.

Using available information from the prospectus/red herrings and various HKEx announcements, it is also possible to back out a rudimentary implied stub value of the unlisted parent’s operations ahead of these spin-offs.

The first to be addressed is Haitong Securities’ spin-off of Haitong UniTrust International Leasing.

3. U.S. Equity Strategy: Neutral Outlook; Opportunities Within Staples and Utilities

Untitled

In last week’s Compass (5/14) we laid our case for a more cautious outlook as a result of several negative developments, including breakdowns for EM (EEM) and China (MCHI, FXI), steep price and RS uptrend violations for Technology (XLK, RYT), improving RS for defensive areas of the market, and weakness in copper. Our outlook remains neutral. In today’s report we highlight attractive Groups and stocks within Consumer Staples and Utilities.

4. M&A LNG Theme Back in the Spotlight with Total’s Entry in Mozambique LNG

Picture5

This insight has been produced in collaboration with Anish Kapadia as a joint effort of the Smartkarma Energy and Commodities Team.

With the acquisition of Anadarko Petroleum (APC US) ’s African assets from Occidental Petroleum (OXY US) for $8.8bn, Total Sa (FP FP) is adding a new LNG export position in East Africa to its growing global LNG portfolio. The acquired assets also include high-quality low cost producing fields offshore Ghana.

Total has been one of the most aggressive oil majors pursuing countercyclical upstream M&A during the oil downturn to expand its resource base at low cost. Is the French major paying a reasonable price for Anadarko’s assets?

The ongoing “re-gasification” of the oil majors’ portfolios is underpinning a growing interest among LNG buyers and portfolio players for quality LNG assets. Total’s entry in the prolific East Africa gas play is the latest example highlighting the LNG “theme” as one of the main strategic drivers of recent and likely future M&A activity in the oil and gas industry.

5. Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend

Valuation%20comp%20may%2014%202019

Xinyi Energy, the subsidiary holding solar assets of Xinyi Solar Holdings (968 HK), started book building today. In our previous insights, we have discussed the company’s fundamentals, and the valuation based on future cash flow. In this insight, we will provide our final view on the deal.

Our previous coverage on Xinyi Energy

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Utlilities: Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3) and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)

1. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)

Dcf%20sensitivity%20may%206th%20

After its failed IPO attempt in last December, Xinyi Energy re-file for listing in Hong Kong. In our previous two insights (links provided below), we discuss the company’s fundamentals and our thoughts on the deal. In this insight, we will look at new numbers provided in the refiled prospectus and provide an update on the development of the solar industry in China.


Our previous coverage on Xinyi Energy

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Utlilities: Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3) and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)
  2. HK Connect Ideas: Longest Streak of Weekly Inflows YTD (2019-04-18)

1. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)

Dcf%20sensitivity%20may%206th%20

After its failed IPO attempt in last December, Xinyi Energy re-file for listing in Hong Kong. In our previous two insights (links provided below), we discuss the company’s fundamentals and our thoughts on the deal. In this insight, we will look at new numbers provided in the refiled prospectus and provide an update on the development of the solar industry in China.


Our previous coverage on Xinyi Energy

2. HK Connect Ideas: Longest Streak of Weekly Inflows YTD (2019-04-18)

Hscei%20inflow%2004 22

In our weekly HK Connect Ideas series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting trade ideas. 

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

In this insight, we will highlight that the recent inflow into Tencent (700 HK) has not suggested that the Southbound sentiment returned to the previous peak prior to tightening of mobile game approval. 

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Utlilities: U.S. Equity Strategy: Neutral Outlook; Opportunities Within Staples and Utilities and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. U.S. Equity Strategy: Neutral Outlook; Opportunities Within Staples and Utilities
  2. M&A LNG Theme Back in the Spotlight with Total’s Entry in Mozambique LNG
  3. Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend
  4. HK Connect Ideas: Tencent Inflows and Geely Outflows (2019-05-10)
  5. HK Connect Ideas – April Snapshot (WH Group, Ping An, Geely)

1. U.S. Equity Strategy: Neutral Outlook; Opportunities Within Staples and Utilities

Untitled

In last week’s Compass (5/14) we laid our case for a more cautious outlook as a result of several negative developments, including breakdowns for EM (EEM) and China (MCHI, FXI), steep price and RS uptrend violations for Technology (XLK, RYT), improving RS for defensive areas of the market, and weakness in copper. Our outlook remains neutral. In today’s report we highlight attractive Groups and stocks within Consumer Staples and Utilities.

2. M&A LNG Theme Back in the Spotlight with Total’s Entry in Mozambique LNG

Picture5

This insight has been produced in collaboration with Anish Kapadia as a joint effort of the Smartkarma Energy and Commodities Team.

With the acquisition of Anadarko Petroleum (APC US) ’s African assets from Occidental Petroleum (OXY US) for $8.8bn, Total Sa (FP FP) is adding a new LNG export position in East Africa to its growing global LNG portfolio. The acquired assets also include high-quality low cost producing fields offshore Ghana.

Total has been one of the most aggressive oil majors pursuing countercyclical upstream M&A during the oil downturn to expand its resource base at low cost. Is the French major paying a reasonable price for Anadarko’s assets?

The ongoing “re-gasification” of the oil majors’ portfolios is underpinning a growing interest among LNG buyers and portfolio players for quality LNG assets. Total’s entry in the prolific East Africa gas play is the latest example highlighting the LNG “theme” as one of the main strategic drivers of recent and likely future M&A activity in the oil and gas industry.

3. Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend

Valuation%20comp%20may%2014%202019

Xinyi Energy, the subsidiary holding solar assets of Xinyi Solar Holdings (968 HK), started book building today. In our previous insights, we have discussed the company’s fundamentals, and the valuation based on future cash flow. In this insight, we will provide our final view on the deal.

Our previous coverage on Xinyi Energy

4. HK Connect Ideas: Tencent Inflows and Geely Outflows (2019-05-10)

Geely automobile holdings limited %28175 hk%29 daily southbound inflow

In our weekly HK Connect Ideas series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting trade ideas. 

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

In this insight, we will highlight that the recent inflow into Tencent (700 HK) was particularly strong while Geely experienced continuous outflows by mainland investors at the backdrop of a weak passenger vehicle market in China. 

5. HK Connect Ideas – April Snapshot (WH Group, Ping An, Geely)

Hscei%20outflow%2004 30

This is a monthly version of our HK Connect Ideas weekly note, in which I highlight Hong Kong-listed companies leading the southbound flow on a weekly basis. Over the past month, we have seen a stronger inflow vs a month ago. Chinese investors were buying WH Group and Ping An Insurance stocks and selling Geely.

Our April Coverage of Hong Kong Connect southbound flow

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Utlilities: HK Connect Ideas: Longest Streak of Weekly Inflows YTD (2019-04-18) and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. HK Connect Ideas: Longest Streak of Weekly Inflows YTD (2019-04-18)

1. HK Connect Ideas: Longest Streak of Weekly Inflows YTD (2019-04-18)

Hscei%20inflow%2004 22

In our weekly HK Connect Ideas series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting trade ideas. 

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

In this insight, we will highlight that the recent inflow into Tencent (700 HK) has not suggested that the Southbound sentiment returned to the previous peak prior to tightening of mobile game approval. 

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Brief Utlilities: M&A LNG Theme Back in the Spotlight with Total’s Entry in Mozambique LNG and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. M&A LNG Theme Back in the Spotlight with Total’s Entry in Mozambique LNG
  2. Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend
  3. HK Connect Ideas: Tencent Inflows and Geely Outflows (2019-05-10)
  4. HK Connect Ideas – April Snapshot (WH Group, Ping An, Geely)
  5. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)

1. M&A LNG Theme Back in the Spotlight with Total’s Entry in Mozambique LNG

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This insight has been produced in collaboration with Anish Kapadia as a joint effort of the Smartkarma Energy and Commodities Team.

With the acquisition of Anadarko Petroleum (APC US) ’s African assets from Occidental Petroleum (OXY US) for $8.8bn, Total Sa (FP FP) is adding a new LNG export position in East Africa to its growing global LNG portfolio. The acquired assets also include high-quality low cost producing fields offshore Ghana.

Total has been one of the most aggressive oil majors pursuing countercyclical upstream M&A during the oil downturn to expand its resource base at low cost. Is the French major paying a reasonable price for Anadarko’s assets?

The ongoing “re-gasification” of the oil majors’ portfolios is underpinning a growing interest among LNG buyers and portfolio players for quality LNG assets. Total’s entry in the prolific East Africa gas play is the latest example highlighting the LNG “theme” as one of the main strategic drivers of recent and likely future M&A activity in the oil and gas industry.

2. Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend

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Xinyi Energy, the subsidiary holding solar assets of Xinyi Solar Holdings (968 HK), started book building today. In our previous insights, we have discussed the company’s fundamentals, and the valuation based on future cash flow. In this insight, we will provide our final view on the deal.

Our previous coverage on Xinyi Energy

3. HK Connect Ideas: Tencent Inflows and Geely Outflows (2019-05-10)

Geely automobile holdings limited %28175 hk%29 daily southbound inflow

In our weekly HK Connect Ideas series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting trade ideas. 

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

In this insight, we will highlight that the recent inflow into Tencent (700 HK) was particularly strong while Geely experienced continuous outflows by mainland investors at the backdrop of a weak passenger vehicle market in China. 

4. HK Connect Ideas – April Snapshot (WH Group, Ping An, Geely)

Hscei%20outflow%2004 30

This is a monthly version of our HK Connect Ideas weekly note, in which I highlight Hong Kong-listed companies leading the southbound flow on a weekly basis. Over the past month, we have seen a stronger inflow vs a month ago. Chinese investors were buying WH Group and Ping An Insurance stocks and selling Geely.

Our April Coverage of Hong Kong Connect southbound flow

5. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)

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After its failed IPO attempt in last December, Xinyi Energy re-file for listing in Hong Kong. In our previous two insights (links provided below), we discuss the company’s fundamentals and our thoughts on the deal. In this insight, we will look at new numbers provided in the refiled prospectus and provide an update on the development of the solar industry in China.


Our previous coverage on Xinyi Energy

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.



Brief Utlilities: Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend and more

By | Daily Briefs, Utilities Sector

In this briefing:

  1. Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend
  2. HK Connect Ideas: Tencent Inflows and Geely Outflows (2019-05-10)
  3. HK Connect Ideas – April Snapshot (WH Group, Ping An, Geely)
  4. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)
  5. HK Connect Ideas: Longest Streak of Weekly Inflows YTD (2019-04-18)

1. Xinyi Energy (信义能源) IPO: An Overvalued Deal Disguised by High Dividend

Valuation%20comp%20may%2014%202019

Xinyi Energy, the subsidiary holding solar assets of Xinyi Solar Holdings (968 HK), started book building today. In our previous insights, we have discussed the company’s fundamentals, and the valuation based on future cash flow. In this insight, we will provide our final view on the deal.

Our previous coverage on Xinyi Energy

2. HK Connect Ideas: Tencent Inflows and Geely Outflows (2019-05-10)

Southbound weekly inflow %28usd m%29

In our weekly HK Connect Ideas series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting trade ideas. 

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

In this insight, we will highlight that the recent inflow into Tencent (700 HK) was particularly strong while Geely experienced continuous outflows by mainland investors at the backdrop of a weak passenger vehicle market in China. 

3. HK Connect Ideas – April Snapshot (WH Group, Ping An, Geely)

Hscei%20outflow%2004 30

This is a monthly version of our HK Connect Ideas weekly note, in which I highlight Hong Kong-listed companies leading the southbound flow on a weekly basis. Over the past month, we have seen a stronger inflow vs a month ago. Chinese investors were buying WH Group and Ping An Insurance stocks and selling Geely.

Our April Coverage of Hong Kong Connect southbound flow

4. Xinyi Energy (信义能源) IPO: Value the Long Term Cashflow (Part 3)

Dcf%20sensitivity%20may%206th%20

After its failed IPO attempt in last December, Xinyi Energy re-file for listing in Hong Kong. In our previous two insights (links provided below), we discuss the company’s fundamentals and our thoughts on the deal. In this insight, we will look at new numbers provided in the refiled prospectus and provide an update on the development of the solar industry in China.


Our previous coverage on Xinyi Energy

5. HK Connect Ideas: Longest Streak of Weekly Inflows YTD (2019-04-18)

Hscei%20inflow%2004 22

In our weekly HK Connect Ideas series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine, and highlight interesting trade ideas. 

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

In this insight, we will highlight that the recent inflow into Tencent (700 HK) has not suggested that the Southbound sentiment returned to the previous peak prior to tightening of mobile game approval. 

Get Straight to the Source on Smartkarma

Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.