China Suntien Green Energy: Largest Distributor of Natural Gas in Northeastern China

Vincent Lam presented his in-depth investment thesis on China Suntien Green Energy (Hong Kong: 956) at Wide-Moat Investing Summit 2013.

The Bottom Line: Largest distributor of natural gas in northeastern China. To benefit from the need for a “greener” China (natural gas share of total primary energy consumption in China is only ~5%; coal is ~70%). Moat due to: 1) permanent operating rights: unlike water treatment and waste power plants which are typically build-operate-transfer projects, China Suntien’s piped natural gas and wind farm operations have permanent operating franchises which can be renewed indefinitely after the first operating rights (typically 30 years) expire; and 2) strategic location: better positioned compared with other wind farm operators, as its wind farms are closer to industrial areas in urgent need of electricity. Trades at 1.3x book and 12x 2013 EPS versus natural gas rivals(2-4x book, 13-20x P/E) and wind farm rivals (1-2x book, 17-19x P/E).

About the instructor:

Vincent Lam is the Founder and Chief Investment Officer of VL Asset Management Limited, which seeks to grow investors’ wealth using its “value-investing with catalysts” strategies and tested stock selection skills. Vincent has close to 20 years’ experience in financial analysis and research and portfolio management in the Hong Kong and China stock markets. Prior to forming the current company, he was Managing Director of Ramius Capital Asia Limited, responsible for their Asian event-driven portfolio. Before Ramius, he served at Quam Asset Management Limited as Chief Investment Officer. Vincent has written several books on value investing in the Chinese language and was a guest lecturer at the Open University of Hong Kong teaching a course on value investing. He is one of top five money managers featured in the book titled Money Masters written in 2005 by Tony Choi, a veteran investment and business executive in Hong Kong (the other managers described include Mr. V-Nee Yeh of Value Partners). Vincent has an EMBA degree from Richard Ivey School of Business, Canada, and a Bachelor’s degree in SSc (Economics) from The Chinese University of Hong Kong.

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