China – Electrical Equipment theme (Jan 7, 2021)

Let’s start with a sector leadership comparison in China (Jan 7, 2021):

The highlighted sectors are the ones where leadership continues to stay and would have resulted in great gains for the investors. I highlighted one such theme (Beverages) in November 2020 – link here.

There has been a sector rotation in the last 3 months and hence new leaders have emerged in the picture. With reflation and economic growth narrative, it’s reasonable to see Metals and Paper jump into the mix of sectors.

In this note, I’ll cover a few names in Electrical Equipment theme, most of these names can also be subclassified into battery/alternate energy.

  • You’ll notice that all stocks are extended, so it would be prudent to wait for a collective intermediate-term pull back from recent bounces to start accumulating.
  • Short-term traders can still potentially reap quick returns as they can manage their risk when the market turns.

Theme: Electrical equipment (Jan 7, 2021)

Eve Energy (300014.SZ): The company is primarily in the business of producing Lithium batteries. It went parabolic recently, worth keeping an eye on.

  • Decent ROIC @ 10-20% in last 10 years

Contemporary Amperex Technology (300750.SZ): It produces EV battery and energy storage battery systems. Fundamentally, undoubtedly impressive revenue and net income growth over the years. Declining ROE and ROIC might potentially cap future returns. Nonetheless, a good one to keep on watchlist if the sector consolidates a bit.

Sungrow Power (300274.SZ): It sells renewable solar and wind-powered products in China. Looking at the financials, it is no surprise why it is an investor favorite in this space. Very extended short term, another name for watchlist to buy on consolidation.

Ginlong Tech (300763.SZ): Involved in sales and service of core inverters for distributed photovoltaic power generation systems.

  • Youngest company in this article (IPO’d last year); much higher growth rate for revenues and income
  • TTM ROIC @ 27%

Charts sourced from aastocks.comFundamentals from

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: This is not investment advice, please do your research before committing capital.

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