The 2014 All-China Research Team: Public Utilities, No. 1: Pierre Lau
Pierre LauCitiFirst-Place Appearances: 5
Total Appearances: 5
Analyst Debut: 2010Pierre Lau is the undefeated champion in covering China’s public utilties stocks. The Citi researcher — along with colleague Kam Keung (Oscar) Choi, who reports on Real Estate names, and Morgan Stanley’s Bin Li, who monitors the Health Care sector — stand out among all ranked analysts for having turned in sector-topping performances every year since 2010, when Institutional Investor launched the All-China Research Team. Clients praise Lau, 44, for expanding his coverage to include power grid equipment providers and increasing the frequency of his investor day trips to power plants and other industry sites. “Pierre has been extremely useful with his depth of contacts and comprehensive understanding and interpretation of events,” says one fund manager. “He is also friendly and approachable.” The Hong Kong–based researcher reports on 24 Chinese public utilities companies — four more than a year ago — and reversed himself on Beijing’s Huadian Power International Corp. in July 2013. He elevated the stock from sell to buy, at HK$2.96, in part on a price correction — Huadian was down 29.4 percent since Lau reduced its rating from buy that May and lagged its peers by 20.9 percentage points. He also noted that unit coal costs were easing and risks from tariff cuts were moderating. The shares traded within a range for many months, rising to HK$3.49 two weeks after his upgrade before settling to HK$2.96 in March, then they turned positive. By late last month, Huadian Power had soared to HK$6.28, for a gain of 112.2 percent that trounced the sector by 89.6 percentage points. For the future, Lau favors China Resources Power Holdings Co., a Hong Kong–based coal-fired powerplant operator whose parent company, China Resources (Holdings) Co., is a stated-owned enterprise. Underpinning his positive outlook are the company’s high net power generation volume and the April appointment of a new chairman for the holding company. Fu Yuning replaced Song Lin, whom the Communist Party removed from his post and placed under investigation for unspecified allegations of wrongdoing. The stock closed at HK$20.40 in late November, and Lau forecasts a rise to HK$29. His “long experience in the sector gives him a unique knowledge of industry cycles and government policies that we find most helpful,” reports another backer.