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Milltrust Alert – Selected News and Insights from the Emerging Markets and Around our Business

April 5, 2019

BY Alexander Kalis
MANAGING PARTNER

WHAT YOU NEED TO KNOW – EMERGING MARKETS

Both China and the U.S. made positive noises about progress at this week’s trade talks in Washington. Chinese Vice Premier Liu He who led his country’s negotiations said the two sides had “reached new consensus on such important issues as the text” of a trade agreement, while President Donald Trump talked up the prospects for a “monumental” deal. While pressure is mounting on both sides to end their trade conflict, there are doubts that things will go back to business as usual between the world’s two largest economies.

Stock of the Week

China Longyuan Power Group Limited (SEHK916), or Longyuan Power, is the largest wind power producer in China and Asia. It is mainly engaged in designing, developing, managing and operating wind power plants, and selling the electricity generated by its plants to its sole customers. As of June 2013, the company had installed wind power plants with a total capacity of 10,661 MW. Longyuan Power is a partially owned subsidiary of the state-owned China Guodian Corporation, and is responsible for Guodian’s renewable energy assets. It had a 24 percent share of China’s wind power market in terms of total installed capacity as of the end of 2008. It was listed on the Hong Kong Stock Exchange as H share in December 2009 with an IPO price of HK$8.16 per share.

The Case for China Longyuan Power Group Corporation Ltd:
These Factors Make China Longyuan Power Group Corporation Limited (HKG:916) An Interesting Investment

WHAT YOU NEED TO KNOW – SUSTAINABLE INVESTMENTS

Chinese solar industry starts to hit grid parity

Breakthrough means photovoltaic sector can compete against coal without subsidies

Solar power will achieve grid parity with coal in 11 of China’s 31 provincial-level administrative units this year, according to Citigroup, potentially allowing the sector to continue its rapid expansion in spite of the slashing of government subsidies.

Beijing temporarily scrapped subsidies for most of China’s solar projects in June last year in a move aimed at curbing runaway growth in the photovoltaic industry, which had boomed under generous subsidies. The industry’s rapid expansion led to a $15bn-plus deficit in a fund set up to pay for higher tariffs for renewable energy.

The end of subsidies caused fears of a sudden slowdown in the roll-out of photovoltaic projects in the world’s largest polluter. China accounted for 29 per cent of global carbon dioxide emissions last year, according to the International Energy Agency, with its emissions having risen 2.5 per cent year-on-year.

However, the earlier-than-expected transition to grid parity — allowing solar power to compete with coal-fired plants with no need of any subsidy — suggests the worries may be overdone.

WHAT YOU NEED TO KNOW – AGRICULTURE INVESTMENTS

A sustainable future for farmland investing

Institutional interest in farmland investments is rising around the world as several trends combine to boost the appeal of the sector.

At this time of heightened stock and bond market volatility, institutional investors globally are considering real asset alternatives.

With interest rates also rising in the US, investors are seeking asset classes that have the potential to outperform in volatile or slower growth environments.

Farmland has a track record of delivering attractive risk adjusted returns that have low to negative correlation with traditional asset classes.

Farmland returns are very much driven by fundamentals. Most of the food and fiber grown on farms is a basic human need, so its pricing tends to be inelastic. In other words, whether an economy is growing or shrinking, the demand profile for food and agricultural products doesn’t tend to move all that greatly.

Furthermore, several long-term trends are combining to ensure that demand will continue to grow.

WHAT YOU NEED TO KNOW – SCIENCE, TECHNOLOGY & INNOVATION

Hear from Saurabh Suri and Ritesh Agarwal on Milltrust Cerracap II, dedicated to early-stage technology investments including Enterprise (B2B) products and solutions in the areas of Healthcare, AI and Cyber Security.

The fund strategy uses a single approach since inception; targeting great teams with high growth characteristics. CerraCap makes great companies better by personally introducing Fortune 500 decision makers – Sales and Scale model.

The fund is managed by Milltrust in Cayman feeding into a US partnership. CerraCap Ventures is headquartered in California with operations in Tel Aviv, Singapore, and Bangalore. Formerly an in-house venture team at UST Global, their prior track record returned a stellar 9x return over 5 years.

CerraCap Ventures boasts a phenomenal advisory board including Vincente Fox, former President of Mexico, John C. Cushman, Chairman of Cushman & Wakefield, Richard P Crane Jr., former member of U.S. Department of Justice, and our own Simon Hopkins.