HS-全球-环境行业-2020年气候雷达第二季度：热门主题——储能和农业-2020.5.26-23页.pdf

Disclosures&Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:HSBC Securities and Capital Markets(India)Private Limited View HSBC Global Research at:https:/ THIS CONTENT MAY NOT BE DISTRIBUTED TO MAINLAND CHINA Energy Storage and Agriculture are the best placed themes on the HSBC Climate Radar in Q2 2020 Energy Storage has outperformed global equities by 5%y-t-d;it offers a robust 12M consensus EPS growth of 15%Agriculture trades at a significant discount relative to history and we see signs of improving consensus outlook We use our proprietary HSBC Climate Solutions Database(HCSD)and apply the quantitative framework of the HSBC Climate Radar to identify the most attractive solutions within the climate change space.We screen ten stocks each(page 12,Figure 16)from the top two best-placed themes on our HSBC Climate Radar.Energy Storage is placed in the most favourable top-left quadrant of the HSBC Climate Radar and is currently among the top ranked climate themes on both the measures of long-term investor sentiment and short-term earnings dynamics.During the current COVID-19 uncertainty,the theme offers a strong 12m consensus EPS growth forecast of 15%,significantly higher than 2%EPS contraction for global equities.Also,the theme showcases positive price momentum,outperforming global equities by 5%so far this year.Looking ahead,growing deployment of renewables in power generation and the rise of electric vehicles are expected to lead to a substantial investment in the energy storage space.As per Bloomberg New Energy Finance(BNEF),yearly investment in the global energy storage market is expected to increase from USD5bn in 2018 to USD59bn in 2040.Agriculture is also placed in the most attractive top-left quadrant of the HSBC Climate Radar.The long-term relative valuation multiples for the theme are below their respective five-year average levels and we see signs of these rising from low levels.The theme depicts positive earnings momentum with signs of consensus EPS growth outlook turning less bearish over the past few months.Please note that access to the HSBC Climate Solutions Database is available on request.For more details regarding the database,please refer to HSBC Climate Solutions Database-to generate Climate alpha.26 May 2020 HSBC Climate Radar Equity Strategy&Climate Change Global Amit Shrivastava*Climate Database Lead,European Equity Strategist HSBC Securities and Capital Markets(India)Private Limited amit1.shrivastavahsbc.co.in+91 80 4555 2759 Wai-Shin Chan,CFA Head,Climate Change Centre;Co-Head,ESG Research The Hongkong and Shanghai Banking Corporation Limited .hk+852 2822 4870 Ashim Paun Co-Head,ESG Research;Climate Change Strategist HSBC Bank plc +44 20 7992 3591 Amitkumar Vyawahare*Associate Bangalore *Employed by a non-US affiliate of HSBC Securities(USA)Inc,and is not registered/qualified pursuant to FINRA regulations The HSBC Climate Radar themes view in Q2 2020 Source:HSBC,Refinitiv Datastream,IBES.Horizontal axis signifies contrarian signal;Vertical axis measures change in the short-term dynamics.For details regarding access to the HSBC Climate Solutions Database,please contact HSBC Global Research.Top conviction themesMost attractiveEnergy StorageAgricultureLeast attractiveNuclearIndustrial EfficiencyPessimismOptimismPositive DynamicsNegative DynamicsNuclearEnergy StorageIndustrial EfficiencyAgricultureQ2 2020:Top themes Energy Storage&Agriculture Equity Strategy&Climate Change Global 26 May 2020 2 Climate stocks have marginally outperformed global equities In our note Climate and ESG:short-and long-term outperformance,29 April 2020,we looked at the short-term and long-term price performance of the global climate stocks and highlighted that companies with relatively high climate credentials have outperformed global equities during the COVID-19 pandemic.Our analysis indicates that year-to-date,climate stocks in the HSBC Climate Solutions database(HCSD)have posted a total return1 of-11.2%,which is slightly better than the-12.0%return posted by global equities(FTSE All World index)over the same period.Across the four major climate sectors,Low Carbon Energy Production(LCEP)has led with the highest return of-8%,mainly due to robust performance by the key renewable sectors of Solar and Wind.Whist the Solar climate theme is down just 1%year-to-date,the Wind climate theme has also outperformed(down 8%)global climate stocks.The remaining two major sectors however have underperformed.Energy Efficiency and Energy Management(EEEM)and Environment and Land Use Management(ELUM)are down 13%each this year.However,among the key themes within EEEM,Energy Storage(down 7%)and Transport Efficiency(down 4%)have significantly outperformed global climate stocks.1.Global climate sectors and themes:year-to-date total return Source:Refinitiv Datastream,FTSE Russell,HSBC LCEP=Low Carbon Energy Production,EEEM=Energy Efficiency and Energy Management,ELUM=Environment and Land use Management,CF=Climate Finance,CIC=Climate Investment Companies,HCSD=HSBC Climate Solutions Database Please note,the Hydrogen Gas and Fuel-Cell climate themes have also outperformed global equities,however,they are relatively small climate themes in our database,with a smaller number of stocks,which generally leads to higher variance in returns.Consensus earnings growth estimate has fallen recently Risk assets globally have been severely hit by the steep fall in global economic activity leading to a sharp decline in global equities(FTSE All World index),which was down almost 30%at its lowest level on 23 March 2020.However,amid signs of peaking infections and easing of lockdown restrictions across various countries,global equities have registered a sharp recovery over the last two months.Nonetheless,despite this recovery,they are still down some 11%this year.Global climate stocks have also been adversely impacted and the consensus has reduced its 12 month forward earnings growth estimate for global climate stocks from 5.8%at the beginning of this year to-7.7%currently.Over the same period,they have also revised down their 12-month forward EPS growth forecast for global equities from+9%to-2%._ 1 Based on equal weighted total return which includes dividend re-investment 25%38%FTSE All World index-30%-25%-20%-15%-10%-5%0%5%10%LCEPBio-EnergyDiv.RenewablesHydrogen GasHGMIntegrated PowerNuclearSolarWindEEEMBuildings EffEnergy StorageFuel CellsIndustrial EffTransport EffELUMAgricultureForestryPollution ControlWasteWaterCFCICHCSDyear-to-date total return,%year-to-date total return(%)3 Equity Strategy&Climate Change Global 26 May 2020 2.Sharp fall in the consensus EPS growth forecast for global climate stocks 3.mainly due to Energy Efficiency sector Source:IBES,Refinitiv Datastream,HSBC Source:IBES,Refinitiv Datastream,HSBC Across climate sectors,the fall in the earnings growth forecast for the global climate stocks is largely driven by Energy Efficiency and Energy Management(EEEM)sector.Consensus expects EEEM earnings to contract 12.7%over the next 12 months.It is worth mentioning that a significant proportion of companies in EEEM are from the Industrials sector,which is traditionally a cyclical sector and among the most underperforming sectors so far this year.Elsewhere,Low Carbon Energy production(LCEP)and Environment and Land Use Management(ELUM)earnings are expected to contract 2.7%and 4.0%respectively over the next 12 months.-30-20-1001020304050-10-50510152025301314151617181920y-o-y return(%)Consensus 12m fwd EPS growth(%)Global Climate stocks:12m forward EPS growth(%)Global Climate stocks:y-o-y total return*(%),rhs-15-10-5051015LCEPEEEMELUMHCSD12m forward EPS growth(%)Jan-20Apr-20HSBC Climate Solutions Database-An investment opportunity in the climate space Climate Radar utilises the HSBC Climate Solutions Database to screen for companies used in our analysis.The HSBC Climate Solutions Database is our proprietary database comprising a universe of global companies that defines the investment opportunity set within the climate change space.The Database is updated annually and includes companies with exposure to 21 climate themes.Access to the database is available on request.For more information,please contact HSBC Global Research or the authors of this report.Also,please refer to HSBC Climate Solutions Database-to generate Climate alpha,for further details.Equity Strategy&Climate Change Global 26 May 2020 4 HSBC Climate Radar Our top conviction themes The HSBC Climate Radar is a quantitative tool-kit that enables identification of the most attractive investment themes from the HSBC Climate Solutions Database2 a database of global companies with varying levels of exposure to climate-related businesses.Based on our objective framework for analysing the prevailing short-term dynamics and long-term investor optimism,we highlight our best conviction ideas across the climate themes.Most attractive themes in Q2 2020 Energy Storage Agriculture Although Diversified Renewables is also placed in the most favourable top-left quadrant,based on aggregate ranking of two measures of long-term investor sentiment and short-term dynamics,it is ranked lower than Energy Storage and Agriculture.Less attractive themes in Q2 2020 Nuclear Industrial Efficiency _ 2 For more details of HSBC Climate Solutions Database,please see our report entitled HSBC Climate Solutions Framework-A climate change solutions tool-kit,12 September 2016.For details regarding access to the HSBC Climate Solutions Database,please contact HSBC Global Research.3 For a detailed description of the Climate Radar and the underlying variables used to create it,please see section HSBC Climate Radar An objective framework of this note.4.The HSBC Climate Radar3 Source:HSBC,Refinitiv Datastream,IBES Horizontal axis signifies contrarian signal;Vertical axis measures change in the short-term dynamics.HGM=Hydro/Geothermal/Marine,CIC=Climate Investment companies Arrows denote three month change in the position of most attractive climate themes highlighted in the current(Q2 2020)and the previous quarter(Q1 2020),on the HSBC Climate Radar.Negative DynamicsPessimismOptimismPositive DynamicsNegative DynamicsBio-EnergyDiversified RenewablesHGMIntegrated PowerNuclearSolarWindBuildings EfficiencyEnergy StorageIndustrial EfficiencyTransport EfficiencyAgricultureForestryWasteWaterCIC 5 Equity Strategy&Climate Change Global 26 May 2020 What has changed since the last quarter(Q1 2020)?In Q1 2020,we highlighted Bio-Energy and Waste as the most attractive climate themes in the climate change universe(see HSBC Climate Radar-Top conviction themes:Bio-Energy and Waste,19 February 2020).In our quarterly update of the Climate Radar,both these themes have moved to different quadrants.Whilst Bio-Energy has moved below the horizontal axis to the bottom-left quadrant,indicating a fall in its short-term dynamic ranking,Waste has registered a fall in its ranking on the both the measures of long-term investor sentiments and short-term price dynamics.Waste is now placed in the bottom-right quadrant of the Climate Radar.The fall in Bio-Energys short-term dynamics ranking can be attributed to a fall in the aggregate total price performance for the theme being higher than the corresponding fall in the earnings this year.During the current environment of COVID-19-induced uncertainty,the total return index for the global climate stocks has fallen 11%year-to-date.In comparison,the Bio-Energy climate theme posted a decline of 25%.The coronavirus outbreak has severely compressed global energy demand and companies producing bio-fuel are also witnessing the adverse impact of this fading demand.Please note,as per our framework,apart from companies producing bio-fuels,the Bio-Energy sector also comprises companies that are engaged in the production of heat and electricity from bio-energy.Waste has also seen a fall in the measure of short-term dynamics primarily due to falling earnings momentum and a marginal decline in the consensus 12 month forward earnings growth forecast.Although the themes three month earnings revisions ratio is still higher than global climate stocks,consensus EPS growth estimate for waste relative to climate stocks has fallen marginally from almost 8%in Feb-2020 to 6%currently.Nonetheless,the themes price performance is in-line with the global stocks(down 11%)and we think its defensive credentials could continue to support investors in the current period of high volatility.Equity Strategy&Climate Change Global 26 May 2020 6 Energy Storage most attractive theme 1 5.Trend-adjusted relative PE for Energy Storage has stabilised and is moving up from low level 6.Sharp improvement in the consensus earnings growth forecast Source:HSBC,Refinitiv Datastream*Relative to screen of targeted stocks in the HSBC Climate Solutions Database Source:I/B/E/S,HSBC,Refinitiv Datastream Second ranked theme on both the measures of LT sentiments and ST dynamics In Q4 2019,Energy Storage emerged as one of the two most attractive climate themes on the HSBC Climate Radar(See Top conviction themes:Solar and Energy Storage,21 November 2019).Although the theme had fallen off the most attractive quadrant of the radar in Q1 2020,it has now re-emerged as the top conviction theme.Energy Storage is the second ranked theme on both the measures of long-term investment sentiments and short-term dynamics.As highlighted earlier,with a total return of negative 7%,the Energy Storage climate theme has also considerably outperformed global equities by 5%so far this year.Looking at the measures of long-term investor sentiment,the trend-adjusted PE(TAPE)for Energy Storage relative to global climate stocks is significantly lower than the five-year average level.The current TAPE relative for Energy Storage is 36%lower than the long-term average,indicating an upside potential of 55%from the current level.We see signs of it stabilising now and beginning to move up.This is generally a positive sign demonstrating that the theme is moving away from being a value-trap and it is beginning to show some growth characteristics.The themes improving growth metrics are evident from a robust increase in consensus earnings growth outlook over the past few months.The 12-month forward consensus earnings growth estimate for Energy Storage relative to global climate stocks is 23%,which is among the highest across all climate themes in our database.In absolute terms,the themes consensus estimates indicate that earnings are expected to grow 15%over the next 12 months,which is considerably higher than the 2%earnings contraction indicated by consensus estimates for global equities.As a result,we also see a sharp increase in the consensus three month earnings revisions ratio(number of upwards EPS estimate revisions to total EPS estimate revisions)for Energy Storage,rising from-