EFTA01462641.pdf

Subject: Fw: China Gas Holdings (384.HK) - consider tactical long -equity position [C] From: Tazia Smith Date: Thu, 22 May 2014 09:30:41 -0400 To: Cc: Paul Morris < Classification: Confidential Rich - FYI only, Russia/China did sign what is arguably the biggest energy deal of the decade yesterday. and 384.HK (highlighted this as an investment last month) rallied 6%. See below. http://www.reuters.com/article/2014/05/21/us-china-russia-gas- idUSBREA4K07K20140521 Catalyst: Potential for Putin/China pipeline agreement May 20-21st. Been talked about for 10yrs but now could come to fruition, would be one of the most major announcements in global energy over the last 10yrs Bottoms Up: Chinese gas distributors (like MLPs) benefit from volumes running throught their pipes. They are SUPPLY constrained, plenty of demand. Pushback on the group/bear case has been that they wouldn't be able to pass through higher costs to end consumer, a real risk that weighed on the stocks and sent them down meaningfully in the last couple weeks...creates an entry point. High probability that the deal is signed (HF places —75% likelihood) = meaningful upside for gas distributors. If deal is not signed, base case is status quo (stocks are NOT pricing in a deal being signed) China Gas: just upgraded by CS Morgan Stanley: commenting on the set up China Gas CFO former banker, full disclosure around its 280 cities that it owns the distribution licenses for, very communicative to the Street (aka VISIBILITY) as of 5/16/14 China Gas Holdings 10 day Price History (Embedded image moved to file: pic17497.gif) EFTA01462641  Forwarded by on 05/22/2014 09:25 AM From: To: [email protected], Cc: Paul Morris, Nav , Vinit /- dbcom@DBEMEA, , Vahe /- dbcom@DBAmericas Date: 04/16/2014 11:46 AM Subject: China Gas Holdings (384.HK) - consider tactical long -equity position [C] Classification: Confidential Jeffrey - Have you looked at China Gas (384.HK)? Consider tactical position - long equity - on potential for a Russia/China nat gas agreement. Gazprom (GAZP.RX, ruble denominated shares) is likely the more common implementation (both charts below). Would argue that the new pipeline diverts existing supply for Gazprom, where it is incremental earnings growth for the likes of China Gas. http://www.reuters.com/article/2014/04/09/russia-china-gas- idUSL6NON11XM20140409 The original call is on The 3rd Plenum's commitment to environmental reform (specifically reduction of carbon emissions by increasing nat gas usage). The EFTA01462642 near-term catalyst stems from this week's developments in the Ukranian- Russian crisis. Not surprisingly, with the chill from the Western world threatening demand for Russia's commodity, Putin's accelerated conversations to the east. Market chatter suggests that negotiations on a Russia-China pipeline could divert 38bn cubic meters of gas per year over to China, and that Putin has sped up negotiations with the intent of turning his presently scheduled May 20 visit to China, into a signing ceremony for an export contract. The stock is a hedge fund name. The DB analyst has been less fond (latest rating is hold with a 9 HKD target). I think this is a tactical, geopolitically-driven entry point on a name that's also a compelling long- term growth investment. Right now it's trading close to 25x 2015 EPS ests of 0.50 HKD, bull case is meaningful upside potential in earnings on an uptake of nat gas in China. China Gas (384 HK is fairly liquid - —5mm share avg daily volume over the last month) China Gas lyr Price History (Embedded image moved to file: pic05549.gif) Gazprom lyr Price History (Embedded image moved to file: pic16859.gif) Forwarded by on 04/16/2014 09:16 AM From: To: , kcp- Date: 04/16/2014 05:55 AM Subject: European Oil [I] EFTA01462643 For non advisory clients only In a "sector rotating" market in favour of value large cap names , Oil could be a relative bet to take, as the sector is: 1) not expensive in terms of valuations 2) favoured by the upper trending of WTI and Brent prices 3) impacted by better capital discipline (capex) expectations Lucas Herrmann, DB research on ROE trend is starting to be more optimistic as well: "Central to the deterioration in return on capital at the integrated oils has been the balance sheet build of non-productive capital. At the super-majors alone, the addition over a decade of c.$250bn of work in progress and exploration assets has proven a material drag on sector profitability clipping an estimated 3-4% from reported RoCE. Yet, with 2013 registering the first decline in non-productive capital for a decade are there now signs that yet another source of returns drag across the oil sector may be at a tipping point? We think so with our analysis suggesting scope for a 10% uplift to reported returns over the next five years". Interestingly, today also the Lex Column in "Oil Change, please" is mentioning the need to improve capital returns to fill the valuation gap (ENI the company mentioned in the article, also for the new management) Short term it could make sense to play the momentum via relative spread and with outperformance calls SXEP vs cyclical sector like chemical SX4P WTI: (Embedded image moved to file: pic05893.gif) SXEP vs SX4P (Chemicals) (Embedded image moved to file: pic07125.gif) EFTA01462644 Kind regards, Pierluigi Amicarella (Embedded image moved to file: pic03113.gif) Pierluigi Amicarella Deutsche Bank (Suisse) SA Key Client Partner Prime Tower Hardstrasse 201, 8005 Zurich, Switzerland Tel. Fax Mobil Email The proposed ideas are being delivered to you by the DBS Key Client Partners ("KCP") EMEA Switzerland desk on your request for discussion purposes only and strictly on a non advisory basis. The proposed ideas do not create any legally binding obligation on the part of Deutsche Bank AG and / or its affiliates ("DB"). These ideas are for the consideration of the intended recipients of this mail only. NOTE: The KCP EMEA Switzerland desk does not provide investment advice. All intended recipients are sophisticated, qualified investors within the meaning of the Swiss Collective Investment Schemes Act of June 23, 2006 (CISA) and MIFID professionals who understand the strategy, characteristics and risks associated with the ideas proposed herein and will be able to evaluate it independently. The products mentioned in this presentation may not be registered with the Swiss Financial Market Supervisory Authority (FINMA), and therefore, not supervised by the FINMA. As a result, you cannot claim any protection for unregistered products under the CISA. No assurance can be given that the objectives of the mentioned products/services will be achieved. 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Wenn Sie nicht der richtige Adressat sind oder diese E-Mail irrtumlich erhalten haben, informieren Sie bitte sofort den Absender and vernichten Sie diese Mail. Das unerlaubte Kopieren sowie die unbefugte Weitergabe dieser Mail ist nicht gestattet. This e-mail may contain confidential and/or privileged information. If you are not the intended recipient (or have received this e-mail in error) please notify the sender immediately and destroy this e-mail. Any unauthorized copying, disclosure or distribution of the material in this e-mail is strictly forbidden. (Embedded image moved to file: pic29703.gif) Tazia Smith Director I Key Client Partners - US DB Securities Inc Deutsche Asset & Wealth Management 345 Park Avenue, 10154-0004 New York, NY, USA Tel. Fax Mobile +1 Email (Embedded image moved to file: pic06719.gif) EFTA01462646