Swancor (3708 TT): Impact from China Energy Consumption Restriction

Impact from China energy consumption restriction policy:

l   The recently announced China energy consumption restriction shows determination for energy transition, which is beneficial to green energy sector such as wind power and solar power.

l   Energy consumption restriction will limit plastic raw material (such as Epoxy and SM) supply and further push up prices, which will possibly put pressure on margins.

l   Swancor’s factories are located in Shanghai and Tianjin, which are not the most impacted areas. Swancor is aggressively searching for factories in Europe (M&A or self-built) to decrease transportation cost and shorten delivery time.

l   Swancor Advanced Materials (688585 CH, 79.24% held by Swancor) released new resin material SWANCOR HYVER, whose price is lower and more suitable for manufacturing large (>100m) wind turbine blades.

l   Swancor recently finished two rounds of convertible bonds issuance and convertible price is 99 and 95, respectively. Total shares will increase to 114.1m shares from 93.5m shares if fully diluted.