Chongqing Machinery & Electric Co (2722 HK)

A recap and another overlooked part of the business

CQME has been covered in a few Substacks - first by Mauispartners then Applied Conjectures and Capytal Management. I suggest you read their posts.

CQME is interesting because it will often be dismissed as an idea simply because (a) it has “Chongqing” in its name and (b) is a large conglomerate burdened by less profitable businesses.

Potential operational efficiencies in the boring businesses driven by the involvement of a new shareholder, Yufu, is already covered by the three aforementioned writers. What is worth amplifying here is the fact that CQME also has a 37.8% interest in Chongqing Hitachi Energy Transformer, a point recently made by MaiusPartners.

Hard not to get excited reading their website.

According to this article, the unit prices for transformers is up 44% in China.

Some percentage of the Hitachi JV’s output will also be for export, where the backlog for transformers is at least 3 years and growing.