On December 23, the financial news agency reported (by reporter Xia Shuyuan) that on December 23, CHINA LONGYUAN (00916.HK) announced that its major shareholder, Ruizhong Life, had accumulated an increase of 83.598 million H shares through concentrated bidding in the Hong Kong Stock Connect secondary market between November 4, 2024, and December 20, 2024, accounting for 1% of the company's total share capital.

It is reported that since the beginning of this year, Ruizhong Life has repeatedly increased its holdings in CHINA LONGYUAN. Industry insiders say that the intensive shareholding increase by insurance capital is to meet the duration matching needs of the balance sheet, extending the asset duration through OCI (Other Comprehensive Income) assets; to continuously enhance returns through equity investments under the backdrop of falling interest rates and asset scarcity, alleviating the pressure of declining investment yield; and to smooth the impact of equity market fluctuations on the profit statement through OCI assets. From an accounting perspective, it is expected that high ROE and dividend assets will continue to be favored by insurance capital.

Ruizhong Life's shareholding in CHINA LONGYUAN has reached 1%.

As an indispensable and important investment force in the capital markets, the repositioning dynamics of insurers are closely monitored by investors.

On December 23, CHINA LONGYUAN issued a notice stating that the company received a "Notification Letter" issued by its major shareholder, Ruizhong Life, on December 23, 2024, indicating that between November 4, 2024, and December 20, 2024, it had cumulatively increased its holdings of 83.598 million H shares of the company using self-owned funds through concentrated bidding in the Hong Kong Stock Connect secondary market, accounting for 1% of the company's total share capital.

It is known that after this increase, Ruizhong Life holds 0.502 billion shares of CHINA LONGYUAN H shares, 0 shares of A shares, totaling 6% of the company's total share capital, with the funding source for this increase being self-owned funds.

Public information shows that CHINA LONGYUAN was established in 1993 and is a large comprehensive power generation group primarily focused on developing and operating new energy, currently under the National Energy Group.

In 2009, Longyuan Electric successfully listed on the main board in Hong Kong, and in 2022, it was listed on the A-share market, becoming the first domestic H-share new energy power central enterprise to return to the A-share market, the first of the five major power generation groups new energy companies to land on the A-share market, the first to simultaneously implement share swap absorption and merger, asset sales, and asset purchase projects.

Currently, Longyuan Electric owns wind power, photovoltaic, biomass, tidal, geothermal, and thermal power projects, with business operations in 32 provinces and regions in China as well as countries such as Canada, South Africa, and Ukraine. By the end of 2023, Longyuan Electric's controlling installed capacity is 35,593.67 megawatts.

In the first three quarters of 2024, Longyuan Electric achieved operating revenue of 26.35 billion yuan, a decrease of 6.39% year-on-year; net profit attributable to the parent company was 5.475 billion yuan, a decrease of 10.61% year-on-year.

Industry insiders indicate that this increase in shareholding of CHINA LONGYUAN reflects the long-term investment philosophy of insurance funds and the important role of patient capital. As of today's close, CHINA LONGYUAN's A shares are priced at 16.79 yuan, down 1.58%, while its H shares are at 6.66 Hong Kong dollars, down 1.62%.

Insurance capital has been actively investing, and a bullish outlook is projected for undervalued, high-dividend assets.

According to a report from Financial Associated Press, on October 28, 瑞众人寿 purchased 4.188 million shares of CHINA LONGYUAN H shares, involving an investment of 30.0377 million Hong Kong dollars. At that time, 瑞众人寿 held a total of 0.417991 billion shares of CHINA LONGYUAN H shares, accounting for 5% of its total share capital.

Using the October 28 closing price of 7.13 Hong Kong dollars per CHINA LONGYUAN H share and the same day's end exchange rate of Hong Kong dollars to RMB as a benchmark, 瑞众人寿's holding of CHINA LONGYUAN H shares has a book balance of 2.734 billion yuan.

As early as July 22, 瑞众人寿 increased its holdings of CHINA LONGYUAN by purchasing 5.26 million shares at a price of 7.45 Hong Kong dollars per share, totaling approximately 39.187 million Hong Kong dollars.

In fact, the increase in shareholding by China Life in CHINA LONGYUAN is just a glimpse of the insurance capital's excessive investment in the equity market. Since the beginning of this year, insurance companies have made more public offers than in previous years, with a total of 20 public offers by the end of the year, breaking the record for the number of companies being targeted in nearly four years.

Industry insiders indicated that the resurgence of insurance capital in public offers since 2023 is related to the current overall environment, where long-term interest rates continue to decline, and high-yield projects like non-standard investments are shrinking against the backdrop of an 'asset shortage.' The multiple public offers may aim to compensate for the losses caused by declining interest spread and to smooth out the effects of the falling interest rate cycle.

In addition, starting from 2023, some insurance companies will implement the new accounting standard IFRS 9. According to IFRS 9, stocks that exceed 5% and obtain board seats can be recorded as long-term Private Equity investments using the equity method, affecting total assets but not impacting the income statement or investment income, which is significant for smoothing out insurance statements and investment returns.

From the perspective of industry distribution, the targeted companies by insurance capital have shifted from real estate and Consumer sectors in 2015 to public utilities and Eco-friendly Concept in 2023, transforming towards a preference for low volatility and high dividend stocks. From an accounting perspective, high ROE and dividend assets are expected to continue to be favored by insurance capital.