Aug 10 HK WRAP HSI -154pts as Jimmy Lia arrested under new law
HSI -154pts (-0.6%) 24,377 HSCEI -73pts (-0.7%) 9,991 T/O HK$135.28bn (-23.9% DoD)
EUROPE Markets opened higher, no data due but earning in focus and some +VE sentiment after Trump signed a new stimulus package which could trigger a deal between democrats and republicans
US Futures opened slightly lower but trended higher currently +70pts, S&P futures flat but NDX flat/lower
EARNINGS Monday Marriott, Simon Property Group, Occidental Petroleum, Liberty Media, Tilray, IAC/InterActive, International Flavors and Fragrances, Canopy Growth, SeaWorld, Barrick Gold, Duke Energy, Royal Caribbean, DoYou
Earnings Tuesday Hong Kong WH Group (288), Giordano Int (709), China Literature (772), China Tower Corp (788), China Longyuan Power (916), Hua Hong Semiconductor (1347), Orient Securities (8018)
CSI 300 Closed +17pts (+0.4%) @ 4,725 Market opened lower and initially sold down to the day low before rallying after the Inflation and PPI data were inline, prompting a little pull back but then continued to work higher to the day high 4,757around 2pm, eased back but then retested but resistance held and the market sold down into the close. Some rotational trading with Tech weak on sanction concerns.
HSI Pre Market Opened -154pts @ 24,376 vs -146pts ADR's at 24,385 with Tencent weak along with other E Commerce names and Tech component names.
Market also saw some initial margin call selling but rebounded on the inline China data and then has traded sideways. Saw an initial spike after lunch to the day high 24,535 level around 1:20pm but then trended lower and tested Friday’s close and then dipped below before working back into the green but resistance around 24,400 and sold back down into the red before bouncing back to 24,410 level going into the close but then sold down 30pts in the closing auction. Sentiment cautious on uncertainty over the New Security Law as Jimmy Lai and his sons and several executives arrest. Investors worried about the potential for more fall out as China criticised a joint statement from the Five Eye’s nations condemning the postponement of the Hong Kong elections.
Chinese hotpot ingredient supplier Guoquan Shihui is mulling an onset of its
IPO as soon as next year, sources quoted as saying by Bloomberg. IDG Capital, a major investor, has begun preliminary discussions with banks in regard to the potential IPO, which will probably have a size of US$400 - 500 million. The listing location has yet to be determined with HKEX (388.HK) being one of the possible destinations. Guoquan Shihui is in possession of more than 300 food ingredient direct supply bases and over 3,600 stores in China.
FAIRWOOD HOLD (52.HK) announced that the company has offered to grant a total of 2.32 million share options to certain employees and directors with the exercise price of $17.08/share. The CEO Francis Lo has been granted 1 million share options while Executive Directors Mak Yee Mei and Peggy Lee have been granted 300,000 share options respectively.
ZHONGSHENG HLDG (881.HK) acquired two BMW stores and one Audi store in 1H20, according to Huang Yi, Chairman of the company. After the pandemic, there has been a stronger rigid demand for travelling by personal vehicles, leading to a significant rise in car purchases, Huang also mentioned.
Macau has been notified by HKMAO that starting from 00:00 on 12 August, Macau residents with no outbound travel record or overseas residency history over the past 14 days and holding negative nucleic acid test results or a health code valid within seven days may be exempted from the 14-day mandatory quarantine in Mainland China, said Ao Ieong U, Secretary for Social Affairs and Culture. Starting from the same date, Macau will resume travel pass granting for Zhuhai residents, including individual visits and tour groups.
CAR INC (699.HK) PROFIT WARNING expects to incur a net loss at a range of RMB3.8 billion to RMB4.3 billion for the six months ended 30 June 2020, as compared to the net profit of RMB279 million for the six months ended 30 June 2019. The loss was primarily attributable to the significant decrease in rental demand as a result of the outbreak of the novel coronavirus (COVID-19) in the PRC in the first half of 2020 which has adversely affected the rental revenue of the Group and the impairment of the equity investment in UCAR; trade receivables from UCAR and other customers; the prepayment of the subscription price of the shares and convertible bonds to be issued by FDG EVEHICLES (00729.HK) 0.000 (0.000%) ; and the residual values of vehicles manufactured by Beijing Borgward Auto Co., Ltd. with repurchase arrangements.
Cheung Kong series Senior Adviser Li Ka-shing and Chairman Victor T K Li through Li Ka Shing Foundation Limited acquired a total of 800,000 shares in CK ASSET (1113.HK) at the average price of HK$41.3669 per share on 7 August 2020. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK ASSET increased from 35.30% to 35.32% and from 35.37% to 35.39%.
SIM TECH (2000.HK) announced that the unaudited monthly revenue of the Group for the month of July 2020 is approx HK$127 million, in which the revenue from the sale of residential properties and properties management (together, 'non-core business') is approximately HK$5.8 million and the revenue from the handsets and internet of things terminals business, the electronics manufacturing services business, the internet of things system and online-to-offline business together with the intelligent manufacturing business (together, 'core business') is approximately of HK$121 million. The revenue of the core business of July 2020 decreased by 26.7% as compared with that of last month, and increased by 18.4% as compared with that of the same period last year. The unaudited revenue of the Group for the seven months ended 31 July 2020 is approximately HK$555 million, which decreased by 11.7% as compared to same period last year.
CHINA GRAND PHARM (512.HK) interim results ended June 2020. Net profit amounted to HK$719 million, up 31.4% yearly. EPS equaled HK21.27 cents. No dividend was declared.
GUOTAI JUNAN I (1788.HK) interim results for the period ended June 2020. The revenue declined 22.6% year-on-year to HK$1.798 billion. The net profit amounted to HK$606 million, down 5.2% year-on-year. EPS was HK6.77 cents. An interim dividend of HK$0.034 was declared against a dividend of HK$0.042 in the corresponding period of the previous year.
Ministry of Foreign Affairs has decided, in response to U.S. Department of the Treasury's actions to impose sanctions upon 11 Mainland Chinese and Hong Kong officials, that China will sanction U.S. lawmakers from both the Senate and House of Representatives who behave badly towards the Hong Kong issue with immediate effect. China strongly reprimands against U.S. behaviours on this matter and believes the U.S. has intervened with China's internal affairs, according to a spokesman for the Ministry.
The social distancing measures, falling expired tomorrow, will be extended by a week till 18 August, local media citing insiders.
NISSIN FOODS (1475.HK) announced that the Group invested in ValleyFarm Holdings Limited, an indoor hydroponic farm in Hong Kong. The invested fund would be used to build a new farm with upgraded facilities for hydroponic vegetable production. After the capital injection, the Group will hold the 80% shares in ValleyFarm and the ValleyFarm’s founder, HO King Yin Edwin, will hold the remaining 20% shares and shall remain as a director, overseeing the research & development and daily operation of ValleyFarm. The transaction has been completed today, 10 August 2020.
Market and Pre Market News at bottom of page.
JAPAN closed reopens Tuesday
S KOREA Kosdaq opened flat and traded sideways initially before working higher to close +0.6% and the Kospi opened slightly lower but worked better through the day to close +1.5%.
TAIWAN opened flat and saw an initial rally and then has traded sideways to close +0.5%
Short Selling HSI Monday 13.1% vs 14.8% Friday
Top Shorts CLP (2) 48%, Hang Seng Bank (11) 42%, Mengniu Dairy (2319) 36%, Sino Land (83) 35%, CCB (939) 35%, MTRC (66) 33%, Ping An (2318) 33%, CITIC (267) 31%, Swire Pac A (19) 30%, Power Assets (6) 30%, Want Want (151) 27%, NWD (17) 26%, CK Assets (1113) 26%, Sunny Optical (2382) 25%.
Northbound Rmb 48,884m Sell 23,742m : 25,142m Buy
Southbound HK$ 14,329m Sell 7,299m : 7,030m Buy
Northbound Rmb 68,451m Sell 34,922m : 33,530m Buy
Southbound HK$ 14,412m Sell 5,721m : 8,691m Buy
CHINA Data was inline with forecasts
Inflation Jul +2.7% YoY vs +2.5% Jun (F/cast was +2.7%)
Inflation Jul +0.6% MoM vs -0.1% Jun (F/cast was +0.6%)
PPI Jul -2.4% YoY vs -3% Jun (F/cast was -2.4%)
Inflation the highest since April driven but rising food prices, especially pork. Non-food prices were flat. Falls seen in transport, rent, fuel and utilities
PPI sixth month of declines in PPI and the slowest in four months due to covid.
Cost of means of production fell less (-3.5% vs -4.2% in June) due to extraction (-7.1% vs -10.5%), raw materials (-6.9% vs -8.5%) and processing (-1.8% vs -2%). At the same time, consumer goods price inflation rose to 0.7% from 0.6% in June, with cost of food productions rising faster (3.7% vs 3.2%) while prices of clothing dropped more (-1.1% vs -0.8%). Meanwhile, cost of both daily use goods (-0.8% vs -0.3%) and consumer durables (-1.6% vs -1.8%) declined further.
Centre for Health Protection said there were 69 additional COVID-19 cases in Hong Kong today; (vs 89 cases Friday). Of which 67 were local infections.
TENCENT (700.HK) -4.8%
HKEX (388.HK) -1.9%
PING AN (2318.HK) +0.1%
CCB (939.HK) -1.2%
HSI & HSCEI Constituents on the move
AAC TECH (2018.HK) -5.6%
GALAXY ENT (27.HK) +5.6%
SINO BIOPHARM (1177.HK) -3.4%
HSMI & HSSI Constituents on the move
JS GLOBAL LIFE (1691.HK) +27.4%, hitting new high on +VE profit alert
TCL ELECTRONICS (1070.HK) +12.7%, hitting new high
SUNCITY GROUP (1383.HK) +11.5%
COFCO PACKAGING (906.HK) +11.4%, hitting new high
COSCO SHIP HOLD (1919.HK) +7.9%, hitting new high
CHINA EDU GROUP (839.HK) +6.1%, hitting new high
*E-COMMERCE WEAK on concerns the US may impose more sanctions on Chinese companies, rumours include banning residents from doing business using TENCENT's (700 HK -4.8%) WeChat. I would also be worried about pressure on US listed entities regarding compliance with US audit standardsALIBABA (9988 HK -2.5%) JD (9618 HK -2.4%) NTES (9999 HK -2.1%).Meanwhile, besides Facebook, news reported that Twitter is also looking at buying Tiktok and that Tiktok is planning to sue the Trump administration regarding the issued an executive order banning the service from the US.
*TECH & COMPONENTS WEAK fears that US sanctions could impact their business; such as banning WeChat would hurt global iPhone sales: AAC (2018 HK -5.6%), BYDE (285 HK -7.5%), SMIC (981 HK -7%) ZTE (763 HK -3%).
*MACAU STRONG on hopes for visa resumption for selective mainland visitors as soon as Aug 12. GALAXY (27 HK +5.6%) SJM (880 HK +4.9%) MELCO (200 HK +3.1%).
*AUTOS MIXED some support as sales gives some evidence of recovery.
GREAT WALL (2333 HK +5%): July vehicle sales 78,339 units, +30% YoY.
GZ AUTO (2238 HK +0.9%) July vehicle sales +16.4% YoY to 183,937 units. ZHONGSHENG AUTO (881 HK -1.4%) 1H net profit +10% YoY to 2.29b yuan, No Div was declared.
*HK PROPERTY MIXED political uncertainties weighted on investors’ confidence despite good weekend sales as homebuyers shrugged off fears of a third wave of Covid infections. Seacoast Royale saw ll 185 flat sold; +VE for developers Empire Group and HK Ferry in Tuen Mun yesterday. LINK REIT (823 HK -1.3%) doubled its support program for tenants to HK$600m from HK$300m. HYSAN (14 HK +1.5%) reported an interim loss of HK$2.626b yuan, which was inline with market forecast, while keeping 1H interim div/shr flat at 27 HK cts.
*SPORTWEAR WEAK as ANTA SPORTS's (2020 HK -1.6%) dept issuance plans signal cash-flow pressures. It has received approval to issue upto 12b yuan of debt as it seeks to repay borrowings and diversify funding channels. CH DONGXIANG (3818 HK -6.8%) after a company controlled by its chairman and executive direction sold 5m shares of China Dongxiang last week.
*PHARMA/MEDICAL WEAK after SSY GROUP (2005 HK -9%). Profit Warning pre market; it expects 1H net profit to drop by 50% to 60%, due to a significant reduction of human traffic in hospitals in China, which are major customers of the Group. SINO BIOPHARM (1177 HK -4.3%) CANSINO (6185 HK -7.9%) INNOVENT (1801 HK -3.5%).
*AIRLINES WEAK after a new Chinese airline, Greater Bay Airlines, has applied to be HK's 5th passenger carrier. CATHAY PAC (293 HK -7%) despite rights issue over subscribedAIR CH (753 HK -1.8%).
NEXT DIGITAL (282 HK +183%) having opened flat the traded slightly lower in the morning rallied to +344% on news of the arrest of Jimmy Lai, his sons and several executives. Hopes that the paper may be sold and likely acquired by a pro Beijing entity. Apple Daily is among Hong Kong’s most read media outlets and has been one of the most outspoken against Being and the Hong Kong Government. He was arrest under the New Security Law on the grounds of ‘foreign collusion’’. Other local media names also rallied; MOST KWAI CHUNG (1716.HK), I-CABLE COMM (01097.HK)
UNI-PRESIDENT (220 HK -5.6%) 1H net profit +7% to 1.06b yuan.
ASIA CEMENT (743 HK -3.5%) interim net profit -42% to 878m yuan.
GOME RETAIL (493.HK) and JD-SW (9618.HK) hosted a press conference today announcing the signing of their strategic procurement agreement, which means they will kickstart with a RMB30 billion joint procurement plan. The joint procurement would not only involve large domestic electrical appliances like fridges and air-conditioners but would also cover appliances of smaller scale, according to Gome.
HYSAN DEV (14.HK) is having close relations with the tenants and understand very well their businesses, and therefore it has provided certain rent reductions for retail tenants and marketing assistance, Chairman Lee Irene Yun-Lien said during an online conference. The extent of the company's rent reduction provided in 1H20 was similar to that in 2H19, it was revealed. HYSAN DEV is also always looking out for various acquisition opportunities, including those in China and overseas locations, apart from Hong Kong, Lee added
JLL: Vacancy Rate of HK Grade A Office Buildings Climbs to 7.6% MoM in Jun; Rent Slides 2.4%. As tenants incline to select options that could save rental costs, 95% of the new rental agreements reached in June were related to districts beyond Central, above the 73.7% recorded in June 2019, JLL reported in its latest edition of Hong Kong Property Market Monitor. As at June 30th 2020, the vacancy rate in Hong Kong's grade A office buildings was 7.6%, up 0.2 ppts month-on-month. Rental of grade A office buildings also slid 2.4% monthly.
TSMC announced that revenue amounted to TWD105.963 billion in July 2020, down 12.3% monthly but up 25% yearly. The Taiwanese tech giant delivered 7M20 revenue of TWD727.259 billion, up 33.6% yearly.
New Oriental (EDU.US) is seeking secondary listing in Hong Kong to raise at least US$1 billion, said media reports. It is reportedly engaging Bank of America, Credit Suisse and UBS as underwriters.
TENCENT (700.HK) bought out Nash Big Data Technology, Chinese media citing Tianyancha's data. Subsequently, Nash's shareholders were entirely replaced by Shenzhen Tencent Industry Venture Capital under Shenzhen Tencent Industrial Investment Fund. Media also reported TENCENT is nearing a takeover of Byment's majority stake, Chinese media reported. The parties will be fostering an in-depth cooperation. Founded in 2016, Byment is principally engaged in intellectual property incubation and comic creation.
Huazhu Hotels Group, a Chinese multi-branded hotel group listed in Nasdaq, is weighing to hasten its second listing in Hong Kong, according to mainland media.
The group may seek listing hearing approval as soon as this month, pursuing up to US$1 billion.
Manulife Hong Kong announced core earnings of HK$2.9 billion in the first half of 2020, up 8% from the same period of 2019. Core earnings reached HK$1.4 billion in 2Q 2020, up 5% from 2Q 2019.
Foxconn plans to pump US$1 bn in establishing 5G connector (mm) production lines in Kunshan, Jiangsu, China, said Taiwanese media. The plan has now started correction and trial.
Since XIAOMI-W (1810.HK) started developing chips in 2014, it has confronted formidable hurdles after launching the first generation in 2017, although the group would stick to relevant plans, said Chairman Lei Jun.
At lunch HYSAN DEV(14.HK) interim results ended June 2020. Underlying profit sank 3.4% yearly to $1.346 billion. Loss was $2.626 billion, against $2.783 billion profit a year ago. LPS equaled 252 cents. Interim DPS was 27 cents, flattish with the corresponding period of the previous year.
At lunch ZHONGSHENG HLDG (881.HK) the interim result ended June 2020. The net profit amounted to RMB2.292 billion, up 10.1% yearly. EPS was RMB1.009. No dividend was declared.
Ant Group's Connected Company Sets Up Health Tech Firm; A health technology firm has been set up in Hangzhou with registered capital of RMB50 million, according to the Tianyancha APP. Business scope of this firm covers health consultancy services (excluding diagnosis and treatment services), hospital management, medical research and pilot development.
India's smartphone shipment -50.6% YoY to 18.2 million units in Q2, reported IDC. By brands, XIAOMI-W (1810.HK) has the biggest market share with shipment falling 48.7% YoY to 5.4 million units.
ByteDance is preparing a foray into Hong Kong's financial sector, with a registered trademark "Squirrel Securities", reported Apple Daily. The trademark involves type 1, 4, 5, 6 and 9 regulated activities as defined by SFC, with a priority to recruit "Hong Kong drifters".
Pansy Ho has lodged an application at the High Court for a caveat from Probate Registry, under which the court shall not commence any procedures about undertaking Stanley Ho's estate without noticing her in advance. Following the Macau casino tycoon's death dated 26 May, his daughter Deborah Ho had on 5 June registered for a caveat.
In response to rumors surrounding MACAU LEGEND (1680.HK)'s planned disposal of Macau Fisherman’s Wharf, CEO Melinda Chan told Ming Pao that the news is untrue, and the group does not intend to drop out of Macau market. While coronavirus shocks are inevitable, MACAU LEGEND has successfully appealed to many Macau residents at its recently revamped exhibition halls at Macau Fisherman’s Wharf, where Light Night Market are recently held.
Civil Aviation Department (CAD) confirmed that the newly-founded Greater Bay Airlines Company Limited had applied to be Hong Kong's fifth passenger airline, reported SCMP. The key man behind the JV is Bill Wong Cho-bau, aka "Shenzhen's Li Ka-shing", who is running the Shenzhen-based Donghai Airlines.
Qualcomm is talking the US government into withdrawing the ban for selling components to Huawei, hoping to continue to sell chips for Huawei's 5G cellphones, Wall Street Journal reported. Prior to this, the US had blacklisted Huawei, which in turn had handed the US$8-billion market to the overseas rival of Qualcomm.
IMPERIAL PAC (1076.HK) has been notified by Inventive Star (a company wholly-owned by Cui Li Jie, the controlling shareholder and Chairman of the Company), that as the trading price of the Company’s shares dropped and triggered the enforcement of margin financing relating to the shares held by Inventive Star, there were forced sales of an aggregate of 72 million shares of the Company and an aggregate of 2.133 billion shares of the Company held by Inventive Star on 5 August and 7 August, respectively. Upon forced sales, the shareholding interest held by Inventive Star decreased from 63.47% to 61.93%.
ZHAOJIN MINING (1818.HK) announced that the conversion of H share full circulation had been completed on 7 August 2020. The Listing of the Converted H Shares on the Stock Exchange commenced at 9:00 a.m. on 10 August 2020.
ANALOGUE HLDGS (1977.HK) noted that the US Treasury has announced that it imposed sanctions on eleven individuals including Teresa Cheng Yeuk-wah, who is is the spouse of Poon Lok To Otto, the chairman of the Board of the Company. The company announced that the overall operations and business of the Group remain normal. With the assistance of the Company’s US legal counsel, the Company has reviewed the US Treasury’s announcement and preliminarily does not believe the sanctions imposed therein on Cheng will apply to the Group based on all available information at this time.
CBHB (9668.HK) announced that the Over-allotment Option was fully exercised in respect of an aggregate of 432 million H Shares at HK$4.80 per H Share. The additional net proceeds approximate HK$2.032 billion.
GREATWALL MOTOR (2333.HK) sales volume +29.8% YoY to 78,300 vehicles in July 2020; production volume rose 23% yearly to 73,600 vehicles.
NEXT DIGITAL (282.HK)'s Apple Daily reported that the founder of Next Digital Jimmy Lai Chee-ying and his second son were arrested by Hong Kong Police Force at around 7am today at Lai's home on Kadoorie Avenue for committing crime of colluding with overseas force in violation of Hong Kong National Security Law.
TikTok will bring up a court action in the U.S., possibly as early as 10 August, against President Trump's executive order to snap U.S. business ties with TikTok in 45 days, National Public Radio reported. The lawsuit will argue that Trump's order is unconstitutional as it failed to give TikTok a chance to explain and that it is baseless to execute the order on national security justification, said the report.
Also Twitter has approached ByteDance to express interest in buying TikTok, Reuters citing insiders. However, experts raised doubts over Twitter's financial ability for the deal. It is very uncertain whether Twitter could outbid Microsoft and complete the takeover in the 45-day period given by US President Donald Trump, one of the people said.
Later Blackstone Group is interested in joining Microsoft's bid to acquire TikTok, reported Fox Business. Blackstone has been internally discussing a team-up with Microsoft to buy TikTok's U.S. operation. However, the private equity powerhouse's interest is waning as controversy surrounding the short video app's future has grown.
JS GLOBAL LIFE (1691.HK) PROFIT ALERT +VE , expecting consolidated profit of not less than US$100 million for the six months ended June 30, 2020, as compared to US$21.9 million for the six months ended June 30, 2019.