Aug 24 HK WRAP HSI +438pts to 25,552 but shorts still elevate
I will be on RTHK’s Monday Talks Tuesday morning; starts at 8am HK time tune in if you have time
HSI +438pts (+1.7%) 25,552 HSCEI +125pts (+1.2%) 10,337 T/O HK$140.15bn (+18.7% DoD)
EUROPE Markets opened higher following the US on Friday and Asian markets today. No data due but covid concerns may limit the upside.
US Futures opened +60pts and crept higher through the day currently +270pts with S&P and NDX set to open higher too. Data today Chicago Fed National Activity Index
CSI 300 Closed +37pts (+0.8%) @ 4,756 opened higher, initially sold down to test Fridays closing level a couple of time and then bounced to 4,760 level and traded sideways into lunch. Investor cautious as US/China relations remain fraught. PM market worked slightly higher.
ChiNext trading user revised IPO pricing rules can now move +/- 20% vs 10% previously.
HSI Market Opened +238pts @ 25,352 vs -54pts ADR as expected after the increased shorting on Friday. E commerce names strong; Tencent rallied on news on continuing business with Apple despite WeChat ban and good earnings from Meituan after market Friday. Market rallied to 25,500 level and then traded sideways for the rest of the day with a 40pts uptick in the closing auction.
EARNINGs due Tuesday include Regal Hotels (78 HK), Kunlun Energy (135 HK), Shenzhen Int (152 HK), IDT Int (167 HK), Daphne (210 HK), Glorious Sun (393 HK), China Foods (506 HK), Shimao Group (813 HK), Guangzhou Baiyunshan Pharmaceutical (874 HK), China Taiping Insurance (966 HK), Chongqing Iron & Steel (1053), TCL Electronics (1070 HK), Goodbaby (1086 HK), CGN Mining (1193 HK), China Resources Gas (1193 HK), New China Life Insurance (1336 HK), Best Food Holding (1488 HK), Livzon Pharmaceutical (1513 HK), Yihai International (1579 HK), COFCO Meat (1610 HK), China Datang Corporation Renewable Power (1798 HK), Zhaojin Mining (1818 HK), Sunac China (1918 HK), SIM Tech (2000 HK), SSY Group Ltd. (2005 HK), Country Garden (2007 HK), ANTA Sports (2020 HK), Shanghai Fosun Pharmaceutical (2196 HK), Wison Engineering Services (2236 HK), Dawnrays Pharmaceutical (2348 HK) Jutal Offshore Oil Services (3303.HK), China Yongda Automobiles (3669 HK), China Harmony New Energy Auto (3836 HK).
EARNINGS OUT After market
YUZHOU GROUP (1628.HK) interim result ended June 2020. The revenue +20.4% YoY to RMB14.007 billion. The net profit amounted to RMB1.019 billion, -37.8% yearly.
EPS was RMB18.43 fen. An interim dividend of HK12 cents was declared, flattish yearly.
YUEXIU PROPERTY (123.HK) interim results for the period ended June 2020. Turnover +8.8% YoY to RMB23.714 billion. The net profit amounted to RMB1.995 billion, +6.7% YoY. EPS was RMB0.1288. An interim dividend of HK$0.057 was declared.
REGENT PACIFIC (575.HK) interim results ended June 2020. The loss widened to US$27.155 million from US$23.304 million in the corresponding period of the previous year. LPS was US1.478 cents. No dividend was declared.
TINGYI (322.HK) interim results ended 30 June 2020. Net profit +58.4% yearly to RMB2.38 billion. EPS equaled 42.33 fen. No dividend was declared.
YIXIN (2858.HK) interim results for the period ended June 2020. Turnover -48.6% YoY to RMB1.624 billion. The results swung into loss of RMB1.053 billion. LPS was RMB0.17. No dividend was declared.
DURING MARKET HOURS
R&F PROPERTIES (2777.HK) interim results for the six months ended 30 June 2020. Revenue -4.2% yearly to RMB33.591 billion. The net profit -5.8% yearly to RMB3.792 billion. EPS was RMB1.0849. An interim dividend of RMB0.38 was declared.
CHINA OVERSEAS Interim results 1H20 NP Sinks 3.7% to RMB20.53B, Revenue +11% yearly to RMB88.625 billion. Interim DPS HK45 Cents
AAC TECH interim results 1H20 Net Profit Falls 58.4% to RMB320M, Missing Forecast; Interim DPS HK$0.1
Out PRE MARKET
SINOPHARM (1099.HK) interim results for the six months ended 30 June 2020. Net profit -2.7% yearly to RMB2.896 billion, EPS equaled RMB0.93. No dividend was declared.
HEC PHARM (1558.HK) interim results announcement for the six months ended 30 June 2020. The net profit -36.2% yearly to RMB618 million. EPS was 70 fen. An interim dividend of 10 fen was declared.
TK GROUP HLDG (2283.HK)interim results announcement for the six months ended 30 June 2020. The net profit -63.8% yearly to $41.36 million. EPS was 5 cents. An interim dividend of 2 cents was declared.
YIP'S CHEMICAL (408.HK) interim results for the six months ended 30 June 2020. Net profit -33.5% yearly to $58.8 million. EPS was 10.4 cents. An interim dividend of 6 cents was declared.
OOIL (316.HK) interim results for the six months ended 30th June 2020. The net profit -26.5% yearly to US$102 million. EPS. was US16.3 cents. An interim dividend of US4.89 cents was declared.
C C LAND (1224.HK) interim results for the six months ended 30 June 2020. It reported loss of $1.87 million, against a net profit of $84.54 million over a year ago. LPS was 0.05 cents. No dividend was declared.
AFTER MARKET NEWS
AAC TECH (2018.HK)'s management said at the online results conference that the company will keep polishing its product mix, foreseeing plastic lens to be priced at $4-4.5 for mid-to-long term, given sizeable production efficiency of the company with edges of production cost. The pricing level may be more favorable with GM at above 40%, assuming WLG to realize mass production and substitute the traditional high-end plastic lens on the market. The MD voiced confidence that the 20-million-unit production capacity of WLG by the year end is achievable. As to the investment of XIAOMI-W (1810.HK) and OPPO in the optical unit, the management found it salubrious to the company, which optimized the shareholder structure of optical segment and improve industry position to increase value. As to whether AAC Communications will be split off for listing, Mok deemed it as sensitive inside information, for which the board of directors was not aware of any disclosable information or IPO underway that needed to be disclosed.
TENCENT (700.HK) and the strategic partner of the latter's e-sports technology ally, RAZER (1337.HK) attended the 2020 Global E-sports Summit and Tencent E-sports Annual Conference in Hainan, China today, at which a brand new Razer-Tencent e-sports custom suit was launched.
NEW WORLD DEV (17.HK) had earlier applied for a compulsory sale of the commercial/ residential property, State Theatre Building, at No. 277-291 King's Road, North Point. The Lands Tribunal granted today an order to allow the sale with a reserve price of $4.7 billion, logging the biggest amount on compulsory sale record. The company's spokesman welcomed the decision.
MTR CORPORATION (66.HK) announced that following the commissioning of the Tuen Ma Line (TML) Phase 1 earlier this year, work for the full opening of the TML has progressed well. The suitable measures for the structures at and near Hung Hom Station Extension are complete and the last section of overhead line was energized in July 2020, followed by commencement of dynamic train testing for the signalling system in August 2020. The overhead line energization is a critical milestone for the project as it allows train testing to commence along the whole railway alignment, said James Chow, Divisional General Manager – Projects Construction of MTR Corporation. It brings MTR a step closer to the full opening of the TML.
CHINA OVERSEAS (688.HK) has been deploying a prudent financial strategy, whose gearing ratio at 59.77% is relatively low as compared with its peers, said Chairman Yan Jianguo. The company does not seek abrupt expansion as it only pursues high-quality stable growth. Asked if the Chinese developer may achieve its FY20 sales target at $400 billion, General Manager Zhang Zhichao stated that the coronavirus pandemic during 1H20 has rendered the goal challenging, but the group is committed to meeting the target, which may still be achievable as long as the external environment remains fundamentally unchanged.
CHINA TELECOM (728.HK) the number of mobile subscribers was 346.07 million in July 2020. The net increase was 2.60 million, faster than June’s. During the month, the number of 5G subscribers was 49.27 million. The net increase was 11.43 million, up from 7.79 million in June.
At the invitation of counterparts, China's Foreign Minister Wang Yi is going to have formal visits to Italy, the Netherlands, Norway, France and Germany during the period from August 25th to September 1st, a spokesperson for the Ministry of Foreign Affairs announced at a press conference.
Market and Pre Market News at bottom of page.
JAPAN opened lower as covid concerns worry investors but rallied from around 10am from 22,900 to 23,000 going into lunch. PM initially retested to 22,930 (near Friday’s close) before trending higher to close +0.3%
S KOREA opened slightly higher following Friday’s US but sold down again on covid concerns Kosdaq tested 790 before bouncing and working higher to 810 level and then traded sideways for most of the session but rallied n the last 35 mins to close +2.5% Kospi tested 2,285 in the early sell-off before bouncing back to 2,330 level and then traded sideways to close +1.1%.
TAIWAN opened higher sold down tp 12,560 before rebounding to 12,700 and then traded sideways to close +0.3%
Short Selling HSI Monday 21% vs 20.7% Friday
Top Shorts Hang Lung Ppty (101) 52% (stock hit a new high), Ping An (2318) 49%, CLP (2) 40%, ICBC (1398 ) 38%, Sands China (1928) 35%, HSBC (5) 35%, Wharf REIC (1997) 34%, Sino Land (83) 34%, CCB (939) 34%, China Mobile (941) 32%, Want Want (151) 31%, Hang Seng Bank (11) 30%, China Res Land (1109) 30%, Country Garden (2007) 29% Sinopec (386) 27%, China Life (2628) 26%, NWD (17) 25%, Henderson Land (12) 25%
CONNECT FLOWS (increased DoD)
Northbound Rmb 44,241m Sell 22,257m : 21,984m Buy
Southbound HK$ 12,278m Sell 5,303m : 6,976m Buy
Northbound Rmb 63,916m Sell 30,848m : 33,069m Buy
Southbound HK$ 12,643m Sell 5,673m : 6,970m Buy
CHINA None due
Centre for Health Protection said there were 9 additional COVID-19 cases in Hong Kong today; (vs 25 cases Sunday). 4 with unknown origins
TENCENT (700.HK) +5.8%
AIA (1299.HK) +4.7%
HKEX (388.HK) +1.2%
PING AN (2318.HK) +0.6%
CCB (939 HK) unch
HSI & HSCEI Constituents on the move
SWIRE PACIFIC A (19.HK) +5.1%
WHARF REIC (1997.HK) +4.5%
CONCH CEMENT (914.HK) +3.8%
MENGNIU DAIRY (2319.HK) +3.8%
HANG LUNG PPT (101.HK) +3.6%, hitting new high
SUNAC (1918.HK) -3.5%
LONGFOR (960.HK) +3.1%
TECHTRONIC IND (669.HK) +1.5%, hitting new high
HSMI & HSSI Constituents on the move
COSMOPOL INT'L (120.HK) +38.5%
TYSAN (687.HK) -17.9%
JS GLOBAL LIFE (1691.HK) +14.9%
GCL-POLY ENERGY (3800.HK) -12.7%
TRULY INT'L (732.HK) +11.1%
WEIMOB INC (2013.HK) +10.7%
VPOWER GROUP (1608.HK) +10.6%
YADEA (1585.HK) +10.3%, hitting new high
CHINARES CEMENT (1313.HK) +7.6%, hitting new high
LI NING (2331.HK) +6.2%, hitting new high
*PETROCHEMS FIRM as Saudi Aramco suspended a $10b deal to build a refining and petrochemicals complex in China, 18 months after signing an agreement with local partners. CH OILFIELD (2883 HK +3.1%) PETROCHINA (857 HK +1.5%) SINOPEC (386 HK+1.4%)
Note Oil companies report this week except CNOOC which has already.
*CHINA BANKS FLAT after PBOC said China's current economic situation "complex and severe." He urged banks to support smaller companies through innovations in financial services and products. Investors also continue to assess cautiously the bad debt levels of Chinese banks. Also caution ahead of the banks reporting this week; most of Friday. CCB (939 HK+0%) ICBC (1398 HK +0%) ABC (1288 HK -1%) BOC (3988 HK +0%).
*E-COMMERCE STRONG MEITUAN DIANPING (3690 HK +10%) After 2Q results Friday net income 2.21b yuan, beating highest estimates. ALIBABA (9988 HK +4.8%) traded strong after reports said that several of its biggest investors have converted billions of dollars from US shares into Hong Kong stock in part to avoid potential US sanctions and de-listings of major
Chinese technology companies. I still think Trump could seek to stop US funds and individuals investing in Chinese tech companies if they are forced to delist in the US.
TENCENT (700 HK +4.6%) as US administration is said to be reassuring US firms that they can still do business with WeChat.
*TECH & COMPONENTS WEAK despite the US saying US companies like APPLE can still do business with WeChat. There are concerns about slowing of iPhone sales if WeChat service is being banned in the US. Although a US broker Friday said large number of iPhones are prime for replacement. FT reported that Huawei and ZTE (763 HK -1%) are slowing down China 5G rollout as US curbs start to bite and they try to exclude US equipment. Huawei told at least one Taiwanese component supplier last week to suspend shipping smartphone parts due to its inability to procure chips from MediaTek Inc.
AAC TECH (2018 HK -1.8%) 2Q net income -21% YoY to 268m yuan, missing est.
QTECH (1478 HK -4.7%) BYDE (285 HK -7.5%) FIT HONG TENG (6088 HK -3.1%).
TRULY (732 HK +11%) on a positive profit-alert.
*CHINA PROPERTY MIXED some concerns on policies unncertainty as PBOC and Ministry of Housing, have reportedly finished drafting capital monitoring and financing management rules for real estate companies, but no details yet. Also a number fo property companies report this week
SUNAC (1918 HK -3.4%) EVERGRANDE (3333 HK -3.1%) TIMES CHINA (1233 HK -2.5%). COIL (688 HK +0.2%) reported 1H net inocme -3.7% YoY to 20.53b yuan.
LONGFOR (960 HK +3%) signed a strategic co-op agreement with Hefei Yaohai district.
*BIOTECH/VACCINE WEAK after CANSINO BIO (6185 HK -4.8%) reported 1H net loss 102.2m yuan;
INNOVENT (1801 HK -3.1%) 3SBIO (1530 HK -2.9%).
*HK CONSUMER FIRM as HK reported only 9 new cases today, the lowest since the July outbreak and the proposal to test the whole HK population. CAFE DE CORAL (341 HK +4%) TAI HING (341 HK +3.1%) SASA INTL (178 HK +4%) I.T. (999 HK +5%) GIORDANO (709 HK+ 4.7%).
At the coming the 40th anniversary of the establishment of Shenzhen Special Economic Zone dated 26 August, Chinese President Xi Jinping is going to deliver a speech at the anniversary celebration event, SingTao Daily reported. Hong Kong Chief Executive Carrie Lam and certain magnates from the business sector will be invited to the event, although the timetable of the celebration remains yet to be finalized, subject to Xi' schedule. The event may be held in September.
Apple targets FY20 iPhone production scale at around 200 million units, roughly the same as its April forecast, foreign media reported. As 2020 celebrates the beginning of the 5G era, the new iPhone model to be launched this fall will be the market spotlight, said suppliers.=
Taobao Taiwan, which was established by UK-based Claddagh Venture Investment Limited, is in fact controlled by BABA-SW (9988.HK) and therefore is in violation of the regulations governing cross-straits relations, the Ministry of Economic Affairs of Taiwan announced. Claddagh Venture Investment should apply for an operating license according to the regulations but it did not. It would be fined NT$410,000 and would need to either withdraw its investment or make rectification in 6 months.
TENCENT (700.HK)'s esports division has reached a strategic cooperation agreement with FC Barcelona and the two sides will engage in deep communication with regard to esports competitions, esports education and industry exchange in the future with a view to exploring the many possibilities of collaboration between sports and esports.
BANK OF CHINA (3988.HK) (601988.SH), BABA-SW (9988.HK) and Ant Group entered into a comprehensive strategic cooperation agreement in Hangzhou today. This agreement signifies a starting point for deepening of collaboration amongst banking corporations and represents a milestone of Chinese banks' transformation into digitalisation, according to Liu Liange, chairman of Bank of China.
TENCENT (700.HK) is nearing a deal to acquire LEYOU TECH H (1089.HK), which could raise the latter's valuation to around US$1.3 billion, Bloomberg citing insiders. The companies are planning to offer HK$3.3-3.4 for each share of LEYOU TECH H.
Liu Zili, Vice Chairman and General Manager of Kweichow Moutai Group, sentenced to 11-year-and-six-month imprisonment and RMB1-million penalty for accepting bribes, according to the WeChat account of the Qiannan Intermediate Court of Guizhou Province. Under the judgement, the Chinese state treasury will confiscate the illicit property, in an amount of RMB18.5478 million, and relevant interest Liu has received. The court found that the defendant had in 2008-2018 sought benefit for others leveraging on the convenience from his post and harvested RMB18.5478 million of reward directly or via his wife and daughter.
Tesla's made-in-china Model Y will consist of two models initially with pre-sale prices ranging between RMB488,000 to RMB535,000, Mainland media reporting quoting information from Tesla's official website.
ByteDance investors are discussing how to use their stakes in the Chinese tech firm to finance their bid for TikTok, Reuters citing insiders. The TikTok assets for sale may be worth between US$25 billion and US$30 billion, the people said. The ByteDance investors are in talks to exchange some or all of their stakes with equity in the short video app's assets.
China will give Mekong River countries priority access to COVID-19 vaccines once they are developed and brought into play, said Chinese Premier Li Keqiang at the 3rd Lancang-Mekong Cooperation leaders' meeting today (24th).
Huawei's smartphone component suppliers received a notification last week that Huawei has suspended the development of a new project for MediaTek's supply issues, Taiwan's Liberty Times reported. Huawei may be exposed to risks of being ousted from the smartphone market next year until the chip supply issue is solved, opined market analysts.
LANDING INTL (582.HK) has made a supplemental announcement to profit warning, expecting a slight decrease of approximately 5% in consolidated net loss for the six months period ended 30 June 2020 as compared with the corresponding period in 2019.
PRE MARKET NEWS
Not in this mornings note
The PBoC today commenced 7-day and 14-day reverse repurchase operation, in respective amount of RMB100 billion and RMB60 billion, foreign media reported.
Chinese Embassy in Japan announced that it accepts the visa applications of Japanese holding residency permits in China, including businessmen and their relatives, effective today. Their applications will also be accepted even though they do not have residency permits, if they have invitation letters from local governments. The Embassy has resumed visa issue for economy, science technology and humanitarian purposes, effective 17 June.
Chinese Premier Li Keqiang claimed that China had secured hundreds of millions of market entities in the first half of year, while completing its mission of boosting over 9 million urban jobs, reported Xinhua. The country is poised to achieve a positive economic growth for the year, Li added.
TENCENT (700.HK)'s WeChat Work (international version) has been renamed as WeCom without official notice, reported Chinese media. It is believed that the name change is related to US President Donald Trump's WeChat ban.
USD/ HKD remained resilient, close to the Strong-side Convertibility Undertaking. It last stated at 7.7506.
Russia stands ready to join hands with China and Huawei on 5G technology, as Foreign Minister Sergei Lavrov told foreign press. Moscow is willing to work together with other countries on jointly developing and implementing innovative technologies, furthered Lavrov.
CSOP plans to unroll the new ETF index, CSOP HS TECH (3033.HK), with a board lot size of 200 fund units and dividend payable every December, as local media cited the prospectus and product summary on the Stock Exchange website. It is the first ETF tech index product in Hong Kong.
TRULY INT'L (732.HK) PROFIT ALERT +VE . It is expected that the consolidated profit for the 6 months ended 30 June 2020 would be significantly increased by approximately 1.1 times to approximately HK$300 million as compared to the consolidated profit for the 6 months ended 30 June 2019.
Temasek, Baillie Gifford and Matthews Asia are among the several major BABA-SW (9988.HK) investors that have converted their ADR holdings in Alibaba (BABA.US) into Hong Kong-listed shares, Bloomberg citing sources. This is driven by potential US de-listing of locally-listed Chinese stocks.
DONGFENG GROUP (489.HK) PROFIT WARNING -VE The Company expects to record a decrease in net profit of approximately 60% for the interim period ended 30 June 2020, as compared to that for the same period in 2019.
National Development and Reform Commission (NDRC) announced that the domestic gasoline and diesel prices had been raised by RMB85/ton and RMB80/ton from 24:00 last Friday (21 August).
SITOY GROUP (1023.HK) PROFIT WARNING -VE. The Group is expected to record a loss for the year ended 30 June 2020 with a range from approximately HK$110 million to HK$140 million, as compared to a profit of approximately HK$126 million for the corresponding period in 2019.