Aug 27 HK WRAP. HSI -211pts T/O +13% Shorts +22

31 Aug

Aug 27 HK WRAP. HSI -211pts T/O +13% Shorts +22

HSI -211pts (-0.8%) 25,281  HSCEI -98pts (-1%) 10,202 T/O HK$150.6bn (+13.1% DoD)  

markets opened lower with caution ahead of Powells speech later today. French Business Confidence rose and Eurozone loans data was higher than forecast. UK car production remained weak.
US Futures Futures opened -23pts and are currently -70pts. Powells speech in focus. Other data GDP Growth Rate, GDP Price Index, Corporate Profits, Initial Claims and 4 week average, PCE Prices, Core PCE Prices, Pending Home Sales, EIA Natural Gas Report, Kansas Fed Manufacturing Index.

CSI 300 Closed +25pts (+0.5%) @ 4,731
Market opened higher but initially sold down into the red as the Industrial Profits (YTD) Jul -8.1% vs -12.8% Jun revised (F/cast was -6.2%) missed. We then saw a bounced back but the market then trended lower to 4680 in choppy trading. Having tested the support the market then worked back to around the opening level going into lunch. PM saw the market initially work higher to 4,730 but then trended lower for the next hour to 4,710 and then saw a sharp rally into the close which was around the day high. Looked like team China at work today, certainly going into the close.
Sentiment remains cautious. Trade deal news is +VE but then there is news of more companies being sanctioned. Also tension as China fires so called ‘aircraft carrier killers’ in live fire exercises. The drop Industrial Profits eased MoM but missed forecasts.

HSI Market Opened slightly lower but sold down to 25,200 on the China data and then traded sideways for 90 minutes before working higher into lunch. PM saw some initial selling and then traded sideways in a tight range with resistance at 28,300 into the close. Mainly rotational trading today on earnings, with traders cautious as earnings are in full flow with some key names still to report, especially the banks on Friday. The announcement of Ant IPO raising concerns that it will suck liquidity from other stocks and reduce margin availability too.

EARNINGs due out Friday include Far East Holdings (36 HK), Shangri La (69 HK), Poly Property (119 HK), China Merchants Port (144 HK), Kingboard Holdings Limited (148 HK), Tsingtao Brewery (168 HK), Jiangsu Expressway (177 HK), Melco (200 HK), Ping An Securities Group (231 HK), AVIC (232 HK), CITIC (267 HK), BYD Electronic (285 HK), Wing On (289 HK), China Travel (308 HK), Angang Steel (347 HK), Jiangxi Copper (358 HK), Wing Tai Property (369 HK), Sinopec (386 HK), China Railway (390 HK), Minth (425 HK), Dongfeng Motor (489 HK), bonjour (653 HK), China High Speed Transmission (658 HK), China Eastern Airlines (670 HK), Genting (678 HK), CAR (699 HK), Truly (732 HK), Air China (753 HK), Solargiga Energy (757 HK), ZTE (763 HK), China Rare Earth (769 HK), Global Brands (787 HK), Mingfa (846 HK), China Construction Bank (939 HK), Lianhua Supermarket (980 HK), Datang Int (991 HK), Anhui Expressway (995 HK), C Banner (1028 HK), China Southern Airlines (1055 HK), China Shenhua (1088 HK), Chong Hing Bank (1111 HK), Yanzhou Coal (1171 HK), Sino Biopharm (1177 HK), China Railway Construction Corporation (1186 HK), Midland (1200 HK), BYD (1211 HK), Agricultural Bank of China (1288 HK), Xtep (1368 HK), Industrial and Commercial Bank of China (1398 HK), Postal Savings Bank of China (1658 HK), CGN New Energy (1811 HK), China Coal Energy (1898 HK), COSCO Shipping (1919 HK), Bank of Chongqing (1963 HK), China Minsheng Banking (1988 HK), Cosmo Lady (2298 HK), Great Wall Motor (2333 HK), China Shineway Pharmaceutical (2877 HK), China National Building Material (3323 HK), Bank of Communications (3328 HK), Anton Oilfield (3337 HK), Waison (3393 HK), GCL-Poly Energy (3800 HK), SinoTruk (3808 HK), China Merchant Bank (3968 HK), China Railway Signal & Communication Corporation (3969 HK), China Molybdenum (3992 HK), Haitong Securities (6837 HK), China Galaxy Sec (6881 HK)

EARNINGS OUT After market
WEICHAI POWER (2338.HK) interim result ended June 2020. Revenue +4% YoY to RMB94.495 billion. Net profit RMB4.68 billion, -11.5% YoY. The Board passed a resolution to propose the distribution to all shareholders of an
interim cash dividend of RMB1.5 for every 10 shares.
GREAT EAGLE H (41.HK) interim result ended June 2020. Revenue -42% year on year to HK$2.724 billion. The profit swung into loss of HK$6.513 billion. LPS was HK$9.05. A total dividend of HK$1.83 was declared, including an interim dividend of HK33 cents and a special dividend of HK$1.5, against an interim dividend of HK33 cents in the corresponding period of the previous year.
Ping An Bank (000001.SZ) interim results. In 1H20, the net profit attributable to shareholders of the parent company -11.2% yearly to RMB13.678 billion. Basic
EPS equaled RMB0.66. NIM was 2.59%, down 3 bps yearly.
XD INC (2400.HK) interim result ended June 2020. Revenue +10% year on year to RMB1.44 billion. The net profit RMB207 million, -12.7% yearly.
EPS was RMB0.49. No dividend was declared.
CHINA VANKE (2202.HK) unveiled the results for the six months ended 30 June 2020. Revenue +5% yearly to RMB146.35 billion. The net profit +5.6% yearly to RMB12.508 billion. EPS was RMB1.11. No dividend was declared.
KWG GROUP (1813.HK) interim result ended June 2020. Revenue +26.6% year on year to RMB13.483 billion. The net profit RMB3.516 billion, -41% yearly. EPS
was RMB110.7 cents. An interim dividend of RMB40 cents was declared, vs a dividend of RMB32 cents in the corresponding period of the previous year.
SINOTRANS (598.HK) interim results for the period ended June 2020. Turnover +5.2% year-on-year to RMB39.691 bn. The net profit RMB1.215 bn, -19.9% YoY.
EPS was RMB0.1642. No dividend was declared.
CC NEW LIFE (9983.HK) interim result ended June 2020. Net profit RMB184 million, +70.3% yearly. EPS was RMB0.187. An interim dividend of HK6.6 cents was declared.
FOSUN INTL (656.HK) unaudited interim result ended June 2020. Net profit RMB2.012 billion, -73.6% yearly. EPS was RMB0.24. No dividend was declared.
EMPEROR WATCH&J (887.HK) interim results for the period ended June 2020. Turnover -61.3% year-on-year to HK$931 million. The results swung into loss of HK$114 million against a profit of HK$118 million for the year-ago period. LPS was HK1.68 cents. No dividend was declared against a dividend of HK0.35 cents for the same period of last year.
PETROCHINA 1H20 Swings to Loss of RMB29.98B; Interim Div 8.742 Fen
EVERG HEALTH (708.HK) interim result ended June 2020. The total revenue rose 70.3% year on year to RMB4.51 billion. The loss widened to RMB2.274 billion from RMB1.527 billion in the corresponding period of the previous year. LPS was RMB26.319 cents. No dividend was declared.
COSCO SHIP PORT (1199.HK) interim results for the period ended June 2020. Turnover -12.6% year-on-year to US$453 million. The net profit US$163 million, +10.5% yearly. EPS was US5.17 cents. An interim dividend of HK16 cents (equivalent to US2.068 cents) was declared against a dividend of US1.9 cents in the corresponding period of the previous year.
LEGEND HOLDING (3396.HK) interim results for the period ended June 2020. Turnover +3.1% year-on-year to RMB184.866 billion. The net profit RMB637 mn, -76.1% yearly. EPS was RMB0.27. No dividend was declared.
PING AN (2318.HK) interim result ended June 2020. Total revenue -1% year on year to RMB683.28 billion. The net profit RMB68.683 billion, -29.7% yearly. An interim dividend of RMB0.8 was declared, against a dividend of RMB0.75 in the corresponding period of the previous year.
KAISA GROUP (1638.HK) interim results for the period ended June 2020. Turnover +10.9% year-on-year to RMB22.297 billion. The net profit RMB2.769 billion, -2.4% yearly. EPS was RMB0.456. An interim dividend of HK3 cents was declared, staying flat year-on-year.
CITIC BANK (998.HK) interim results ended June 2020. Net profit RMB25.541 billion, -9.8% yearly. EPS equaled RMB0.52. No dividend was declared.
CHINA EB LTD (165.HK) interim results for the period ended June 2020. Turnover +60.1% year-on-year to HK$9.069 billion. The net profit HK$765 mn, -58.9% yearly. EPS was HK45.4 cents. An interim dividend of HK14 cents was declared, against a dividend of HK25 cents in the year-ago period.
HKTV(1137.HK) interim results ended June 2020. Profit amounted to $109 million, as compared with $155 million in loss a year ago. During the period, GMV on order intake reached $2.747 billion, representing 113.6% year-on-year growth.

CFO Chai Shouping, at the results conference call, predicted that the import gas loss of the group in 2H20 will be milder than 1H20 as the import gas cost in 2H20 is expected to be lower than 1H20. The group is mapping out a new energy plan for China's "14th Five-year Plan" in hope of developing low-carbon energy ecosystem and amplify investment in geothermal, wind and solar power, aiming zero carbon emissions in 2050, the CFO added.
He forecast that the average Brent oil price will range US$41-43/ barrel for the whole year with the price likely higher in 2H20 than 1H20. In face of falling price, the group adopted multiple measures in 1H20 that helped attain RMB14.5-billion cost-saving. Such measures will be kept in place for 2H20. Despite loss making during 1H20, the company managed to hike interim dividend to 8.742 fen as it remained actively optimistic about the distribution in spite of hardships. The group has been maintaining its dividend policy for years at around 45% of net profit. It hoped to continue the return to shareholders in future and retain steady dividend policy.
HKTV (1137.HK) Vice Chairman Wong Wai Kay, Ricky said that the company acquired the successful experience in transforming itself from an online supermarket to an online shopping mall, in addition to the knowledge of warehouse, logistics and infrastructure. Harnessing such experience and knowledge, the company will set up two to three overseas subsidiaries in coming half year to promote the company's system and solution to the world. Citing the British company Ocado as an example, it only has to provide the technology to help traditional supermarkets shift to online platform to yield over GBP80 million revenue a year as turnover sharing. Different from Ocado, HKTV will target companies, such as property developers, that intend to invest in building large online shopping platform. Wong hoped this business model to be long-lasting.
The Communications Authority (CA) approved an application by TVB (511.HK) for changes in its shareholding structure arising from the transfer of certain shares in Young Lion Holdings Limited (YLH), which indirectly held 26% of the voting shares of TVB via its wholly owned subsidiaries, from its existing shareholders to Ever Port Limited, a company controlled by Mr Kenneth Hsu. The CA also approved an application by Profit Global Investment Limited (PGIL) and related parties to hold up to 3.9% of the voting shares of TVB as unqualified voting controllers as part of the changes in TVB's shareholding structure. The changes in the shareholding structure of TVB have taken effect following completion of the relevant transactions today. Upon completion of the transactions, the proportion of the voting shares of TVB held by YLH has been reduced from 26% to 22.1%, with PGIL and related parties receiving 3.9% of the voting shares of TVB in exchange for surrendering all of its YLH shares. YLH remains the major shareholder of TVB, with Mr Hsu becoming the ultimate voting controller of 22.1% of TVB's voting shares held by YLH.
HKD reached 7.75 against US dollar, the strong-side convertibility undertaking, during local trading hours. The Hong Kong Monetary Authority (HKMA) injected HK$3.488 billion into the market, absorbing the US$450 million disposal in the market. Hong Kong's banking balance as at August 31st will increase to HK$191.905 billion.
EVERG HEALTH (708.HK) At the first phase, it's seeking to produce 400,000 vehicles at its production bases in Shanghai and Guangzhou, said Vice Chairman Liu Yongzhuo. Production trial may start next month, followed by mass production in 2H21. The group invested around RMB14.7 billion in the EV business in 2019, mainly used for equity acquisition, base construction, R&D expenditure, said CFO Pan Darong.
The Hong Kong Jockey Club (the Club) announced that all Off-Course Betting Branches (OCBBs) will be re-opened on non-race-days from 29 August. The opening hours will start from 12:00 nn to 8:00 pm.
Centa Valuation Index (Major Banks) (CVI) last printed at 34.90 this week, -8.59 pts WoW Some homeowners became willing to trim property prices for sale under the relentless epidemic, said Centaline Property. Therefore, banks' valuations have descended in the near term.
At Hang Seng Investment Management press conference, CEO Rosita Lee stated that capital is flooding into the technology sector, which has been rapidly expanding in the recent years. The firm is going to roll out HSTI-tracking ETF, furthered Lee. As the product has moved on to the final stage of review and approval, it may hit the market very soon.

Regional Markets
JAPAN opened flat and trended slightly lower all day with caution ahead of Powells speech tonight and covid concerns. At lunch the All Industry Activity Index Jun +6.1% vs -4.1% May revised (F/cast was -2.4%) Market closed -0.4%
S KOREA BoK kept the interest rate unchanged as expected. Markets opened lower and trended lower all day. The new stimulus package failed in inspire as covid concerns remain high Kosdaq closed -0.6% and the Kospi -1.1%.
TAIWAN opened higher but sold down to yesterday’s close and then traded sideways closed -0.3%

Short Selling HSI Thursday 22.1% vs 18.9% Wednesday
Top Shorts Sino Land (83) 61%, Want Want (151) 55%, HSBC (5) 47%, China Res Land (1109) 46%, CLP (2) 38%, Hang Lung Ppty (101) 37%, Country Garden (2007) 35%, CCB (939) 35%, Power Assets (6) 33%, Petrochina (857) 33%, China Mobile (941) 33%, CNOOC (883) 32%, China Shenhua (1088) 32%, MTRC (66) 31%, BoC HK (2388) 31%, ICBC (1398 ) 30%, Hang Seng Bank (11) 30%, Ping An (2318) 29%, China Life (2628) 29%, Mengniu Dairy (2319) 29%, BoC (3988) 25%.

Northbound Rmb 38,775m Sell 20,448m : 18,327m Buy
Southbound HK$ 14,471m Sell 6,301m : 8,170m Buy

Northbound Rmb 52,500m Sell 25,692m : 26,808m Buy
Southbound HK$ 14,053m Sell 5,833m : 8,220m Buy

Industrial Profits (YTD) Jul -8.1% vs -12.8% Jun revised (F/cast was -6.2%)
Signs of a gradual recovery from the COVID-19 pandemic. Profits at state-owned industrial firms -23.5% and those at private-sector -5.3%.
Among the 41 industries surveyed, 29 saw profit falls. The mining and raw materials industries posted the largest profit declines, while company cash flow pressures remained high and uncertainty surrounding future profit growth increased amid tensions between Washington and Beijing ahead of the US presidential elections in November. In July alone, industrial profits +19.6% YoY to CNY 589.5 billion, the third straight month of gains and by the most since June 2018.
Centre for Health Protection said there were 21 additional COVID-19 cases in Hong Kong today; (vs 24 cases Wednesday). 18 local infections 4 from unknow sources

Active Heavyweights
TENCENT (700.HK) +1.2%
PING AN (2318.HK) -0.9%
HKEX (388.HK) -0.7%
AIA (1299.HK) -0.4%

HSI & HSCEI Constituents on the move
CHINA UNICOM (762.HK) -6.1%
AAC TECH (2018.HK) +3.7%
CNOOC (883.HK) -3.5%
SHIMAO GROUP (813.HK) -3.3%

HSMI & HSSI Constituents on the move
ZA ONLINE (6060.HK) +22.9%
PANDA GREEN (686.HK) +14.7%
CRRC TIMES ELEC (3898.HK) -13.1%
CMGE (302.HK) -11.2%
CG SERVICES (6098.HK) +7.1%, hitting new high
XINYI SOLAR (968.HK) +4.7%, hitting new high
LVGEM CHINA (95.HK) +3%, hitting new high

Market Commentary
*PETROCHEMS WEAK falling US stockpiles and weaker demand as a hurricane hits and shuts down of Gulf Coast refineries.
CH OILFIELD (2883 HK -3.8%) as 1H net income +76% YoY to 1.71b yuan. CNOOC (883 HK -3.7%) deferred the startup of the Buzzard Phase II project in the UK North Sea owing to lower oil prices and other factors.
Concerns that the upside on the oil price may be limited in the near term given only a moderate recovery in demand and Covid's lingering threat. PETROCHINA (857 HK -1.5%) SINOPEC (386 HK -2.2%).
*HK BANKS WEAK as US Sec of State Pompeo accused HSBC (5 HK -2% trading at a 5 year low) of aiding Beijing's clampdown on Hong Kong. He cited reports that the bank had stopped the accounts of the executives of publisher Next Media from accessing their personal credit cards and bank accounts after the arrest of founder Jimmy Lai. He also said HSBC continued to provide services to people sanctioned by the US. HANG SENG (11 HK -1.2%) STANDARD CHART (2888 HK -1.6%).
*E-COMMERCE FIRM optimism as ANT Group's IPO in HK and Shanghai kicks off.
MEITU (1357 HK +9.6%) recorded a narrower 1H net loss of 159.5m, compared with a net loss of 371m yuan in the same period last year. Total monthly active users across all apps were 295.4 million in June, +4.6% from Dec 2019. ALIBABA (9988 HK -0.4%) JD.COM (9618 HK +0.4%) MEITUAN (3690 HK +4.8%).
XIAOMI (1810 HK +12%) after better-than-expected revenue and net profits last quarter, driven by its new premium smartphones and rising overseas demand. For the quarter ended June, net profit +129.8% to 4.49b yuan. Revenue +3.1% to 53.5b yuan, beating analysts' expectations.
Yesterday's sold-off chip and component makers rebound as Chinese-made chips and components are seen in higher demand amid US sanction on Huawei and other companies. SMIC (981 HK +3.4%) HUA HONG (1347 HK +3.9%) AAC (2018 HK +3.8%).
CHINA LIFE (2628 HK -0.3%) as 1H net income -19% YoY to 30.54b yuan, as the coronavirus pandemic hit investment returns and policy sales. Net income narrowed from the first-quarter slump amid nationwide lockdowns.
BUT ZA ONLINE P & C (6060 HK +21%) reported 1H net profit rose 4.19 times to 490m yuan, benefiting from the lockdown in China due to Covid-19 outbreak.
*INFRASTRUCTURE WEAK as CHINA COMM CONS (1800 HK) and its units are reportedly among the 24 firms sanctioned by the US over South China Sea construction. Additionally US official also cited non-transparency problem with the group. CH RAIL CONS (1186 HK -3%) CH STATE CONS (3311 HK -5.4%).
SINGAMAS (716 HK -6%) after interim net loss of US$5.33m.
COOLPAD (2369 HK-6.7%) reported 1H interim net loss of HK$65.92m.
CRRC TIMES (3898 HK-13.6%) reported 1H net profit -35% to 688m yuan.

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