In a favorable atmosphere, the Hong Kong stock market has continued to strengthen without any doubts. Today, it jumped up steadily, closing with the Hang Seng Index up 1.62%.
[Market Analysis]
In a favorable atmosphere, the Hong Kong stock market has continued to strengthen without any doubts. Today, it jumped up steadily, closing with the Hang Seng Index up 1.62%.
According to the Ministry of Foreign Affairs website, the spokesperson announced on July 21 that, following discussions between China and Europe, CoStar, the President of the European Council, and Ursula von der Leyen, the President of the European Commission, will visit China on July 24. The focus of this summit will be on bilateral relations and global geopolitical challenges, including the Ukraine crisis. Additionally, the leaders will discuss how to ensure a more balanced and mutually beneficial trade relationship, as well as common concerns such as climate change, biodiversity, and promoting green transformation. Expectations are high for achieving results; yesterday there was some pre-trading in photovoltaic polysilicon like GCL TECH (03800), looking forward to news catalysts.
As Europe is set to talk with us, the U.S. is also moving quickly to sign an agreement with Japan. On Tuesday, Eastern Time, President Trump announced that a trade agreement had been reached between the U.S. and Japan. The U.S. will lower the tariff rate on Japan from the previously announced 25% to 15%. Japan will invest $550 billion in the U.S. and open its market to rice and other agricultural products.
This agreement is essentially a compromise, as Japan originally demanded a 10% reduction, but this is still acceptable. On the other hand, the Philippines’ Marcos took the initiative to discuss tariffs with Trump in the U.S., only receiving a symbolic reduction of 1%, from 20% to 19%, and was told by Trump: I don’t mind you getting along well with China, because we also have a good relationship with China. This is quite awkward and shows a lack of respect. Being reduced to a pawn results in this kind of outcome.
Moreover, the third round of U.S.-China trade talks will be held next Monday and Tuesday in Stockholm, Sweden. This time, the U.S. has added content regarding the second round of sanctions against Russia, which is likely to be rejected. Following this, the U.S. will talk with the EU, marking critical junctures. From market feedback, the outcome of the talks does not seem to have a significant impact on us, regardless of whether they go well or poorly.
The stocks related to the Yaxia hydropower station, which were popular for several days, all adjusted today. This is normal; a strong upward trend cannot rise every day. These adjustments do not affect the overall situation; as market confidence strengthens, other stocks will follow.
The long-silent Internet giants stood up today, with Tencent (00700) leading the way. The National Press and Publication Administration announced on July 22 the latest batch of game license approvals, a total of 127 domestic and 7 imported games were approved, including the import game “Ultimate Showdown” operated by Tencent’s Chengdu Shiyu. The regular issuance of licenses enhanced confidence.
Additionally, there is less than a day left before the official release of the domestic game “Ming Dynasty: Feather of Abyss”. Some media scores have already been announced, with the globally recognized game media IGN giving it a score of 8. While it may not compare to “Black Myth”, it is still quite impressive. This demonstrates the growing influence of domestic games in the international market, and today Tencent (00700) surged nearly 5%, reaching an annual high. Other stocks like NetEase (09999), Alibaba-W (09988), and Meituan (03690) also rose by nearly 3%.
On July 23, Eddie Yue Wai-man, the President of the Hong Kong Monetary Authority, spoke again about stablecoins: We have noticed much recent speculation regarding the application process, and we will announce a summary explanation of the “Stablecoin Issuer Licensing System” next week. The document will outline the arrangements for the HKMA’s acceptance and processing of license applications. With the stablecoin timeline approaching, the securities stocks also performed positively, with CC SECURITIES (01375), CITIC SEC (06030), and GF SEC (01776) all rising over 3%.
During this cyclical adjustment, consumer stocks began to take action. “The world’s number one internet celebrity” MrBeast (real name Jimmy Donaldson) announced that he would start his live streaming debut on his Chinese internet platform from the US, scheduled to be broadcast on Kuaishou (01024) on July 26. It is reported that MrBeast has 0.415 billion fans on YouTube, with approximately 0.8 billion followers across all platforms, making him more popular than “Thyroid Brother” IShowSpeed, who came to China this March. Kuaishou (01024) surged over 7% directly.
The similarly themed STARPLUS LEGEND (06683) surged over 24% today due to the presence of Chinese music superstar Jay Chou on Douyin on July 9, as the market holds high expectations for the wealth realization brought by such high-traffic celebrities.
The innovative drug sector continues to experience performance-driven catalysts. WUXI XDC (02268) announced that the group expects revenue in the first half of 2025 to grow over 60% year-on-year, with adjusted net income (excluding interest income and expenses) expected to increase by over 67%, and net income expected to rise by over 50%. Today it rose 8%; Kingsoft (01548) released a positive profit announcement, expecting to turn profit in the first half of 2025, with adjusted pre-tax profit expected to be approximately $0.1754 billion to $0.2046 billion, compared to a pre-tax loss of about $0.1279 billion in the same period last year. Today it rose nearly 7%. Actually, after WUXI APPTEC (02359) released impressive results last time, the market had good expectations for the CXO sector, with other varieties like PHARMARON (03759) also rising nearly 8%.
Yesterday, the anti-involution coal stock YANCOAL AUS (03668) rose over 5% again. Today, this trend reached the papermaking industry. Recently, the Beihai municipal government in Guangxi released a public consultation draft for the environmental impact assessment of ND PAPER’s upgrading and efficiency improvement project. The company plans to upgrade existing projects while building a 0.8 million-ton unbleached chemical pulp production line and a 0.5 million-ton craft paper production line, along with a sodium recovery system (including a lime kiln) and supporting environmental projects, fundamentally controlling low-end production capacity and advancing towards high-end development.
Recently, ND PAPER (02689) announced another price increase, with an increase of 30 yuan/ton. This is the third round of price increase notices issued by this paper company since July 1 and July 10, with the reason still being “higher operating costs.” Today, the stock rose nearly 9%; other varieties, such as LEE & MAN PAPER (02314), increased by nearly 6%.
Today, Swancor Advanced Materials Co., Ltd. (688585.SH) once again hit the limit up, recording a temporary streak of 11 consecutive boards. The cumulative increase over the 11 trading days exceeded 630%. The reason behind this is that Shanghai Zhiyuan New Technology Co., Ltd., founded by “Huawei genius” Zhihui Jun, intends to acquire at least 63.62% of its shares, indicating the market’s crazy pursuit of the Robotics industry, with UBTECH (09880) also rising nearly 6% today.
Yesterday, NIO (09866) was mentioned, and the Lido L90 officially started pre-sales on July 10. According to data as of mid-July, the order quantity has reached 0.03-0.035 million vehicles, exceeding market expectations. Sales representatives indicated that during the pre-sale period of the Lido L90, store visitor volume increased by 3-4 times, and nearly half of the customers are comparing it with the Ideal L8 and i8, indicating a high level of market attention. It seems the competitiveness is indeed strong, and today the stock rose nearly 9%.
[Sector Focus]
On July 23, the National Copyright Administration issued the “Opinions on Accelerating the High-Quality Development of Copyright Undertakings,” which pointed out the need to promote software legalization deeply. It emphasized the role of the inter-ministerial joint meeting mechanism in promoting the use of genuine software, to continuously consolidate the achievements of software legalization in government agencies, state-owned enterprises, and Financial Institutions, and further promote the software legalization work in key industries and areas such as education and health.
This genuine software mainly refers to domestic software, as the software used in government agencies, state-owned enterprises, and Financial Institutions belongs to important national departments, involving national security and people’s livelihood, making the use of genuine domestic software a trend.
Key beneficiaries: KINGDEE INT’L (00268), KINGSOFT (03888), FENBI (02469), INSPUR DIGI ENT (00596).
[Stock Picking]
TONGCHENGTRAVEL (00780): Significant growth in the core OTA business, strong performance in international business.
This morning, the Yunnan Financial Regulatory Bureau issued a statement saying that it will promote finance to boost consumption, encouraging banks and institutions to increase the supply of consumer financing and expand the application scenarios for consumer finance. In the past month, financial regulatory bureaus from various places including Yunnan, Fujian, Qinghai, and Jilin have issued documents and deployed work related to finance promoting consumption, and some regulatory authorities have clearly stated that “financial assistance to boost consumption will be included in daily supervision.”
Commentary: Promoting financial assistance for consumption should significantly benefit the tourism industry. The company’s first-quarter performance exceeded expectations, with both revenue and Net income achieving substantial growth, releasing brand effects. Although revenue from tourism decreased by 11.8% year-on-year, domestic demand remained strong, and international business grew rapidly. The company is a leading one-stop tourism service platform in China, currently ranked among the top three in the OTA industry, engaging in deep cooperation with major shareholders Tencent and Trip.com.
The company is actively expanding its hotel management, vacation, and other businesses, gradually developing the international market, which is expected to bring incremental performance. By business segment: Core OTA business: Revenue increased by 18.4% year-on-year, exceeding market expectations by 1%; International business: International flight tickets and hotel night volumes increased more than 40% and 50% year-on-year respectively, and it is expected that future user consumption frequency and ARPU will increase, improving profit margins.
The company’s air ticket business maintains a strong growth momentum, and market share steadily increases, with air ticket volumes in mainland China growing by single digits, while international ticket volumes increased by over 40%, contributing single digits to traffic revenue. It is expected that the company’s sales expense ratio will further decline year-on-year in Q2 2025, leading to sustained improvements in the core OTA profit margins.
Additionally, the company announced on April 17, 2025, the acquisition of Wanda Hotel Management, which is expected to fill the gap in high-end hotel management and create a more complete hotel management brand matrix, which is likely to enhance revenue and profits. TONGCHENGTRAVEL benefits from Tencent and Trip.com’s flow and inventory resource competitive advantages, with domestic business competitiveness continuing to improve; benefiting from the core OTA’s cost reduction and efficiency increase, the growth potential of the OTA business is considerable, and it is gradually expanding into the international market, expected to further contribute to performance increments.
