Intelligent Financial Hong Kong Stock May Investment Strategy and Top Ten Gold Stocks

On the previous issue, it was mentioned that the general judgment of the Hong Kong stock market in April was high before low, but unexpectedly, at the end of the month, the plot took a turn with the index directly breaking through the annual line. The Hang Seng Index has a trading range of 16,044.45-18,031.16 points. The market context is still relatively clear. Strong economic data at the beginning of the month allowed the market to maintain its upward momentum. However, in the middle of the month, Iran's retaliatory actions against Israel led to a global stock market adjustment. Towards the end of the month, with Blinken's visit to China and the central government's support for Hong Kong, the Hang Seng Index saw a strong rebound. Before the index showed a trend of rising, the market mainly traded Middle East conflict-related varieties, such as non-ferrous aluminum China Hongqiao (01378), shipping gold stocks Hafnia (01308), COSCO Shipping Holdings (01919). Subsequently, it shifted to weight-bearing stocks represented by Tencent (00700), Meituan (03690), and household appliance stocks for trade-in, such as Hisense Home Appliances (00921), Haier Smart Home (06690), among others. Other low-priced stocks also saw increased activity, such as SenseTime (00020) and some real estate stocks. The strong market performance at the end of the month has set a good expectation for the May market. The key is that the market rally was triggered by bullish comments from foreign investors, combined with the Securities Regulatory Commission's release of 5 favorable measures for cooperation with Hong Kong's capital market. These factors jointly propelled the rapid strength of the Hang Seng Index. Overall, after withstanding various pressures, there have been relatively positive changes in the fundamentals in May. Looking at the political meetings: adhere to the momentum, avoid being loose after being tight, and effectively consolidate and enhance the positive trend of economic recovery. The meeting pointed out the need to actively expand domestic demand, implement large-scale equipment renewal and consumer goods trade-in action plans. It mentioned the need to effectively implement macroeconomic policies, implement proactive fiscal policies, and prudent monetary policies. It is necessary to issue and use ultra-long-term special national bonds early, accelerate the progress of special bond issuance and use, flexibly use policy tools such as interest rates and reserve requirements, and increase support for the real economy. In general, the fiscal policy is relatively positive, and there is hope for reserve requirement ratio cuts and interest rate cuts in monetary policy. There are also new proposals for real estate, coordinating the digestion of existing housing stock and optimizing policy measures for new housing, focusing on building a new model for real estate development to promote high-quality development of the real estate sector. This proposal downplays the three major tasks, and the key going forward is how funds will be implemented. With the cancellation of purchase restrictions across the country and various innovative trade-in initiatives, real estate sales are expected to bring marginal improvements. According to data from the National Bureau of Statistics, in April, the Purchasing Managers' Index (PMI) for the manufacturing sector was 50.4%, a decrease of 0.4 percentage points from the previous month, in line with market expectations, remaining in the expansion zone for two consecutive months, indicating that the manufacturing sector continues to maintain a recovery and development trend. In April, the non-manufacturing business activity index was 51.2%, a decrease of 1.8 percentage points from the previous month but still above the critical point, indicating that the non-manufacturing sector continues to expand. In addition, China's Caixin Manufacturing PMI for April was 51.4, higher than the market's expected 51, up 0.3 percentage points from March, reaching a new high since March 2023, reflecting a continued acceleration of expansion in manufacturing production and operations On the diplomatic front, there have been frequent actions in May. According to media reports, Putin will be inaugurated on May 7th and will then visit China. This is conducive to further enhancing mutual trust between the two sides, and it is expected that Sino-Russian trade will reach new heights. In May, top leaders will visit France, Serbia, and Hungary. It is expected that orders will be brought in the fields of nuclear power, high-speed rail, and the Belt and Road Initiative. Hong Kong's capital market is experiencing a historic moment with the listing of Bitcoin spot ETF and Ethereum spot ETF. On the first day, related varieties all rose, and institutions expect the management scale to exceed $1 billion. Compared to the nearly $58.9 billion scale of the US spot Bitcoin ETF, Hong Kong's scale is still relatively small. However, the advantage is that it can attract those holding Hong Kong identity cards. This move is conducive to enhancing Hong Kong's status as an international financial center. According to Wind statistics, as of April 26, 2024, 94 companies are queuing up to apply for listing in Hong Kong. Among them are many star companies, such as Missfresh, Horizon Robotics, and iFlytek Medical. Horizon Robotics is an intelligent driving technology company, with a valuation as high as $8.7 billion (approximately RMB 63 billion), and the market expects it to become the largest IPO in Hong Kong this year. Valuations for Hong Kong IPOs are generally low, with an average P/E ratio of only around 8 times. Only by expanding the market can funds continue to enter. On May 4th, Berkshire Hathaway held its shareholders' meeting, where Chairman Buffett answered shareholders' questions on the spot. The investment direction of the stock god and his views on the market will have a significant impact on the global capital market. On May 2nd, the Federal Reserve will hold a monetary policy meeting and announce its interest rate decision. This meeting is expected to remain unchanged, and it depends on what guidance Powell's speech will bring. Currently, inflation remains high, but economic data is not ideal, suspecting stagflation, which is a contradictory state. It depends on how the Federal Reserve will choose. Some may mention a point: if the US stock market fails to rise and falls below the half-year line, will it have a negative impact on the Hong Kong stock market? There are two scenarios here. If it is due to extreme escalation in the Middle East conflict, with Israel and Iran experiencing major friction again, in this case, all global stock markets will be affected. Setting aside this extreme situation, the probability of the US stock market weakening significantly is not high. On the other hand, comparing the candlestick charts of both sides, it is not difficult to find that when the US stock market weakens, the Hong Kong stock market actually strengthens. Therefore, the facts have already provided the answer. This is related to the historically low valuation of Hong Kong stocks. Remember the previous discussion about the diversion of Japanese and Indian stock markets to Hong Kong stocks. This variable is also showing positive changes now. The trigger is the significant devaluation of the yen, hitting a historical high. It is quite strange, as Japan is definitely better off now than at its worst, having finally climbed out of deflation. How could the exchange rate suddenly plummet? It can only be understood as international capital starting to take action. The direct consequence is the withdrawal of funds from the Japanese stock market, while funds flow into the Hong Kong stock market due to the linked exchange rate system Despite the optimistic view on the market in May, it is important to note that the retracement after the rise towards the end of the month should not be too large, preferably not breaking the 10-day moving average. At the same time, it is necessary to closely monitor the consequences if Israel insists on attacking Gaza. May 2024 Investment Strategy: Looking for Accelerated Stocks In April, the top stocks recommended by Wisdom Finance continued to outperform the market. In the same period, the Hang Seng Index had a maximum increase of 9%, while the top ten recommended stocks had an average maximum increase of 11.9% in April. The specific monthly maximum increases of the top ten recommended stocks are as follows: Haitong International (01308) rose by 24.9%, Fuyao Glass (03606) rose by 21.8%, Xiaomi Corporation (01810) rose by 19.7%, China Resources Power (00836) rose by 11.5%, Kingsoft Corporation (03888) rose by 10%, Tongcheng-Elong (00780) rose by 9.2%, ANE Logistics (09956) rose by 7%, Leapmotor (09863) rose by 7%, Xinjiang Goldwind Science & Technology (03800) rose by 3.9%, and Great Wall Pan Asia Holdings (01415) rose by 3.6%. The performance of the top stocks in April was relatively good, with half of the stocks having an increase of over 10 percentage points, and the relative increases were relatively balanced. This aligns with the strategy of "prioritizing stability and maintaining a good pace." For May, although everyone is relatively optimistic, a major issue is that funds have already started to position themselves at the end of last month, making it less likely to find low-priced stocks for investment. Therefore, the strategy for May is to look for accelerated stocks. Clear opportunities include the outbound supply chain, including textile processing, export of two-wheeled electric vehicles, overseas small commodity stores, etc. Domestically, there is optimism in the repair of dental and hot pot ingredients. In the real estate sector, coupled with construction machinery on the infrastructure side. From a policy perspective, the "Opinions on Further Promoting the High-Quality Development of the Yangtze River Delta Integration" is expected to stimulate express delivery and logistics. This month will also see the first-quarter report of NVIDIA. If it exceeds expectations again, it is expected to stimulate related semiconductor packaging. There should also be a lot of news in the AI sector, with communication-related stocks likely to perform better. In the pharmaceutical sector, the focus is on obesity and weight loss products. Intermittent movements in real estate, finance, and occasional fluctuations in gold and non-ferrous metals are expected in May. However, these opportunities are not easy to grasp. Specific stocks to consider: Consumer: Miniso Group (09896) Manufacturing: Shenzhou International (02313) Semiconductor: ASM Pacific Technology (00522) Ingredients: Yihai International (01579) Communication: China Communications Services (00552) Dental: Angelalign Technology (06699) Logistics: ZTO Express (02057) Pharmaceutical: Hansoh Pharmaceutical (03692) Machinery: Sany Heavy Industry (00631) Two-wheeled Electric Vehicles: Yadea Group Holdings (01585) Detailed list as follows: 1. Miniso Group (09896) The company's performance exceeded expectations, with continuously improving profitability. In Q4 23, the company achieved revenue of 3.84 billion yuan, a year-on-year increase of 54%, reaching a historical quarterly high; adjusted net profit was 660 million yuan, a year-on-year increase of 77%, also reaching a historical high, with an adjusted net profit margin of 17.2%, an increase of 2.2 percentage points compared to the same period last year 1. Chiikawa Chiikawa, a joint venture with the company, officially went on sale in national stores and online channels on April 8th, with hot sales and overnight queues. According to Miniso's FY2023 annual report, the average annual revenue per store is 2.1 million RMB, with an average customer price of 37.6 RMB. The sales data of Chiikawa's pop-up stores are significantly higher than the average level of Miniso stores. Domestic consumption is recovering, and overseas store expansion is accelerating. In Q4 2023, Miniso added a net of 124 stores domestically and 174 stores overseas, while TOPTOY added 26 stores. In 2023, a total of 973 stores were added, with Miniso adding a net of 601 stores domestically and 372 stores overseas, and TOPTOY adding 31 stores. The domestic target of adding 450-650 stores for the whole year was achieved, as well as the overseas target of adding 350-450 stores for the whole year. In Q4 2023, the acceleration of overseas store expansion, combined with the retail peak season and IP strategy layout, drove the overseas direct sales business to achieve over 80% for three consecutive quarters. In Q4 2023, for the first time, it contributed more than half of the overseas business revenue, further significantly improving profitability. 2. Shenzhou International (02313) The company achieved double-digit sales growth in 2023, with Adidas being a major contributor among the top four customers of Shenzhou International's Chinese factories. Apart from Nike, all major global and domestic brand orders recorded double-digit growth. As brand customers are close to destocking, the company's capacity utilization has recovered. Coupled with the efficiency improvement of new overseas factories and the elimination of unfavorable production environments in 2022, the company's gross profit margin increased by 2.2 percentage points to 24.3% in 2023, compared to the low base of the previous year, with the gross profit margin in 2H23 reaching over 26%. By brand, European and American sports brand customers were in the destocking phase in 2023, with Uniqlo's retail performance relatively better, showing a 3% increase in revenue. Lululemon's business, after two years of development, increased its revenue share to over 2%. Domestic brands such as Anta and Li-Ning accounted for approximately 11% of revenue, an increase of about 2 percentage points year-on-year. Overseas capacity scale and efficiency improvements have gradually increased profit contributions. In 2023, the company's overseas garment production accounted for 53% (up 7 percentage points year-on-year), with the Cambodia base achieving a 26% share (up 4 percentage points year-on-year) due to efficiency improvements and staff expansion. The total number of employees in the group in 2023 was 92,000 (down 2.4% year-on-year), with overseas employees accounting for 57% (up 5 percentage points year-on-year). As overseas integration support improves and overseas factory operational efficiency gradually increases. 3. ASM Pacific Technology (00522) The company adjusted its product structure, leading to a quarter-on-quarter increase in gross profit margin. The continuous increase in demand for AI and other products in 2024 is expected to drive further expansion of production lines such as CoWoS, increasing the company's equipment demand. The future space for AI computing power is still huge, and CoWoS packaging, as a bottleneck in the industry chain, will continue to benefit from the increasing demand. The improvement in the quarter-on-quarter performance is a key point. In terms of end-market applications, sales revenue contributions from the automotive and industrial sectors continue to account for the highest proportion of the company's sales revenue The company is well positioned in the rising cycle of High Bandwidth Memory (HBM), and the Thermal Compression Bonding (TCB) technology meets the advanced packaging requirements of HBM. ASM Pacific Technology (ASMPT) is a major supplier of 2.5D advanced packaging thermal compression bonding (TCB), with technology applied to products such as TSMC's CoWoS and HBM. Industry giants like SK Hynix and TSMC have indicated that the demand inflection point has arrived, and the long-awaited recovery in the chip industry may be underway. The company's order volume is expected to moderately rebound this year, with the consumer electronics terminal market being a key driver. The company covers equipment for TCB, hybrid bonding, Fan-out, etc., with TCB being more precise and efficient in bonding on thinner substrates, and its second-generation products have received a large number of orders from OSAT and logic chip customers. The company comprehensively covers advanced packaging solutions and is accelerating the iteration of TCB equipment, poised to benefit significantly. 4. Yihai International (01579) In 2023, the company achieved main operating income of 6.148 billion RMB, flat year-on-year; achieved a net profit attributable to the parent company of 853 million RMB, a year-on-year increase of 14.9%, with a net profit margin of 13.85% (+1.81pct). The company announced its dividend plan for 2023, planning to distribute 767 million RMB in cash dividends at the end of the year, with a payout ratio of 90%, reaching a historical high. With the recovery of dining demand, the revenue achieved strong recovery growth. Haidilao's franchise opening will mainly focus on steady expansion, making a certain marginal contribution to Yihai International. In 2023, the group launched 24 new hotpot seasoning products, 37 Chinese compound seasoning products, and 40 convenient fast food products. At the same time, based on market feedback and sales performance, some products were discontinued and some product specifications were integrated. As of December 31, 2023, the group had a total of 62 hotpot seasoning products, 68 Chinese compound seasoning products, and 72 convenient fast food products on sale. In terms of products and channels, hotpot seasoning in 2023H2 achieved revenue of 2.438 billion RMB, a year-on-year increase of 8.7%. Among them, related parties and third parties achieved revenues of 1.060 billion and 1.378 billion RMB respectively, with year-on-year growth rates of 34.5% and -5.2% respectively. The growth of related party hotpot seasoning was mainly driven by the normalization of the economic and social environment, leading to an increase in offline consumption demand. 5. China Communications Services (00552) The company maintains steady growth in the domestic telecom operator market. In 2023, revenue and net profit met expectations, with operating costs increasing by +5.3% year-on-year to 131.4 billion RMB, and gross profit margin increasing by 0.2ppt year-on-year to 11.6%. The company announced an increase in the dividend ratio to 42% for 2023, a year-on-year increase of 2ppt, continuing to enhance dividend returns. The company's industrial digital business is rapidly developing, with revenue from applications, content, and other businesses growing by 16.8%. The company seizes strategic opportunities for the development of emerging businesses, with good revenue growth in various customer markets. Revenue from operators, enterprise customers, and overseas markets increased by +4.7/6.3/15.3% year-on-year to reach 81.7/63.4/3.5 billion RMB, respectively Among them: 1) In the customer market, the company focuses on industrial digitization, photovoltaic new energy, and other strategic emerging businesses. The new contract value in the customer market increased by about 8% year-on-year to 87 billion yuan, with the new contract value of strategic emerging businesses in the customer market increasing by about 19% year-on-year. 2) In the operator market, the company seized the opportunity of computing power development, with the Smart Computing Center, Smart Cities, and other initiatives driving a year-on-year increase of about 8% in new contract value in the operator market. In 2023, the new contract value of strategic emerging businesses reached 59 billion yuan, a year-on-year increase of +31%, accounting for an increase of 6 percentage points in the total new contract value share to nearly 30%. 6. Era Angel (06699) In 2023, Era Angel achieved operating income of 1.476 billion yuan, a year-on-year increase of 16.2%; the total number of invisible correction cases reached approximately 245,000 in 2023, a year-on-year increase of 33.2%. The domestic business maintained steady growth, while the international business developed rapidly. In 2023, the total revenue from the international market reached 145 million yuan, with the number of cases in the international market reaching 33,000. In the second half of 2023, the number of cases in the international market reached 23,600, showing significant growth compared to the first half of the year. Era Angel launched a new generation KiD anterior traction solution, providing orthodontists with a new treatment option that combines orthodontic correction. In 2023, Era Angel's children's products continued to show strong growth. Products and services cover more than 30 countries and regions globally, with Europe being one of the fastest-growing markets. The company is steadily advancing synergies with its holding companies and Aditek, a leading orthodontic product manufacturer in Brazil, in medical design, smart manufacturing, etc., including providing online training and on-site guidance for the A-Treat digital correction solution design platform and iOrtho cloud service platform, and assisting Aditek in upgrading its intelligent manufacturing base in Brazil, thus having manufacturing bases in China and South America, laying a manufacturing foundation for strong global growth. 7. ZTO Express (02057) The company completed a total of 30.2 billion parcels for the year, a year-on-year increase of 23.8%, with a market share of 22.9%, ranking first in the industry, and achieving the annual growth target of 20-24% in parcel volume. In terms of profitability, in the full year of 2023, revenue was 38.419 billion yuan, a year-on-year increase of 8.6%; net profit was 8.755 billion yuan, a year-on-year increase of 31.5%. In the fourth quarter, the company's operating income was 10.62 billion yuan, a year-on-year increase of 7.6%, achieving a net profit attributable to ordinary shareholders of 2.19 billion yuan, a year-on-year increase of 1.3%. In 2023, the company's express delivery volume increased by 23.8%, with a slight increase in market share. In 2023, the Chinese express delivery industry continued to recover, with business volume maintaining rapid growth. ZTO Express' service volume reached 30.2 billion parcels in 2023, a year-on-year increase of 23.8%, with a market share of 22.9%, an increase of 0.8 percentage points year-on-year. In the fourth quarter of 2023, the company's express service volume was 8.703 billion parcels, a year-on-year increase of 32.0%, with a market share of 22.3% Regarding dividends, payouts, and repurchases: The company's board of directors has approved the declaration of regular cash dividends every six months starting from 2024, with the total amount of dividends not less than 40% of the company's distributable profits for the fiscal year. In addition, the board of directors has approved an expansion of the share repurchase program from $5 billion to $20 billion, with the effective period extended by one year until June 30, 2025. 8. Hansoh Pharmaceutical (03692) In 2023, the company's revenue from innovative drugs and collaborative products reached RMB 6.87 billion, accounting for 67.9% (+14.5pct YoY), with collaborative product revenue of RMB 700 million, mainly from the upfront payment for the B7H4 ADC licensed to GSK. The company expects another upfront payment of approximately RMB 1.3 billion for the B7H3 ADC licensed to GSK to be recognized in 2024. The company has established multiple innovative R&D platforms such as ADCs, bispecific antibodies, siRNAs, etc., with the proportion of revenue from innovative drugs continuing to increase. By segment: 1) Oncology business revenue in 2023 was RMB 6.17 billion (+11.7% YoY), with Ameluz doubling in sales volume after being included in medical insurance in March 2023, and sales are expected to increase by about 12% year-on-year in 2023 and close to 20% year-on-year in 2024; 2) Anti-infection business revenue in 2023 was RMB 1.27 billion (+1.6% YoY), central nervous system business revenue in 2023 was RMB 1.37 billion (-8.5% YoY), and other business revenue in 2023 was RMB 1.30 billion (+16.3% YoY). In 2023, the company achieved multiple commercial cooperation agreements, including licensing to GSK, introducing Deqi Medicine's Selinexor, and expanding cooperation with Pumis in March 2024 on EGFRxcMET bispecific antibodies. Hansoh Pharmaceutical has initiated and accelerated late-stage research on HS-20094 for type 2 diabetes patients, overweight/obese individuals in China. With the approval of these new products/new indications in the next 3 years, it is expected to accelerate the company's performance growth. 9. Sany International (00631) Sany International has maintained a growth trend for many years, with core performance indicators achieving double-digit high growth, and has continuously broken historical highs in recent years. The mining equipment + logistics equipment segments have shown steady performance. In 2023, the mining equipment business achieved revenue of RMB 11.8 billion, a year-on-year increase of 19%; the logistics equipment business achieved revenue of RMB 5.8 billion, a year-on-year increase of 26%. In terms of mining equipment, the overall sales reached RMB 13 billion, with mining truck sales exceeding RMB 5 billion for the first time, making Sany International the largest mining truck supplier in China. In terms of logistics equipment, the market share of small port machines and stackers has increased to 68% and 67% respectively, maintaining a leading market position; large port machines signed contracts worth RMB 2.64 billion last year, reaching a new historical high, providing strong support for future income growth certainty. In 2023, the company achieved overseas business revenue of RMB 6.36 billion, a year-on-year increase of +50.7%, with total revenue share increasing by +4.2pct year-on-year The overseas revenue of the logistics equipment sector reached 3.554 billion RMB, a year-on-year increase of +68.75%. In recent years, Sany International has continuously expanded outward and engaged in mergers and acquisitions. In June 2023, the company consolidated Sany Petroleum Technology. In 2023, the revenue of the petroleum equipment business was 1.5 billion RMB, and the revenue of emerging businesses was 1.2 billion RMB. In the future, the surge in new business orders will become the breakthrough point for performance growth. 10. Yadea Group (01585) The company's performance in 2023 was impressive, achieving revenue of 34.8 billion RMB, a year-on-year growth of 12%; net profit attributable to shareholders was 2.64 billion RMB, a year-on-year growth of 22.2%. Throughout the year, Yadea sold a total of 16.52 million electric two-wheeled vehicles, an 18% increase year-on-year. In terms of products, in 2024, the company launched the 6th generation Crown Energy series products equipped with the new TTFAR6.0 system, with a retail price higher than the Crown Energy 5 series by 1,150 RMB (the retail price of the Crown Energy 6 series new products is all above 4,000 RMB). As of March, the sales rate of the Crown Energy 6 series reached 35%, driving the proportion of the company's mid-to-high-end products (expected to be mainly Crown Energy) back to 40%. In terms of distribution, by the end of 2023, the company had 4,000 distributors and over 40,000 distribution outlets. The overseas market may be entering a harvest period, boosting the company's secondary growth. In 2023, the company further accelerated its expansion in the Southeast Asian market, and in early 2024, the North Jiang factory in Vietnam (designed capacity of 2 million vehicles) had been laid the foundation. Yadea is expected to benefit from its gradually improving layout in Southeast Asia, enjoy the dividends of overseas market development, open up new sales volume, and anticipate market growth elasticity. In terms of performance, in 2023, the company increased its research and development investment in core components and platform engineering systems, possibly to improve the self-sufficiency and compatibility of components; at the same time, the company actively promoted new mid-to-high-end products, with ample room for profit improvement. Yadea is leading in the layout of sodium batteries and plans to strengthen its sodium battery technology barriers by acquiring the leading electronic control company Lingbo Electronics for 350 million RMB. (By Wan Yongqiang, Director of Zhitong Financial Research Center) Disclaimer: The stocks mentioned in the article are for discussion among stock enthusiasts only and do not constitute investment advice. The stock market is risky, and investment needs to be cautious