Zhitong Hong Kong Stock Analysis | Global Technology Enters Hard-hit Area, Consumer Sector Flourishes

【Anatomy of the Market】

Although the Hong Kong stock index rose by 0.41% today, the technology stocks that rebounded yesterday fell sharply. This is a global phenomenon, as the Philadelphia Semiconductor Index plummeted nearly 5% overnight. The KOSPI index in South Korea triggered a circuit breaker with a significant drop, and the Nikkei 225 index fell by over 2700 points. The A-share technology sector is also heavily impacted.

The trigger point was foreign media reports that our domestic DUV will soon begin small-scale deliveries, with plans to expand delivery quantities next year. ASML's stock fell by 8% at one point, closing down 5.8%. Coupled with the surge in Nvidia's CDS, the CDS for Oracle, Alphabet, and others also soared, leading to a breakdown today, with South Korea following suit, and the domestic market mirroring South Korea's movements, feeling like a boomerang. Objectively speaking, domestic DUV is still far from true mass production; otherwise, why is SMIC (00981) also declining?

The real reason is the concern that the AI cash-burning model may not be sustainable. Additionally, the market is highly focused on the upcoming Federal Reserve meeting, with interest rate futures indicating that traders expect a 40% probability of a 25 basis point rate hike on Wednesday, adding extra uncertainty to the market.

Changxin Technology (688825.SH) performed impressively upon listing, with participating investors from insurance and banking institutions clearly benefiting. In terms of insurance, among the strategic allocation list, China Property & Casualty Insurance Co., Ltd., China Life Insurance Co., Ltd., China Post Life Insurance Co., Ltd., and Taikang Life Insurance Co., Ltd. each received approximately 11.5473 million shares, corresponding to an allocation amount of about 100 million yuan, with a lock-up period of 18 months. Based on the closing price on the first day, the market value of shares held by these four insurance companies is approximately 566 million yuan, an increase of about 466 million yuan compared to the allocation cost at the issue price, with a total book value increase of about 1.86 billion yuan for the four insurance companies. China Pacific Insurance (02328): The interim report is about to be released, and since the third quarter, natural disasters such as typhoons, heavy rains, and floods have occurred frequently, raising concerns that the claims of property insurance companies will further increase. However, according to data from the Ministry of Emergency Management, as of the end of June, the cumulative economic losses from natural disasters this year amounted to 42.14 billion yuan, a year-on-year decrease of 22.1%. Therefore, the overall decline in natural disasters is expected to promote improvements in the company's claims in the first half of the year, with expectations for further improvement based on the low claims rate from the same period last year. Today, it rose over 8%.

In terms of banks, Industrial and Commercial Bank of China (01398), China Construction Bank (00939), Agricultural Bank of China (01288), Bank of China (03988), and Bank of Communications (03328) all participated in the investment in Changxin Technology through their respective AICs. In addition, there are other banks, and if we roughly calculate based on the closing price of 49.00 yuan per share on the first day, the market value of shares held by these banks has reached 132.3 billion yuan. The strongest performer today was Huishang Bank (03698), which rose over 6%.

On the evening of July 27, Moon's Dark Side announced the open-source release of the Kimi K3 model weights, published a technical report, and simultaneously opened the underlying infrastructure technologies supporting K3 training: MoonEP, FlashKDA, and AgentEnv. The CEO of Hugging Face publicly stated that Kimi K3 received over 4000 likes within just 30 minutes of going live, topping the platform's trend list and setting a record for the fastest growth in releases since the platform's inception ChinaSoft International (00354) recently signed a Token revenue-sharing and joint innovation cooperation agreement for the "Moon Landing Project" with Moon's Dark Side. Today, it rose nearly 5%.

According to foreign media reports, Chinese brands accounted for over one-third of new plug-in hybrid vehicle sales in Europe in the first half of this year, setting a historical high. The EU's anti-subsidy tariffs on Chinese pure electric vehicles have been implemented, while plug-in hybrid models have not yet been included in the increased tariff scope, becoming a new breakthrough for Chinese car manufacturers to enter the European market. The direction of automotive stocks still depends on overseas markets, with Leapmotor (09863) and Li Auto-W (02015) rising over 3%, and Xiaomi Group-W (01810) and Geely Automobile (00175) rising over 1%.

The automotive industry has entered an era of competition in intelligent driving. The strength of leading company Horizon Robotics-W (09660) seems to be benchmarking against the newly listed Momenta. Generally speaking, Momenta has an advantage in software, while Horizon excels in self-developed chips. However, Horizon's HSD is also quite impressive, with revenue from licensing and services expected to reach 1.935 billion yuan by 2025, accounting for more than half of total revenue. This revenue is already close to Momenta's annual operating income. With stronger chips, the Journey series has cumulatively shipped 11 million sets, making it the only domestically produced self-developed intelligent driving chip with a production volume of over 10 million; by April 2026, the market share of intelligent driving chips installed in domestic passenger cars is expected to reach 13.6%, second only to NVIDIA, and the first among domestic brands. Compared to NVIDIA's general-purpose chips, Horizon has a clear advantage, as its chip architecture is entirely designed for intelligent driving, offering cost advantages. Coupled with localized cost advantages and service capabilities, it effectively compensates for the performance disadvantages compared to NVIDIA, leading to an increasing market share over time. Unlike many domestic peers that only provide bare chips, the company has the advantage of integrating software and hardware, paired with the HSD (Horizon SuperDrive) full-stack solution based on urban NOA algorithms. Its downstream customers include 25 car manufacturers such as BYD, Li Auto, Changan, GAC, Geely, Volkswagen, and Chery, covering over 100 models, from entry-level electric vehicles to high-end new energy vehicles, making it a core target for domestic substitution. Lastly, there is a question of whether car manufacturers developing their own chips will have an impact. It must be said that the previous decline was influenced by this factor, as self-development is limited to a very small number of financially strong car manufacturers. However, in the current highly competitive environment, finding more advanced third-party solutions is the optimal choice from an economic perspective. Therefore, the current wave of benefits in intelligent driving cannot bypass Horizon, and when compared to Momenta, its valuation is clearly undervalued, leading the market to correct itself, with a rise of over 8% today.

The brain-computer interface concept mentioned yesterday continues to gain traction, with the China Disabled Persons' Federation revealing a key piece of information: it will promote assistive technology products for the disabled to enter relevant subsidy scopes, lowering the usage threshold for disabled individuals. This means that brain-computer interface rehabilitation devices are expected to be included in government procurement or medical insurance payment systems in the future, transforming from "black technology in laboratories" to rehabilitation tools that ordinary patients can afford. Institutions estimate that the market size is expected to grow from $2.41 billion in 2025 to $12.11 billion in 2035, with a compound annual growth rate of 15.8% during the forecast period (up to 2035), indicating significant long-term growth potential. Nanjing Panda Electronics Co., Ltd. (00553) rose nearly 5% again The recently released June retail sales data shows that catering revenue increased by 1.2% year-on-year and improved by 0.6 percentage points month-on-month, indicating a marginal improvement trend. After the rectification, Xiao Cai Yuan (00999) has seen the following effects: the launched VIP membership system has stimulated a recovery in dine-in customer flow, increased member repurchase rates, moved towards a lightweight store model, and supported by the supply chain, the first food production line of the Ma'anshan central factory was put into production in May, with the entire line expected to reach full production this year, anticipating annual revenue to exceed 700 million yuan, further strengthening cost and scale advantages to support store expansion. Today, it rose nearly 6% again, while Yum China (09987) rose nearly 4%. Other varieties such as Ming Ming Hen Mang (01768) are moving in the chain direction, surging over 11%. Dongpeng Beverage (09980): plans to invest 1 billion yuan to build a new production base project in Zhengzhou, planning to invest in the construction of 6 high-end beverage production lines, rising over 7%.

The summer vacation is a peak consumption season for education and training, with significant increases in demand for adult training and marketing of online courses. China Oriental Education (00667) and Tianli International Holdings (01773) both rose by 5%.

【Sector Focus】

According to CCTV International News, the Japan Meteorological Agency reported that around 16:27 local time today (July 28), which is around 15:27 Beijing time, a 7.1 magnitude earthquake occurred in Kumamoto Prefecture, Japan, with the maximum intensity being "Shindo 7," the highest level in Japan's 10-point seismic scale, and a depth of 10 kilometers.

Kyushu/Northeast Japan is a core production area for global semiconductor materials, mature processes, and automotive-grade chips, with a very high global monopoly on Japanese photoresists, silicon wafers, power devices, and MLCCs. It has been reported that personnel at TSMC's Kumamoto factory have been evacuated following the earthquake.

It is still unknown how much impact the earthquake will have on related factories, and subsequent observations will check for tsunamis and any further strong earthquakes. This is favorable for domestic alternatives: SMIC (00981), Hua Hong Semiconductor (01347), ASMPT (00522), and Tianyue Advanced (06882).

【Stock Picking】

SF Holding (06936): Overseas logistics continue to grow rapidly, large-scale share buybacks boost confidence

Recently, the company spent approximately HKD 14.3293 million to repurchase 434,000 shares. The company's Q1 2026 report showed revenue of 74.142 billion yuan, a year-on-year increase of 6.14%; net profit attributable to the parent company was 2.526 billion yuan, a year-on-year increase of 13.05%. The total revenue for June 2026 was 27.880 billion yuan, a year-on-year increase of 6.19%.

Comment: SF's net profit margin continues to improve, with growth rates maintained at a high level, accelerating quarter by quarter. The company's express logistics business generated revenue of 20.017 billion yuan in June, with a business volume of 1.389 billion tickets; revenue per ticket was 14.41 yuan, rising year-on-year for four consecutive months. Overseas logistics continues to grow rapidly, with supply chain and international business being the company's second growth curve, generating revenue of 7.863 billion yuan, a year-on-year increase of 24.97%, which is the core driving force for overall growth. The company has the largest private cargo airline in Asia, operating 111 freighters, with 90 owned, possessing rare civil aviation rights and slot resources; domestic air cargo and mail volume has long accounted for about 33% of the domestic market. Ezhou Huahu Airport is the only professional cargo aviation hub in Asia, achieving overnight delivery nationwide and connecting globally within two days In 2025, the cargo mail throughput is expected to increase by 44% year-on-year, with international cargo mail throughput growing by 85%. The B-end customer base is stable, and multiple sub-sectors are gradually achieving independent profitability. 1) Over 95% of China's top 500 enterprises use SF Express logistics services, with manufacturing companies expanding overseas, cross-border independent sites, and increasing demand for logistics in new energy foreign trade. 2) The company has stable cooperation with large cross-border e-commerce platforms such as SHEIN and Temu; a large number of independent site sellers and foreign trade factories are utilizing cross-border air freight and overseas warehouse distribution. 3) New Balance's smart warehouse and distribution center in Shanghai features integrated automated warehousing. 4) A nationwide network of over a hundred cold chain sub-warehouses and cold chain trunk lines covers temperature-controlled transportation of fresh produce in over 340 cities. Long-term seasonal supply chain agreements for fresh produce regions such as cherries, crunchy plums, and lychees across the country. 5) One of the very few logistics providers in China with nationwide GSP pharmaceutical cold chain qualifications, covering high-margin temperature-controlled transportation for biological agents, insulin, vaccines, etc. Long-term frameworks for national pharmaceutical cold chain distribution with multiple listed pharmaceutical companies. The company has mutual shareholding with Jitu Express (both parties hold 9.98%/4.29%); SF Express is responsible for cross-border trunk air and sea transportation, while Jitu provides end-point services in Southeast Asia, filling gaps in overseas delivery. In terms of overseas business project layout, the company continues to undertake overseas spare parts warehouses and local distribution projects for Chinese enterprises, establishing overseas supply chain centers in Thailand, Australia, and Europe. SF Holding has developed its own logistics AI large model, continuously reducing the unit operating costs across the network. The company has spent 5.934 billion yuan to repurchase a total of 158 million shares, with significant share buybacks boosting confidence