Focus Today

Selected viewpoints of research and newspaper

1. CICC: Hong Kong stocks may continue to consolidate in the near future, and the medium-term upward trend and relative resilience still exist

2. CITIC: the Fed may raise interest rates in September and slow down to 50bps.

3. CICC: interest rate hike continues, growth still needs to go down
   

4. CITIC: long-term optimistic about the development potential of meta-universe

5. Galaxy: the medium-and long-term investment value of the military sector is further highlighted.

6. CICC: China's automotive sensor market is expected to reach 144.9 billion yuan in 2026

7. League of Nations: the installed scale of wind power is expected to increase significantly in the second half of the year, and the new installed capacity for the whole year is expected to exceed 50GW.

8. Citic Construction Investment: continue to be optimistic about the recovery trend of real estate sales and the follow-up performance of the real estate sector

9. Southwest: the gap between supply and demand is widening, and the special steel metal is ready to start.

10. Morgan Stanley: still optimistic about the insurance technology industry, giving Zhongan Online a rating of "outperforming the market"

11. Bank of America: reiterate Wuxi Apptec's "buy" rating, lowering the target price to HK $120.2

12. Guoxin: maintain BABA-SW "overweight" rating with a valuation range of HK $143,155

13. Huachuang: first "recommended" rating by Genscript Biotech Corporation, with a target price of HK $44.86

14. Credit Suisse: maintain Huaneng International Power's "outperform" rating, lowering the target price to HK $4.6

15. HSBC: raise Tsingtao Brewery's target price to 107yuan, rating "buy"
    

I. Macro-market

• CICC: Hong Kong stocks may continue to consolidate in the near future, and the medium-term upward trend and relative resilience still exist

CICC Research reported that it is expected that the comparative advantage of the valuation of Hong Kong stocks and the relatively loose liquidity environment in China as a whole are still expected to support continued southbound capital inflows, which may still be the main driving force for Hong Kong stocks when it is difficult for overseas funds to return substantially for some time to come. The recent correction in the market is mainly due to rising concerns among investors about the easing of external environmental variables in the policy of stabilizing domestic growth. At the same time, the upcoming mid-year Politburo meeting and the performance period of the China News have also led to a strong wait-and-see mood. In this context, we expect that the short-term market will not rule out further consolidation and wait for more clues about policy and profitability. In the medium term, we believe that the upward trend and relative resilience of Hong Kong stocks still exist, and investors are advised to pay close attention to policy signals and earnings changes to judge the short-term rhythm of the market and the strength of the sector.

• CITIC: the Fed may raise interest rates in September and slow down to 50bps.

CITIC pointed out that the Federal Reserve raised interest rates by 75bps as scheduled at its interest rate meeting in July. At present, US inflation is still running high and the economy is still far from a substantial recession, but economic growth may have begun to affect the Fed's aggressive stance. Powell put forward the statement of slowing the pace of interest rate hikes for the first time at the meeting, sending a conditional dovish signal that the Fed could slow its rate hike to 50bps in September, but it is still expected to raise interest rates to around 3.5 per cent this year, depending on inflation data. It is expected that the dollar index will peak within 110, US bond interest rates are likely to remain volatile, and US stocks will rebound periodically before September, but the downward revision of earnings expectations restricts the rebound space.

• CICCInterest rate hikes continue to move forward, and growth still needs to go down

China International Capital Corporation's latest research report said that the Fed raised interest rates by 75 basis points, in line with market expectations. The monetary policy statement acknowledged the slowdown in economic growth, but Powell hinted that the slowdown was necessary. On the whole, the Fed still tends to sacrifice economic growth for price stability, which means that interest rate hikes will continue to move forward, but the Fed's attitude towards future rate increases is also becoming increasingly vague. As to whether to raise interest rates sharply again in September, the Fed did not take the initiative, refused or promised, which also triggered market speculation about the slowdown of interest rate increases. Nevertheless, we believe that the message from this meeting is not enough to allay the concerns of the market, and "weak data and tight policies" may still be the main features of overseas macro and policy for some time to come.

II. Industry plate

• CITIC: long-term optimistic about the development potential of meta-universe

CITIC's latest research report said that according to statistics, since 2022, more than 20 cities / regions have released support for the local development of meta-universe in the form of industrial policies, government work reports, action plans and so on. At the same time, meta-universe-related industries such as VR/AR and digital collections are also in continuous evolution. We are optimistic about the development potential of meta universe for a long time, and domestic support policies and key industry landing expectations are also expected to bring confidence to the market. At the current node, our industry preferences are in the following order: 1) VR/AR industry, including the whole machine, industry chain, and content, of which the whole machine part suggests tracking the progress of new products from overseas technology giants and the domestic layout. In the part of the industry chain, it is suggested that we should pay attention to optics, display and the subdivided value direction that may have poor expectations, while the content side should pay attention to the relevant enterprises with advanced layout. 2) the digital collection industry, pay attention to the significant directional guidance that the policy may bring to the domestic digital collection industry, pay attention to the possible opportunities of Internet giants and radio and television enterprises; 3) meta-universe-related races such as digital twins, open-world games, virtual humans, etc.

• Galaxy Securities: the medium-and long-term investment value of the military sector is further highlighted.

Yinhe Securities Research News pointed out that in early 2022, affected by the expectation of the Federal Reserve to raise interest rates and the conflict between Russia and Ukraine, the military industrial sector retreated sharply, the fund's position adjustment / reduction action was obvious, 2022Q2 picked up somewhat, and the proportion of institutional positions rebounded to 4.41%, an increase of 1.32pct over the same period last year and 0.69pct month-on-month growth. Looking to the future, we believe that the downstream demand of the military industry is highly planned and still strong. As the domestic epidemic gradually stabilizes and the capacity expansion of the superimposed industry continues to advance, the linear extrapolation of the annual performance of the military industry on the basis of 21 years of high growth will still be established, and the medium-and long-term investment value of the military industry sector will be further highlighted.

• CICC: China's automotive sensor market is expected to reach 144.9 billion yuan in 2026

China International Capital Corporation research newspaper pointed out that the automotive industry electrified, intelligent functions continue to iterate, the perception layer has become one of the core components of self-driving. With the continuous breakthrough of high-level auxiliary driving from L1 to L5, the perception layer upgrades and expands in the two dimensions of body state and environmental perception. The whole vehicle dimension, the number of car sensors and the value of the car continue to increase; in the structural dimension, the new smart components give birth to the functional upgrade of the body sensor; functionally, the environment sensing sensor has become a new part of the smart car. The sensor market has a large stock and fast growth. According to our estimates, the global and Chinese automotive sensor market space is expected to reach 3803 yuan / 144.9 billion yuan respectively in 2026, and the 2021-2026CAGR is 26.3% and 26.1% respectively.

• Guolian Securities: the installed scale of wind power is expected to increase significantly in the second half of the year, and the new installed capacity for the whole year is expected to exceed 50GW.

Guolian Securities pointed out that the newly installed scale of wind power in China reached 12.9GW in the first half of this year, up 19% from the same period last year, including 2.1GW in June, down 30% from the same period last year and up 70% from the previous month. With the decline in steel prices and the high price of photovoltaic modules, the acceptance of operators has dropped by one liter, and the installed scale of wind power is expected to increase significantly in the second half of the year, and the agency expects the number of new installations to exceed 50GW for the whole year.

• Citic Construction Investment: continue to be optimistic about the recovery trend of real estate sales and the follow-up performance of the real estate sector

Citic Construction Investment Research News pointed out that new home sales this week compared with the month-on-month decline, the property market demand is relatively low. During the week, Zhengzhou set up a real estate rescue fund to help invigorate the unfinished projects. at the same time, the National standing Committee again mentioned the implementation of measures to promote the stable and healthy development of the real estate market. We believe that as the stoppages around the country are gradually resolved, sales will further recover. We continue to be optimistic about the recovery trend of real estate sales and the follow-up performance of the real estate sector.

• Southwest Securities: the gap between supply and demand is widening, and special steel metals are ready to start.

Southwest Securities issued a research report that we believe that in the next three years, there will be basically no new production capacity of molybdenum in the world, and the supply will be relatively rigid. With the upgrading of domestic manufacturing industry and the rapid development of green energy, there will be a large demand for molybdenum downstream high-strength steel, high-speed tool steel, wind power blades, and military superalloy molybdenum. The gap between supply and demand in the molybdenum industry in the first half of 2022 is close to 10,000 tons, and the gap will still exist in the next three years, and molybdenum prices are expected to start a long-term upward trend.

III. Individual stocks

• Morgan Stanley: still optimistic about the insurance technology industry, give$Zhongan Online (06060.HK) $"outperform the market" rating

Morgan Stanley said in a research report that Zhongan Online was given an "outperform" rating, with the latest target price of HK $36. In addition, Morgan Stanley also gave the company a bull market target price of HK $61. According to Morgan Stanley, Zhongan Online is the first and largest pure online property insurance company in China. It has become a leader in many niche property insurance markets and has successfully used its data analysis capabilities to increase sales and cost efficiency. At the same time, Morgan Stanley believes that Zhongan Online is expanding his business to become a provider of insurance technology and services to the outside world.

• Bank of America: reiterate$Wuxi Apptec (02359.HK) $"Buy" rating, target price reduced to HK $120.2

Bank of America Securities said in a research report that it reiterated Wuxi Apptec's "buy" rating and lowered its revenue forecast for next year to 46.353 billion yuan (up 19.6% from the same period last year), and the adjusted profit forecast for non-IFRS to 11.107 billion yuan (up 21.1% from the same period last year). The target price was lowered from HK $144.1 to HK $120.2.

• Guoxin Securities: maintain$BABA-SW (09988.HK) $"overweight" rating with a valuation range of HK $143-155

Guoxin Securities released a research report saying that to maintain the "overweight" rating of BABA-SW (09988.HK), the net profit of FY2023-25 is expected to be 920gamma 977 / 107.7 billion yuan, with a valuation range of HK $143,155. On July 26, the company's board of directors authorized the management to submit an application to the HKEx to add Hong Kong, China as the main listing place. After completing the review process, the company will be listed on the main board of the HKEx and the New York Stock Exchange, which is expected to take effect at the end of this year. BABA's US-listed depositary shares and Hong Kong-listed common shares will continue to be convertible, and investors will continue to choose to hold them in either form.

• Huachuang Securities: first granted$Genscript Biotech Corporation (01548.HK) $"recommended" rating, target price of HK $44.86

Huachuang Securities released a research report that, first given Genscript Biotech Corporation's "recommended" rating, the four major businesses are in an industry-leading position, with an estimated operating income of US $6.85 million 10.92 / 2.092 billion in 2022-24 (an increase of 34 per cent over 60 per cent in the same period last year). The segment valuation method is used to value the overall value of 81 billion yuan and the target price of HK $44.86. Based on its leading gene synthesis business, the company has become an international biotechnology company covering life science services, biomedical CDMO, cell therapy and industrial synthetic biological products, with revenue CAGR of 34.3% in 2015-21. In addition, Kingsley is seizing the opportunity to give full play to the synergy of the whole industry chain, focusing on the gene and cell therapy (GCT) industry chain and synthetic biology industry chain, which is expected to bring a new growth curve.

• Credit Suisse: maintainHuaneng International Power Co., Ltd. (00902.HK) $"outperform the market" rating, the target price is reduced to HK $4.6

Credit Suisse released a research report saying that Huaneng International Power maintained its "outperform" rating and lowered its earnings per share forecast for 2022 by 64%. Due to high coal prices and weak performance in the first half of the year, the target price was reduced from HK $4.8 to HK $4.6. Among the power stocks, the bank prefers China Resources Power Holdings.

• HSBC: upward adjustment$Tsingtao Brewery (00168.HK) $Target price to 107 yuan, rating "buy"

According to a report released by HSBC Research, it is expected that Tsing Tao Beer's net profit in the second quarter will increase by a high number of units, with the target price of H shares rising from RMB102to RMB107with a rating of "buy". According to the report, in view of the hot weather this year, we are optimistic about the performance of Tsingtao Beer in the third quarter. Sales of Tsingtao Beer fell by about 9% in the third quarter last year, forming a low base because of floods, epidemics and storms in Henan Province. Temperatures at 71 weather stations across the country hit an all-time high between June 13 and July 12 this year, which could boost beer consumption, according to the National Meteorological Center. In addition, due to the decline in raw material prices, including aluminum ingot prices, the company's cost pressure is expected to ease in the second half of the year.