[Anatomy Board]

Under the impact of the “black swan” incident, Hong Kong stocks were unable to hold back today and adjusted weakly throughout the day. The Hang Seng Index was directly hit by bears to the 10-day EMA, a decline of 2.47%. It is difficult to predict this kind of sudden outbreak.

On August 1, local time in the US, global rating giant Fitch suddenly announced that it would downgrade America's long-term foreign currency debt rating from AAA to AA+. This is the first time Fitch has downgraded the country's rating since it first released its US credit rating in 1994. Currently, out of the top three international rating agencies, only Moody's still maintains an AAA rating for the US. This is the second time that the US has been downgraded after S&P downgraded the US rating in August 2011. According to the news, futures on the three major US stock indexes fell in a straight line during the after-hours period. Every time a loss comes out on the eve of the Hong Kong stock trading session, it's always someone else that gets hurt first. On August 2, the Asia-Pacific market declined across the board. The Nikkei 225 Index fell more than 2%, while the Korea Composite Index and the Singapore Strait Index both fell more than 1%. Hong Kong stocks have fallen a lot.

Real estate ushered in another stimulus. In the second half of the year, the city's policies should accurately implement differentiated housing credit policies to continue to guide interest rates and down payment ratios on personal housing loans downward to better meet residents' rigid and improved housing needs. Guide commercial banks to adjust interest rates on existing personal housing loans in an orderly manner in accordance with the law. Note that the wording has changed. The previous statement was encouragement and support, but now it has been implemented into action and implementation has begun. This move means that support for the real estate industry has reached a micro level. To put it bluntly, adjusting interest rates on stock personal housing loans saves money and is beneficial to consumption. The overall reduction in interest rates also gives positive feedback to buyers. The willingness to buy houses will increase, and increased market activity is conducive to speeding up inventory clearance. Country Garden Services (06098) is leading the rise today. The company announced earnings reports that net profit attributable to shareholders is estimated to be between 2,318 million and 2,576 million yuan in the six months ending June. Furthermore, the company intends to buy back no more than 337 million shares on the open market in accordance with the authorization, which is equivalent to 10% of the company's share capital. With repurchases underpinned, capital dared to gain strength, surging directly by nearly 18 points. Other Shimao Services (00873) and Hejing Youhuo (03913) were also driven to rise.

The industrial chain is still gaining strength. Today it is mainly cement building materials. The logic is about stronger real estate expectations and post-disaster reconstruction caused by recent floods. See “Section Gathering” for details.

The news of adjusting interest rates on stock personal housing loans is bad for banks. Another point is that the competitive pressure on banks is increasing because there is a possibility that interbank mortgage transfers (new loans issued by other banks replace the bank's mortgages) will be liberalized, but “according to law” and “orderly” means that the liberalization process may be cautious to avoid excessive competition among banks. This may also be an opportunity for banks with flexible mechanisms. China Construction Bank (00939) and Industrial and Commercial Bank (01398) all dropped 3 points today.

The Internet Information Office plans to completely upgrade the “youth model” to the “underage model,” and the prevention of online addiction into refined management. This news has caused emotional disturbances in gaming, but this is not the first time, and the overall impact on performance is limited.

Speaking of automobiles, sales figures from several major new power giants were intensively released last night, and deliveries all soared in July. However, the stock price trend is not ideal. It can be understood as a return in profit. For example, Xiaopeng (09868) fell 14.63%. Such a large decline is not normal; it must be a superposition of market factors. I believe that if it goes any further, the funds that have gone to the bottom will enter the market.

Because the fundamentals of cars are really strong. Today, it was reported that after Xiaopeng, the Jetta brand owned by Volkswagen is currently discussing cooperation with Zero Sports Auto (09863). “Unlike the way VW and Xiaopeng cooperate, FAW-VW is likely to 'buy' a certain generation of zero-run platform technology this time.” Another FAW-Volkswagen insider said that the company did have contact with Zero Run, but the details were unknown. ZERO SPORTS “has no comment” on this. Although the news has not been confirmed, it shows that China's NEV technology has been approved. In the past, China used foreign companies to form joint ventures, but now it's all the other way around.

In terms of individual stocks, the August financial stock Aneng Logistics (09956), which I mentioned to you yesterday, is proud of the crowd. Amid its weak position, it surged 11.66% again, directly hitting a new annual high. For specific logic, please refer to the latest monthly report.

Regarding today's decline, some people think that according to August 8, 12 years ago, S&P downgraded the US rating to cause turmoil in global financial markets. The three major US stock indices all fell 5%-7% on the same day, and S&P fell 15% within a month. It took more than half a year to recover its vitality. So will the tragedy be repeated this time? Personally, I don't think this is very likely. Fitch's behavior this time is more like a mix of political factors, because the US economy hasn't reached a very bad bottom. It was still talking about a soft landing a few days ago, and today it said it would be close to the ICU. This span is actually a bit exaggerated, and the reasons given are that fiscal deterioration and debt is too high. This has already happened. It's nothing new; it doesn't feel convincing enough.

Of course, this is just personal speculation. The lethality of this downgrade incident is definitely there. It depends on how US stocks actually follow tonight. If there is a slight decline, then it is a normal adjustment. There will be no impact, and Hong Kong stocks will quickly rebound tomorrow. If there is a sharp decline, Hong Kong stocks will have to wait until policies are introduced.

[Sector Focus]

Affected by the residual circulation of typhoon “Du Surui,” heavy rainfall has continued in North China and Huanghuai since July 29. According to meteorological information from Beijing, from 20:00 on July 29 to 07:00 on August 2, 2023, extreme rainfall occurred in Beijing. The extreme rainfall recorded during this rainy weather process occurred at Wangjiayuan Reservoir in Changping, at 744.8 mm. The extreme value of this rainfall process has significantly exceeded the extreme rainfall recorded in the Beijing region. The Beijing region has measured and recorded the highest rainfall in 140 years. Affected by typhoon “Du Surui,” extreme rainfall occurred in North China, Huanghuai and other places, triggering floods and geological disasters, causing major casualties in Beijing, Hebei and other places.

Benefiting from falling coal prices, cement companies' profits may remain relatively stable month-on-month in the second quarter. As the profit base decreases in the second half of the year, cement companies' profits are expected to turn positive year-on-year. As a starting point for steady economic growth, infrastructure investment is still an important support for cement demand; as an important variable, whether the real estate market can pick up steadily in the second half of the year is also the key to determining cement demand.

Post-disaster reconstruction combined with real estate expectations has smoothed the logic of cement. Huaxin Cement (06655) achieved revenue of 15.832 billion yuan in the first half of the year, an increase of 10.02% over the previous year, and overseas cement sales increased. Others include China Resources Cement Holdings (01313) and Conch Cement (00914). In addition, China Liansu (02128), which has laminated pipes, will also increase demand during the floods.

[Individual Stock Nuggets]

Huaxin Cement (06655): Achieved revenue of 15.832 billion yuan in the first half of the year, a 10.02% year-on-year increase in overseas cement sales

The company achieved operating income of 15.832 billion yuan, an increase of 10.02%; affected by the year-on-year decline in domestic cement and commercial clinker prices and sales volume, it achieved net profit attributable to shareholders of listed companies of 1,193 billion yuan, a year-on-year decrease of 24.85%. Among them, revenue for the second quarter was 9.203 billion yuan, up 17.11% year on year; net profit attributable to shareholders of listed companies was 945 million yuan, up 3.23% year on year.

Comment:Zhitong Finance learned that in the first half of 2023, due to the increase in overseas cement sales, the company achieved sales of 29.99514 million tons of cement and commercial clinker, an increase of 2.13% over the previous year (of which: domestic cement and commercial clinker sales fell 0.76% year on year. The company's integrated development showed that aggregate sales in the first half of the year were 505.012,400 tons, an increase of 103.30% over the previous year; concrete sales were 10.9497 million square meters, an increase of 82.31% over the previous year. At the same time, the company continued to promote the development of environmental protection business and reduce consumption costs. In the first half of the year, the company received 1.94 million tons of various types of waste, an increase of 11% over the previous year. As a starting point for steady economic growth, infrastructure investment is still an important support for cement demand; as an important variable, whether the real estate market can pick up steadily in the second half of the year is also the key to determining cement demand.

Greentown Management Holdings (09979): Outstanding performance in the first half of the year and continued to maintain the number one position in the contract construction market

The company achieved revenue of 1.55 billion yuan in the first half of 2023, an increase of 23.1% over the previous year. Among them, commercial contract construction revenue was 1,065 million yuan, up 39.2% year on year, and government contract construction revenue was 395 million yuan, up 3.7% year on year. Revenue from other services was $889 million, down 20.5% year on year. The company achieved net profit of 474 million yuan in the first half of the year, an increase of 31.3% over the previous year. The performance is impressive.

Comment:The company continues to maintain its number one position in the contract construction market. As of June 30, the company had contract construction projects in 123 cities across the country, with a contract area of 114 million square meters, a continued increase of 12% over the end of 2022. The company's commodity value structure is highly focused on the core metropolitan area. Currently, the contractual sellable value in the four major economic regions of the Yangtze River Delta, Beijing-Tianjin-Hebei Bohai Rim, Pearl River Delta, and Cheng-Chongqing urban agglomeration has reached 630.3 billion yuan, accounting for 76.6% of the total sellable value. Among them, the Yangtze River Delta and the Beijing-Tianjin-Hebei Bohai Rim account for 32.3% and 24.5%. Government and state-owned enterprise client projects contribute to stable business revenue. The company focused on deepening the business of state-owned enterprises and government. In the first half of 2023, the company contracted 17.3 million square meters for new contract construction projects, an increase of 30.6% over the previous year, of which the government and state-owned enterprise clients accounted for 62.1%; the estimated cost of the new development agency was 5.12 billion yuan, an increase of 26.3% over the previous year, of which the government and state-owned enterprise clients accounted for 54.3%. By the end of the period, the contract area of state-owned enterprises and government clients had increased to 3470 and 31.9 million square meters respectively, accounting for a total share of 58.6% of the total contract area. Overall, the company's client structure is diverse and healthy, forming a stable service scenario and a basic fee guarantee.

China Longgong (03339): Fa Yingxi expects net profit of 282 million yuan to 382 million yuan in the medium term

The company announced that based on the board's initial assessment of the Group's unaudited comprehensive management accounts for the six months ended June 30, 2023, net profit will increase dramatically in the first half of 2023. Net profit will be between RMB 282 million and RMB 382 million, an increase of 91% to 158% over the same period last year. The increase in net profit during the reporting period was mainly due to a sharp year-on-year increase in export revenue and a sharp increase in net income from financial assets over the same period.

Comment:According to CME's forecast, in June 2023, excavator sales volume was around 16,000 units, down 22% year on year, and estimated sales volume in the domestic market was 5,500 units, down about 50% year on year. The estimated sales volume in the export market was 10,500 units, an increase of about 7.9% over the previous year. Shen Wan Hongyuan pointed out that the introduction of the policy is expected to speed up the iteration of stock equipment and the acceleration of electrification. It will also increase the utilization rate of stock equipment and boost confidence in the industrial chain. Furthermore, construction machinery is expected to enter a new renewal cycle.