In March, under a series of favorable incentives, Hong Kong stocks emerged from a technical bull market.

The data shows that since the Hang Seng Index bottomed out on January 22, its biggest rebound has exceeded 16%. The biggest rebounds of the Hang Seng Technology Index and the Hang Seng China Enterprises Index reached 24.09% and 21.36% respectively, both of which have entered a technical bull market.

A sharp rise in one or two sectors may not explain anything, but if several sectors continue to rise continuously, the significance is completely different. This signal is worth paying close attention to.

Brokerage analysts generally believe that as the performance of Hong Kong stock companies recovers and market liquidity improves, Hong Kong stocks may start a double-click market where performance and valuation are repaired.

And the “survival of the fittest” after the results are announced is probably the best time to reallocate funds.

Recent,$SY HOLDINGS (06069.HK)$A high-profile 2023 full-year results announcement was issued. In 2023, Shengye not only maintained steady profitability, but also had a number of core data reaching record highs.

Financial reports show that the total amount of supply chain assets handled by the platform was 193.4 billion yuan, an increase of about 22% over the same period last year. The total number of customers on the platform was 15,326, an increase of about 20% over the same period last year.

As the scale of the business continues to grow, Shengye achieved net profit of 286 million yuan, an increase of about 17% over the previous year.

Shengye has achieved dual-drive development through the “Industrial Internet” + “Digital Finance” business segments. Among them, the digital finance sector grew steadily, and revenue from digital finance solutions was about 723 million yuan, an increase of about 16% over the previous year.

The technology service sector is growing strongly. Technology revenue (including platform service revenue and supply chain technology service revenue) is about 170 million yuan, an increase of about 65% over the previous year, and has become an engine for performance growth.

According to industry insiders, there are two main reasons why Shengye has achieved continuous growth: first, the financing needs of micro, small and medium-sized enterprises are strong, and China's supply chain finance market is huge, and it has formed a stable growth market; second, Shengye has adopted a “heavy transaction and light entity” business model to provide differentiated supply chain inclusive financial services through in-depth industrial ecology and active risk control, effectively solving the financing problems of micro, small and medium-sized enterprises, and has formed a unique competitive barrier.

According to public information, since its establishment in 2013, Shengye has maintained profits for 10 consecutive years. Judging from Shengye's steady development performance, Shengye's business model has “worked” and “matured”. It is also the only Hong Kong listed company that continues to make profits in the supply chain finance industry.

According to the “2023 China Supply Chain Finance Digital Industry Research Report”, China's supply chain finance industry is 36.9 trillion yuan in 2022. It is expected to maintain growth at a compound annual growth rate of 10.3% over the next five years, and exceed 60 trillion yuan in 2027.

Judging from Shengye's current business scale and market share, there is still huge room for future development.

The fundamentals of an enterprise are a decisive factor in long-term value investment in stocks. When the wind blows, the market rotates between sectors. You only need to firmly practice value investment and wait for the “rose of time” to bloom.

Currently, both absolute and relative valuations of Hong Kong stocks are undervalued. With policy funding and the support of profits from the market structure sector, there is not much room for downward adjustment in the market. Although the Federal Reserve is still staging a “war of hawks and pigeons” to disrupt market confidence, the Fed's interest rate cut during the year is already a matter of course, and the shift in dollar liquidity will also benefit Hong Kong stocks.

Investors are now waiting for China's recovery momentum to accelerate. If there are more signs that the economy has stabilized, there is plenty of room for Hong Kong stocks to “catch up”, and Shengye is also expected to welcome a return in value. At present, Shengye has begun a new round of share repurchases, once again sending a positive signal to the market. CICC also released the latest research report stating that it maintains Shengye's “outperforming the industry” rating and gives a target price of HK$6.01, which has a potential increase of more than 40% compared to the current stock price.