[Anatomy Board]
Despite a slight decline in Hong Kong stocks today, the internal structure is actually not weak. The vast majority of individual stocks have risen, and the Hang Seng Index is supported by the 10-day EMA.
It's really hard to say the current A share. Do you think it's weak or strong like this? It doesn't feel like it. It should still be volatile. It is very difficult to make money in the A-share market. You can rotate more than a dozen topics every day, just play with this amount of money. Following this trend of entanglement, there is essentially a lack of incremental capital; what is more active is quantification, and floating capital is also being regulated, making it too afraid to work hard. Currently, all of the hype in the market depends on small essays. Half a day of hard research is not as powerful as a few sentences. However, none of the essays are direct enough. They have evolved into direct card point prediction of ups and downs. From Nanjing Chemical Fiber (600889.SH) the day before yesterday to yesterday's Zhongtong Bus (000957.SZ), to today's Rayco Defense (002413.SZ), is being talked about. The dead body on the Nanjing chemical fiber floor is still in full swing, and supervision, investigation and prosecution are not effective. It can be seen how extreme the market is. In this way of playing, bad money only drives good money. As long as the Hong Kong stock market doesn't touch fairy stocks, it is very benign and regulated.
The 30-year ultra-long-term special treasury bonds, which were first issued on May 17, will be listed and traded on the secondary market starting today (May 22). After listing, individual investors can buy from institutional investors in the secondary market. This listing attracted strong demand from investors. “Special Guo 2401” listed on the Shenzhen Stock Exchange closed up 19.70%, and rose 23% during the intraday period. The “24 Special Guo 01” listed on the Shanghai Stock Exchange closed up 1.32%, and rose 25% during the intraday period. The above bonds all triggered temporary suspension of trading on both occasions during the intraday period. The reason for the popularity is that the coupon interest rate for 30-year special treasury bonds is 2.57%. Although it doesn't seem high, the market expects interest rates to drop further in the future, so they think it's a good deal. Also, there is usually an emotional premium when it is first issued. At the same time, as treasury bonds are the hardest collateral, they are the favorite of institutions. Conversely, since the 2.57% anchor is highly sought after, wouldn't a dividend ratio above this level be more attractive?
Yesterday, I mentioned that “real estate is still the core”. After banks in Wuhan began implementing the first 15% down payment, Xi'an began to follow up. The media reported that Xi'an has now begun implementing the central bank's new policy. The down payment ratio for the first home has been reduced to 15%, and the down payment ratio for the second home has been reduced to 25%; however, the mortgage interest rate for commercial loans has not yet received an adjustment notice, and the specific policy at the time of signing the housing purchase contract shall prevail. According to this trend, it should be progressing in an orderly manner. The sales side was also positive today. Data disclosed by Leyoujia, the leading intermediary agency in Shenzhen, showed that on the first weekend after the New Deal (May 18-19), second-hand housing sales at Leyoujia's Shenzhen stores rose 127% compared to the previous weekend, becoming the highest point since 2018, surpassing the historical peak period in the second quarter of 2020; second-hand housing sales in stores rose 117% compared to the previous weekend, and the single-day turnover on May 19 hit the highest point since February 2021. Any real estate policy ultimately comes down to sales volume, which is the only measure of effectiveness. The data for Shenzhen is already off to a good start. We'll see if other major cities are also scaling up later. The good increase today is that Guangzhou Real Estate's Zhuguang Holdings (01176) rose more than 20 points. Shanghai's Shimao Group (00813) and Shenzhen Vanke Enterprise (02202) are all above 4 points, focusing on real estate in first-tier cities. The flexibility of the property management category is also quite good. Country Garden Services (06098), Sunac Services (01516), Poly Property (06049), and CNOOC Properties (02669) continue to be sought after.
Consumer electronics was also mentioned yesterday. On the evening of May 20, the Tmall 618 promotion campaign was launched, and the official Tmall Apple Store flagship store launched a big price reduction. The iPhone 15 series phones are being promoted the most, with a direct reduction of up to 2,300 yuan. According to data released by Tmall, Tmall 618 went on sale at 8 p.m. on May 20. It went on sale for 1 hour, and Apple's transaction amount exceeded 1.5 billion yuan. The Guochain individual stock Gaowei Electronics (01415) mentioned once again rose more than 6 points.
According to the CPIA official account of the China Photovoltaic Industry Association, the China Photovoltaic Industry Association recently organized a “Symposium on High Quality Development of the PV Industry” in Beijing. The conference pointed out that the crackdown on vicious competition in below-cost sales should be strengthened; industry mergers and restructuring should be encouraged, and market exit mechanisms should be unblocked. It is a good model for regulation at the national level. Otherwise, all kinds of chaos will occur. Disorderly and vicious competition and overcapacity will greatly hurt the industry. It is foreseeable that the competitive landscape of the industry will improve in the future. Prices in the photovoltaic industry chain continue to drop, leading companies in all sectors may enter a phase of losing cash costs, and industry clearance is accelerating. The current position should not be pessimistic. GCL Technology (03800), Xinte Energy (01799), Xinyi Solar (00968), and Follett Glass (06865) are working together today. Judging from the large scale, there must have been institutions entering the market.
Recently, the Shanghai Municipal Health Insurance Bureau, together with the human resources social security and health departments, issued the “Notice on Including Some Therapeutic Assisted Reproduction Technology Projects in the Scope of Medical Insurance and Work Injury Insurance Payments”. Shanghai will include 12 assisted reproductive medical service programs in the scope of medical insurance payments, covering essential medical assisted reproduction techniques such as egg retrieval, sperm extraction, artificial insemination, embryo cultivation, and embryo transfer. It is expected to reduce the burden on insured personnel by about 900 million yuan each year. According to incomplete statistics, up to now, Beijing, Guangxi, Inner Mongolia, Gansu, Jiangxi, and Shanghai have successively included assisted reproduction in medical insurance reimbursement. The inclusion of medical insurance will greatly boost the assisted reproduction business. According to public data, taking Beijing as an example, after Beijing implemented new medical insurance reimbursement regulations for assisted reproductive technology in July 2023, the number of outpatient reproductive medicine clinics in hospitals increased by 36.3% from July to December compared to the same period in 2022, and the number of IVF egg retrieval cycles increased 62.7% over the same period in 2022, and an increase of 50% compared to the first half of 2023. This increase includes both first-time patients, returning patients, and those receiving assisted reproductive technology services more than once. As a leader in the industry, Jinxin Reproduction (01951) is expected to benefit in the long term.
In terms of consumer stocks, the market expects demand for outbound travel from the mainland to recover. The three major airline shareholders, Airlines (00670), Air China (00753), and China Southern Airlines (01055), are once again strengthening today.
Unlike Ideal Auto, Xiaopeng (09868)'s results for the first quarter came out, and major foreign banks were optimistic. The overall gross margin reached 12.9%. The technical fees collected in cooperation with Volkswagen should not be long-term recurring expenses; they are one-time income that lasts two to three years. Considering that Volkswagen's profit from technical expenses is more visible, it is driven by factors such as shipping from the new brand MONA. Looking ahead to the second quarter, Xiaopeng Motor expects vehicle deliveries to be between 29,000 and 32,000 vehicles, or an increase of about 25% to 37.9% year-on-year. Total quarterly revenue is expected to be between 7.5 billion and 8.3 billion, an increase of about 48.1% to 63.9% year-on-year.
Nvidia will soon announce its results report for the first fiscal quarter of fiscal year 2025 in the early hours of Thursday morning Beijing time and hold a conference call at 5 a.m. Wall Street expects Nvidia's revenue to grow 240% to US$24.6 billion in the first fiscal quarter, while net profit will increase 540% to US$13.1 billion. Since strong demand for artificial intelligence chips from large companies such as Amazon, Google, and Meta is the main support for Nvidia's performance, tomorrow's forward-looking guidance will be critical. The Lenovo Group (00992), which was mentioned in the focus section yesterday, surged by more than 10 points, and should also be taking the lead in capital.
[Sector Focus]
2024 is a big year for Sea Wind tenders and construction, and there is a high degree of certainty about Sea Breeze construction. The second quarter entered the Haifeng construction window. At the same time, problems left over from the early stages of the industry improved. Seabreeze projects in Guangdong, Jiangsu and other places made substantial progress, and competition, approval, and tenders were released one after another, leading to intensive commencement of construction. Examples include the recent launch of tenders for key projects such as Fanshi 2 and Qingzhou 57. Overseas project commencement has gradually resumed: the Iles D'Yeu et Noirmoutier project in France has resumed offshore construction, and the single-pile foundation is scheduled to be installed this year (62 single piles provided by Daikin); the first batch of 5 fans in the US Vineyard Wind 1 has been put into operation, Evolution Wind and Virginia projects have all begun offshore installation; and the first fan installation in Germany's Baltic Eagle. Overseas follow-up release: Siemens Gamesa said that the auction volume of overseas offshore wind power projects during the year was about 40 GW (Germany has already started 2.5 GW auctions, and 5.5 GW is expected within the year; the Netherlands has already started 4 GW; a new round of competition in the UK has also been closed at the end of April, and the auction results are expected from mid-Q3).
Main varieties: Goldwind Technology (02208) for wind power equipment, Longyuan Electric (00916), a downstream wind power developer and builder.
[Individual Stock Nuggets]
China Railway (00390): Mineral resources are expected to reassess the high increase in overseas orders
Recently, China Railway's procurement platform issued an EMU tender notice. 165 groups were first tendered in '24, and 103 groups were first tendered last year, an increase of 60%. All of the 350 km/h models were in this tender, which exceeded the total number of 164 tenders last year. This tender volume is the highest in a single tender in the past four years.
Comment: China Railway Group still has 2-3 tenders this year. It is expected that there will be more than 300 tenders throughout the year, supporting the company's performance growth. The company's overall performance growth rate in 2023 is stable, overseas orders are growing rapidly, the number of orders in hand is sufficient, and the mineral resources sector's contribution to the performance is expected to increase. China Railway is the main contractor for the China-Laos Railway, Indonesia's Yawan High Speed Rail, the Hungarian Railway, and the Bangladesh Padma Bridge for representative projects along the Belt and Road. The company recently won bids for a number of major projects. The total bid price for the project was about RMB 41.68 billion, accounting for about 3.3% of the company's 2023 revenue under China's accounting standards. In 2023, the company's overseas orders increased by 8.7%, exceeding domestic growth of 1.8%. The company's mine's own copper and molybdenum production capacity already ranks among the highest in the domestic industry, and mineral resources are expected to be re-evaluated. The company wholly owned, controlled, or invested in the construction of 5 modern mines at home and abroad, namely the Heilongjiang Luming Molybdenum Mine, Congo (Gold) Lusha Copper-Cobalt Mine, MKM copper-cobalt mine, Huagang SICOMINE copper-cobalt mine, and the Mongolian Ulan lead-zinc mine, all of which are in good production and operation conditions. China Railway's performance continued to grow and valuations returned to the bottom, and equity incentives increased the certainty of growth.