Northbound Capital | Northbound Capital's net purchase of 1.468 billion yuan, high dividend stocks are in demand again, automobile stocks receive additional positions

Zhitong App learned that on January 12th, in the Hong Kong stock market, the net purchase of Northbound funds amounted to HKD 1.468 billion, with a net purchase of HKD 875 million through the Shanghai-Hong Kong Stock Connect and a net sale of HKD 593 million through the Shenzhen-Hong Kong Stock Connect.

The stocks with the highest net purchase by Northbound funds were China Mobile (00941), Construction Bank (00939), and WuXi Biologics (02269). The stocks with the highest net sale by Northbound funds were Tencent (00700), HSBC Holdings (00005), and EAST BUY (01797).

Active trading stocks through the Shenzhen-Hong Kong Stock Connect

Active trading stocks through the Shanghai-Hong Kong Stock Connect

Northbound funds have increased their positions in high dividend assets, such as China Mobile (00941), Construction Bank (00939), and CNOOC (00883). On the news front, CITIC Securities stated that the performance of high dividend stocks indicates a significant decrease in market risk appetite and a severe lack of investor confidence. With the expectation of a soft landing for the US economy and better-than-expected non-farm payroll data in December, both defensive and high win-rate strategies have driven capital flow into high dividend stocks. It should be noted that the short-term volatility risk of the high dividend strategy may lie in market sentiment reversal, a decrease in dividend yield after the rise, and a decline in attractiveness.

WuXi Biologics (02269) received a net purchase of HKD 105 million. On the news front, J.P. Morgan released a research report stating that it has raised the target price of WuXi Biologics from HKD 33 to HKD 34, and expects its revenue growth forecast for fiscal year 2023 and fiscal year 2024 to reach 10% and 14% respectively. The company added 71 new comprehensive projects last quarter, which was a pleasant surprise, bringing the total number of new projects for the full year of 2023 to 132.

Meitu, Inc. (01357) received a net purchase of HKD 90.71 million. On the news front, Guotai Junan stated that Meitu is a leader in the digital imaging industry, with a focus on extending from consumer applications such as MeituPic to B2B businesses. In terms of technological innovation, the company's AI portrait generation effect has reached the top level in China, and the AIGC strategy is expected to open up the B2B paid space. In addition, the US SEC has approved the first-ever Bitcoin spot ETF. Meitu Inc. has attracted market attention due to its high-profile purchases of Bitcoin and Ethereum.

Automobile stocks are sought after, with Li Auto-W (02015) and XPeng-W (09868) receiving net purchases of HKD 58.25 million and HKD 16.42 million, respectively. In terms of news, Ping An Securities predicts that the "price war" led by top new energy vehicle companies will continue in 2024, especially in the mainstream price range of RMB 100,000 to RMB 200,000. In addition, the decline in battery costs provides room for car companies to lower the prices of new energy vehicles. CICC predicts that the penetration rate of new energy vehicles in 2024 may reach 46%, with a sales growth rate of 36%. The concentration of top brands has increased, the market share of domestic brands has reached a new high, and the gasoline vehicle market is shrinking, facing greater pressure to lower prices.

Fuyao Glass (06865) experienced net sales of HKD 50.73 million. In terms of news, Morgan Stanley previously pointed out that the solar energy and float glass industries in mainland China will face price and profit pressures in 2024 due to increased industry supply, weakened demand, and reduced production cost support. They maintain a negative view of the entire industry. Morgan Stanley predicts that the supply pressure of solar energy glass will continue in 2024, and the supply of float glass will continue to increase by 3% YoY.

EAST BUY (01797) experienced net sales of HKD 64.44 million. In terms of news, CICC released a research report stating that the company's Douyin platform is stable, with additional contributions from Taobao and the app. However, the short-term profit of the live streaming business is under pressure, mainly due to increased investment in anchors and the supply chain talent team under the multi-channel strategy. The large discounts on self-operated products with low profit margins and the increase in GMV ratio have dragged down the overall profit margin. It is expected that the adjusted net profit margin of the company's live streaming business will remain stable YoY.

HSBC Holdings (00005) experienced net sales of HKD 158 million. In terms of news, JPMorgan Chase released a report stating that the impact of the US litigation and the UK car loan investigation on HSBC Holdings is limited. According to the bank's calculations, the total potential penalties and fines for the two incidents in the worst-case scenario will reach USD 1.3 billion, accounting for approximately 3.3% of this year's pre-tax profit. JPMorgan Chase believes that the current weak stock price is a buying opportunity, as the cash dividends and share buybacks in the next 12 months are equivalent to 16% of HSBC's market value at the closing price on January 11. In addition, with the approval of the sale of HSBC Canada, there is a potential upside of USD 2 billion to USD 3 billion for share buybacks.

Tencent (00700) experienced net sales of HKD 216 million. In terms of news, Morgan Stanley released a report stating that Tencent's fourth-quarter performance last year is expected to roughly meet market expectations. The bank's revenue forecast is 1% lower than market expectations, and the adjusted EPS forecast is 2% lower than market expectations. Although meeting expectations may not be enough to drive the stock price up, the comments from management on the gaming regulatory environment and this year's gaming channels are key to market sentiment and could become a catalyst for the stock price. CICC also stated that Tencent's game "Dream Star" will be launched at the end of the year, but it will not contribute to revenue in 2023 due to deferred revenue. In addition, there will be high base pressure for overseas games in 4Q22 and pressure on domestic games in 4Q23. It is expected that the overall revenue of games in 4Q23 will remain flat YoY. In addition, Semiconductor Manufacturing International Corporation (00981) experienced a net sell-off of HKD 4.86 million.