Hong Kong Stock Market Closing (02.27) | Hang Seng Index rose by 0.94%, with a strong performance in the automotive industry chain. LI AUTO surged by 25% after its earnings report.

Zhitong App learned that the three major stock indexes in Hong Kong surged in the morning, then fell back, and rebounded in the afternoon, with further gains at the close. As of the close, the Hang Seng Index rose by 0.94% or 156.06 points to 16,790.80 points, with a total daily turnover of HKD 102.6 billion; the Hang Seng China Enterprises Index rose by 1.46% to 5,806.90 points; and the Hang Seng Tech Index rose by 3.24% to 3,503.17 points.

Guotai Junan pointed out that looking ahead, the bottom of the Hong Kong stock market is solidifying, with a medium-term upward trend and a preference for dividend stocks. With the continued introduction of policies to boost domestic economic momentum, economic growth expectations are stabilizing. Although the overall trend of overseas liquidity is easing, the short-term disturbance caused by the rebound of U.S. inflation data has led to fluctuations in overseas liquidity expectations, exerting a greater impact on the growth style of Hong Kong stocks. In addition, there are many overseas risk events, including elections in various countries, geopolitical tensions, and the possibility of a U.S. recession, which may disturb the Hong Kong stock market. The high-dividend style with low-risk characteristics such as low valuation and stable cash flow remains the current preferred choice.

▍Performance of Blue-chip Stocks

LI AUTO (02015) surged significantly. At the close, it rose by 25.45% to HKD 175.50, with a turnover of HKD 4.4 billion, contributing 77.04 points to the Hang Seng Index. LI AUTO released its unaudited financial performance for the full year ending December 31, 2023. The group achieved vehicle sales revenue of RMB 120.295 billion, a year-on-year increase of 172.7%; vehicle gross profit margin was 21.5%, up by 2.4 percentage points year-on-year; total revenue was RMB 123.851 billion, up by 173.5% year-on-year; gross profit was RMB 27.497 billion, up by 212.8% year-on-year; net profit was RMB 11.809 billion, turning losses into profits year-on-year; diluted net earnings per American Depositary Share attributable to ordinary shareholders were RMB 11.1. The announcement stated that the increase in vehicle sales revenue was mainly due to an increase in vehicle delivery volume. In addition, other sales and service revenue in 2023 was RMB 3.56 billion, an increase of 201.3% compared to RMB 1.18 billion in 2022. The increase in other sales and service revenue was mainly due to the increase in vehicle delivery volume, which also led to an increase in charging pile sales revenue and an increase in sales revenue for accessories and services due to the cumulative increase in vehicle sales volume.

Among other blue-chip stocks, SMIC (00981) rose by 10.21% to HKD 16.62, contributing 10.19 points to the Hang Seng Index; BYD (01211) rose by 5.32% to HKD 197.90, contributing 16.37 points to the Hang Seng Index; Shenzhou International (02313) fell by 2.64% to HKD 66.35, dragging down the Hang Seng Index by 2.33 points; Sands China Ltd. (01928) fell by 2.37% to HKD 22.65, dragging down the Hang Seng Index by 2.44 points.

▍Hot Sectors

On the market front, the automotive, semiconductor, Bitcoin, Foxconn, and education sectors are leading the gains, while gold, beer, and other sectors are relatively weak.

1. Strong Performance in the Automotive Industry Chain. At the close, LI AUTO (02015) rose by 25.45% to HKD 175.50; Zero Run Auto (09863) rose by 6.46% to HKD 27.20; Minth Group (00425) rose by 4.63% to HKD 13.10; Zhejiang Shibao (01057) rose by 3.86% to HKD 2.15.

The fourth meeting of the Central Finance and Economic Committee pointed out the need to promote the renewal and technological transformation of various production and service equipment, encourage the trade-in of traditional consumer goods such as cars and home appliances, and drive the trade-in of durable consumer goods. Sinolink Securities stated that if a new round of trade-in policies is implemented, it is expected to boost the trade-in ratio. It is anticipated that car companies in the price range of 150,000 to 300,000 with a focus on multi-purpose models will benefit significantly.

Furthermore, analysts suggest that as the overlap between the robot supply chain and the automotive supply chain exceeds 60%, robots will continue to reshape the entire automotive industry, similar to the previous electrification of cars. Huaxi Securities pointed out that the humanoid robot sector is continuously catalyzed, with promising future investment opportunities. On one hand, Tesla's Optimus is rapidly iterating and is expected to gradually enter the mass production stage, with technology leaders like Tencent accelerating their entry, continuously catalyzing the supply side. On the other hand, companies like NVIDIA and OpenAI are increasing their investments in the AI industry. As an important branch of the AI+ industry chain, humanoid robots are expected to benefit significantly.

2. Chip Stocks Extend Gains in the Afternoon. At the close, Shanghai Fudan (01385) rose by 23.11% to HKD 13.32; SMIC (00981) rose by 10.21% to HKD 16.62; China Electronics Huada Technology (00085) rose by 9.22% to HKD 1.54; Hua Hong Semiconductor (01347) rose by 7.69% to HKD 17.36.

The State-owned Assets Supervision and Administration Commission of the State Council recently held a special promotion meeting for central enterprises' artificial intelligence under the theme "AI Empowering Industry Renewal." The meeting called for the launch of AI+ special actions, strengthening demand traction, accelerating the empowerment of key industries, building a batch of high-quality multimodal data sets for industries, and creating a large-scale empowerment industry ecosystem from infrastructure, algorithm tools, intelligent platforms to solutions.

Huafu Securities pointed out that central enterprises have advantages such as large demand scale, complete industrial supporting facilities, and diverse application scenarios. Their entry will help accelerate the improvement of China's AI industry development foundation, promote the formation of industry demonstration projects to provide direction for innovation for other enterprises. Morgan Stanley stated that the current supply of advanced process capacity is insufficient to meet demand, and the penetration rate of advanced packaging is expected to maintain high growth following the surge in demand for AI computing chips. At the same time, the penetration rate of advanced packaging for edge computing chips is also rapidly increasing.

3. Strength in Bitcoin Concept Stocks. At the close, OSL Group (00863) rose by 19.04% to HKD 9.63; Xiongan Technology (01647) rose by 11.76% to HKD 0.09;

• New Fire Technology Holdings (01611) rose by 3.12% to HKD 3.30.

• Bitcoin spot prices briefly surpassed $57,000 today, with an intraday increase of over 8%, hitting a new high since December 2021. Additionally, Tom Lee, Managing Partner of Fundstrat Global Advisors, made an aggressive prediction on Bitcoin's trend, suggesting that by the end of this year, the cryptocurrency could climb to $150,000.

• On January 10, the U.S. Securities and Exchange Commission (SEC) approved 11 Bitcoin spot ETFs, leading to a price surge of over 10%. The trading volume of Bitcoin ETFs also reached a historic high. On February 20, industry insiders revealed that the trading volume of 9 Bitcoin spot ETFs approached $2 billion, marking the highest level since the first day of trading on January 11.

• Beer stocks fell in the morning session. By the close, Tsingtao Brewery (00168) dropped by 3.68% to HKD 52.30; China Resources Beer (00291) fell by 0.87% to HKD 34.15; and Budweiser APAC (01876) declined by 0.59% to HKD 13.38.

• Huafu Securities pointed out that due to a higher base in the same period of 2022 and the impact of typhoons and rainy weather, beer sales are expected to be somewhat suppressed. Sales volume in 2023 is projected to remain stable compared to last year. In terms of high-end products, the slower recovery of high-end catering establishments than expected has somewhat restrained the sales of high-end beers. However, under the high-end strategies of various manufacturers, the price growth of beer per ton continues.

Looking ahead to 2024, the overall growth of the beer market is expected to be limited, with revenue growth mainly driven by structural upgrades. The continuous rise in high-end products will also elevate the profitability of various manufacturers. Additionally, with China terminating the anti-dumping and countervailing duties on imported barley from Australia, the expected decline in barley prices is anticipated to contribute to the profitability elasticity of beer companies beyond high-end products.

• Hot Stocks in Focus

1. China Medical System (03332) surged by over 39% in the morning session, hitting a new high, and closed with a 48.21% increase at HKD 0.41.

China Medical System announced that the group expects to achieve a net profit of approximately RMB 45 million to RMB 55 million for the year ending December 31, 2023, compared to a net loss of approximately RMB 14.2 million for the year ending December 31, 2022. The expected profit is mainly attributed to a significant increase in online and offline sales revenue for the year ending December 31, 2023.

1. ALCO HOLDINGS (00328) soared by over 20%, closing with a 20.86% increase at HKD 3.36.

ALCO HOLDINGS recently announced its plan to issue up to 15.91 million shares at HKD 1.96 per share to underwriters on February 19, 2024, representing approximately 16.67% of the expanded share capital. This price is at a discount of about 4.85% compared to the closing market price of HKD 2.06 per share reported on the Hong Kong Stock Exchange on February 19, 2024. Assuming a maximum of 15.91 million shares have all been allocated in the stock placement, raising approximately HKD 30.0545 million in net proceeds, intended for repaying bank and other borrowings, clearing external debts, and general operational funds for the group.

3. Samsonite (01910) surged more than 12% intraday, closing up 13.76% at HKD 26.45.

Today, there were media reports that, according to insiders, after receiving acquisition intentions, Samsonite is working with advisors to explore various possibilities, including privatization. Discussions are still ongoing, and it is currently uncertain whether Samsonite will decide to proceed with the transaction.