Intelligence Hong Kong Stock Analysis | Hong Kong stocks violently rise in May, leading the way with dual attributes of SenseTime

[Market Analysis]

With the A-share market closed for Labor Day and the volatile trend of the US stock market, the Hong Kong stock market has become more interesting. May started off strong, with a violent surge of 444 points, closing at 18207 points.

The overnight performance of the US stock market has left many investors confused. Both bulls and bears are closely watching Powell's speech to place their bets. Following the latest Federal Reserve interest rate decision to maintain rates, Powell first ruled out the possibility of a rate hike: the rate hike cycle has ended, and a rate hike at the next meeting is 'unlikely'. In other words, raising rates will not be a future policy option. The market naturally liked to hear this, so the bulls rallied as if they had found a lifeline. The three major US stock indices surged by over 1% at one point during the trading session. However, Powell then mentioned: there is currently a lack of certainty for a rate cut, which requires two triggering factors: rapid decline in inflation and sudden collapse of the labor market. Obviously, neither the Federal Reserve nor the market has confidence in these two triggering conditions. With all the back and forth, isn't this still a stalemate? The market goes up and then comes crashing down immediately. This kind of movement indicates several issues: firstly, the sentiment of investors in the US stock market is extremely unstable, and any slight change can trigger significant fluctuations. Although the bulls still have some strength at this stage, if the market officially breaks below the six-month moving average, it is likely that the bears will fully exert their influence. Secondly, as the Japanese yen hits new highs and depreciates, the Chinese yuan exchange rate is becoming stronger, and the Hong Kong dollar even stronger. If this situation continues for a while, one can imagine what actions international capital might take.

The cryptocurrency market is in turmoil again. Following the heavy blow to the virtual currency market on April 30th Beijing time, Bitcoin plummeted again on May 1st. Starting from 3 pm, within just over ten minutes, the price of Bitcoin successively fell below the two integer levels of $58,000 and $57,000. At the same time, other cryptocurrencies in the market also experienced a sharp decline. Ethereum fell by over 6% in 24 hours, Binance Coin by over 7%, and Dogecoin by 11.3%. As of the time of writing, the price of Bitcoin is currently at $56,969. As soon as the spot Bitcoin ETF was launched in Hong Kong, it immediately plummeted. Are they just eyeing that $1 billion? This should be due to a decrease in risk appetite.

The decrease in risk appetite will inevitably lead to funds gathering in undervalued areas, with institutions continuing to target giants like Tencent (00700) and Meituan (03690). Varieties that show a money-making effect tend to have stronger sustainability. Taking real estate as an example, under the latest meeting spirit, various regions continue to loosen restrictions. On April 30th, the Beijing Municipal Commission of Housing and Urban-Rural Development issued a notice on optimizing and adjusting the city's housing purchase restriction policy, allowing resident families who already own homes up to the purchase limit to buy a new home outside the Fifth Ring Road (including new commercial housing and second-hand housing). Companies like Vanke (02202), which have already announced their performance, are now being targeted by funds again. They surged by over 10 points Elon Musk's moves are always unexpected. In the latest news, Musk suddenly disbanded the entire Tesla Supercharger team, involving hundreds of employees worldwide, including Rebecca Tinucci, the global Supercharger senior director who has been working at Tesla for six years. In addition, the integrated casting that has always been proud of is also planned to be abandoned, switching to a three-stage approach. These operations may seem difficult to understand, but in fact, everything is about actively responding to how to overcome challenges. This is because he has felt the strong competitive pressure from Chinese car companies. Let's take a look at the latest April performance report. Among them, BYD (01211) still leads the pack, with sales reaching 313,200 units, climbing month by month. Xiaomi's car made its debut, delivering over 7,000 vehicles in its first month. Aito M9 has started a frenzied mode in the 500,000 yuan level race track. Nio (09866) saw an explosive growth in April deliveries, reaching 15,600 units, a year-on-year increase of 134.6% and a month-on-month increase of 31.62%. It surged more than 20 points today. Following closely is Leapmotor (9863) with 15,000 deliveries in April, a year-on-year increase of 71.96%, making it a hot stock in April with a surge of over 15 points. With the arrival of the May Day holiday and the successive launch of car exhibitions across the country, marketing activities are unfolding, further attracting consumers' attention and enthusiasm for car purchases. Meidong Auto (01268) surged over 19 points. Also fermenting is the sector gathering mentioned in intelligent driving, with Zhejiang Shibao (01057) surging nearly 18 points.

The most stunning in the market today is SenseTime (00020), which surged over 36 points again. On April 28, Forbes China officially released the "2024 Forbes China AI Technology Enterprise TOP50" list. Innovusion (02121) and Fourth Paradigm (6682) both saw gains of over 14 points. SenseTime (00020) also made the list, which may be related to its development in autonomous driving. At the Beijing International Auto Show, the company showcased for the first time to the public the road test performance of its end-to-end autonomous driving solution UniAD (Unified Autonomous Driving), as well as the new cockpit 3D interactive demonstration based on the multimodal brain core Al large model cabin product matrix, showcasing a new travel experience driven by general artificial intelligence (AG) technology. If they can achieve results in the automotive direction, it will be a major highlight.

On May 2, Novo Nordisk had a very impressive first quarter, with sales of 65.35 billion Danish kroner, significantly exceeding the market's expected 63.75 billion, and operating profit reaching 31.85 billion Danish kroner, surpassing market expectations. Sales are expected to increase by 19%-27% in 2024, and operating profit may grow by 22%-30%. In terms of production capacity, Novo Nordisk expects to double its investment in production capacity this year to reach $6.4 billion, in order to compete with its rival Li Auto for the dominant position in the weight loss drug market. This news has stimulated the domestic innovative drug sector, with optimism for companies like Junshi Biosciences (01877), Innovent Biologics (01801), and Hansoh Pharma (03692) [Sector Focus]

During the "May Day" Golden Week from April 29th to May 3rd, Macau welcomed its first peak in passenger flow after the COVID-19 pandemic, with over 2.65 million entries and exits in 5 days, a 49% increase from the same period last year, reaching 91% of the pre-epidemic level in 2019. All entry and exit ports set new daily records: on April 30th, the number of inbound tourists to Macau reached 134,000, with a total of 574,000 entries and exits.

At the same time, the Hengqin Guangdong-Macao Deep Cooperation Zone (referred to as the "Cooperation Zone") showcased its beautiful environment and consumer circle during the "May Day" Golden Week, receiving a total of 387,000 tourists, a 234% year-on-year increase, with visitor flows at various scenic spots recovering beyond expectations.

Some experts in the tourism market pointed out that both Macau and Hengqin welcomed a peak in tourist flows during the "May Day" holiday, indicating that the cultural and tourism resources of the two places are favored by tourists, and the integrated development of Hengqin and Macau continues to deepen.

Main stocks in the Hong Kong stock market: Sands China (00200), Sands China (01928), MGM China (02282) rose, and Galaxy Entertainment (00880).

[Individual Stock Analysis]

XD Inc. (02400): Self-developed games perform well, multiple blockbuster games to be launched in May

XD self-developed placement RPG "Mafin's Adventure" conducted a closed beta test from April 16th to April 26th. The National Press and Publication Administration released the approval information for domestic online games in April on April 26th, with a total of 95 games approved.

Review: The continuous issuance of game licenses, the increase in quantity, and the approval of blockbuster games have helped to continuously release game supply. XD's "Mafin's Adventure" (expected on May 15th) and other blockbuster games will be launched. The company's self-developed products are gradually delivering results, with "Mafin's Adventure" performing well in the Hong Kong, Macau, and Taiwan regions. Since its launch in the Hong Kong, Macau, and Taiwan regions on January 24th, it has remained at the top of the iOS bestseller list. According to DotData, the revenue in March exceeded $20.12 million, ranking first in outbound games in Hong Kong, Macau, and Taiwan. "Isaiah: Reboot" is steadily progressing and is expected to contribute significantly to the company's performance. In terms of TapTap, the company's H2 MAU has increased month-on-month, and with the launch of new games and marketing growth next year, TapTap's revenue and MAU are expected to continue to grow. The company's flagship product "Torchlight" is in long-term operation, and the new product "Sword of Bellflower" has commercial potential, which is expected to jointly drive the recovery of the company's 23H2 game revenue and profit release. Revenue realization may exceed expectations; "Town of XD" and "Mafin's Adventure" are expected to contribute new increments.

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