Zhitong Hong Kong Stock Exchange Unravels | Major meetings focus on stability, do not anticipate the return of securities, and plan ahead for the return of securities

[Anatomy Dashboard]

The Hong Kong stock market rose for a while during the intraday period, but at the end of the market there was a slight increase of 0.32%, and the trading volume continued to shrink at the level of 200 billion yuan.

Obviously, the strengthening at the beginning of today is mainly due to the hope that the Politburo meeting will be successfully launched. Let's first take a look at the contents of the conference: we must step up implementation of more active and promising macroeconomic policies, and make good use of more active fiscal policies and moderately loose monetary policies. Accelerate the issuance and use of local government special bonds, ultra-long-term special treasury bonds, etc. Secure the bottom line of the “Three Guarantees” at the grassroots level. Cut interest rates in due course, maintain abundant liquidity, and strengthen support for the real economy. Create new structural monetary policy instruments, establish new policy financial instruments, support scientific and technological innovation, expand consumption, stabilize foreign trade, etc. Strengthen the consistency of policy orientations.

The conference pointed out that efforts should continue to be made to prevent and mitigate risks in key areas. Continue to implement the local government's debt package policy to expedite the resolution of local government arrears to enterprises. Strengthen the implementation of urban renewal actions, and vigorously and orderly promote the renovation of urban villages and dilapidated houses. Accelerate the construction of a new model for real estate development, increase the supply of high-quality housing, optimize existing commercial housing acquisition policies, and continue to consolidate the stable trend in the real estate market. Continuously stable and active capital markets.

Overall, the message conveyed at this conference was not to flood the water, or to focus on stability. This is also understandable, because now Trump is in a state of “complacency,” the A-share Shanghai Index has reached around 3,300, the necessity and urgency of policy stimulus has been greatly reduced, and the Federal Reserve has not yet begun to cut interest rates, so there is room for room. As a result, the market's view was that it was relatively disappointing, so the index rushed higher and fell.

Specifically, in terms of fiscal stimulus, no new treasury bonds were issued, in line with expectations, because only 1.3 trillion of ultra-long-term special treasury bonds and 500 billion yuan of special treasury bonds were issued to supplement banks in March. At the same time, 4.4 trillion special bonds were also issued, an increase of 500 billion dollars over the previous year. It is less than two months until now. Most of them have not been paid out. There is no need for new debt approvals. It is completely sufficient for the first half of the year; there was no direct increase in the stock market, but it was mentioned that the capital market should continue to be active. In terms of the property market, it mainly targets the direction of stock, and continues to focus on stability; as for cutting interest rates at the right time, this has been discussed many times at the right time, and I don't think it's that fast; it's not likely right now.

Foreign investors are positive about real estate. Citibank analysts Griffin Chan and Cindy Li said in a Wednesday report: “We expect that the next two years will be a good time to lay out the Chinese real estate sector. As asset turnover and pricing improve, the return on equity is expected to continue to rise.” In the early days, many real estate stocks were rising, but they all declined as the press release of the conference came out. There is also news from Sunac (01918) that the Hong Kong court will hold a winding-up hearing on April 28, and Sunac is actively seeking support for its debt replacement plan. In the middle of this month, a media report said that the company proposed a final plan to restructure overseas debt and plans to convert all of its foreign debt of about 9.55 billion US dollars into company shares, thereby “zeroing out” foreign debt. The market is waiting for the final results.

Trump has been “talking nonstop” for the past two days, saying that he is in talks with China, but he was directly punched in the face. Seeing that it didn't work, then the strategy was adjusted. According to media reports on the 23rd, senior US officials revealed that the Trump administration is considering various plans. Under the first plan, the tariff rate on Chinese goods may be reduced to about 50%-65%. The second plan is called the “hierarchical plan,” and the US side will divide goods imported from China into so-called “products that do not pose a threat to US national security” and so-called “strategically significant to America's national interests.” According to the US media, in the “classification plan,” the US side will levy 35% tariffs on the first category of goods, and the tariff rate on the second category of goods is at least 100%. Trump claims that the tariff rate on China is too high, affecting trade between China and the US, but he has yet to decide to lower the tax rate. In addition, he also said that he plans to raise tariffs on Canadian cars a little more. Federal Reserve officials are estimated to be unable to continue; they can only help. The Federal Reserve Governor warned on the 24th that if the Trump administration maintains an aggressive tariff policy, the wave of corporate layoffs or the unemployment rate will soar, and the unemployment rate will soar, it is not ruled out that interest rate cuts will be taken to deal with it.

The market now tends to lower tariffs on its own. Earlier, the US also announced the exemption of “equal tariffs” on electronic products such as smartphones, computers, chips, and integrated circuit devices. According to the latest adjustments, the mobile phone industry chain may loosen. As a result, today Gaowei Electronics (01415) rose by more than 6%, while others such as Shunyu Optics (02382), Ruisheng Technology (02018), and BYD Electronics (00285) have all risen.

There are also rumors that the Chinese side is loosening up. Rumor has it that China Customs has issued a notice to companies to exempt some US chips from the additional 125% tariff. Some mainland media reports quoted relevant industry sources as saying that there are indeed 8 tax numbers relating to semiconductors or integrated circuits that are exempt from additional tariffs. Chip stocks that previously benefited from the mainland expected to accelerate the development of domestic chips were pressured, and both SMIC (00981) and Huahong Semiconductor (01347) underwent adjustments.

Recently, seven departments jointly issued the “Implementation Plan for the Digital Transformation of the Pharmaceutical Industry (2025-2030)”. Support relevant organizations to establish a pharmaceutical model innovation platform, collaborate to carry out pharmaceutical model technology product research and development, regulatory scientific research, etc., and strengthen rule-building such as standards, scientific and technological ethics, application safety, and risk management. Xintai Medical (02291): Looking ahead to 2025, the company's performance is expected to continue to grow rapidly with the support of various newly approved products such as fourth-generation fully degradable atrial septal occlusions and ScienCrown transcatheter implantable aortic valves. Today's increase is over 11%. Rongchang Biotech (09995), the April gold stock of Zhitong mentioned yesterday, has once again risen by more than 5% today. At one point, the AI medical concept stock Yidu Technology (02158) rose more than 10%.

Recently, the performance of power stocks has been very strong. First, in terms of performance, benefiting from the 13.07% year-on-year drop in thermal coal prices, and the release of profit flexibility for thermal power companies, the quarterly reports are expected to be generally good. Second, electricity reform heats up. The core direction is two directions. One is the intelligent transformation of power grids, and the other is the market-based reform of electricity trading (landscape green power consumption problem), which points to the focus on virtual power plants. Next, it will usher in a seasonal peak in summer electricity consumption, combined with the demand for AI, and charging demand brought about by the increase in the penetration rate of new energy vehicles. In the current situation where hot spots are not prominent, the power sector is representative of high dividends, and groups that can easily obtain capital. The main types include Datang Power Generation (00991), Huaneng International Electric Power (00902), and Huadian International Electric Power (01071).

Facing the increasingly complex international situation, the return of China Securities requires planning ahead. The Hong Kong Financial Secretary, Chan Mao-po, stressed that Hong Kong has established a complete listing system framework and will fully embrace the wave of the return of China Securities. Wong Wai Lun: The Hong Kong Stock Exchange has been instructed to support the return of Chinese securities listed overseas. Currently, the Hong Kong Stock Exchange is continuously optimizing and simplifying the Hong Kong listing system. In February, Chen Maobo pointed out that Hong Kong will improve the approval process, optimize the dual main listing and secondary listing thresholds, and review the market structure, including studying the establishment of an OTC trading mechanism after delisting. It is reported that the optimized dual primary listing and secondary listing system will ease restrictions on the market value, industry attributes (such as abolishing the “innovative industrial company” requirement), and the length of compliance. If China Securities returns, it will be beneficial to individual securities stocks. The main types are: CITIC Securities (06030), Guangfa Securities (01776), HTSC (06886), and Hong Kong Stock Exchange (00388).

[Section Focus]

According to Macau Daily News, as May 1st Golden Week approaches (May 1-5), reservations for many five-star luxury hotels in Macau are already in full swing. On April 21, a reporter from the gaming industry media GGrAsia discovered after checking 33 local high-end hotel towers and found that 15 of them showed no rooms for five nights. Most of them were casino hotels located in large integrated resorts in Cotai City.

According to a recent research report by J.P. Morgan Chase, based on industry surveys, Macau's gaming revenue for the first day of April 21 was 13 billion patacas, with an average daily gaming revenue of 619 million yuan, which is slightly better than the past. The bank expects Macau's gaming revenue in April to be roughly the same year on year, roughly the same trend as the first quarter. The first-quarter earnings period for gaming stocks is about to begin. The bank believes that the market will pay attention to the views of Sands China's management on future trends and prospects, and Labor Day demand will also be closely watched.

Main varieties: MGM China (02282), Galaxy Entertainment (00027), Melco International Development (00200), Wynn Macau (01128), Sands China Limited (01928), etc.

[Individual Stock Mining]

Huadian Power International (01071): Main business profit increased sharply, dividend payouts were stable

The company completed a cumulative total of 51.38 million megawatt-hours of power generation in the first quarter, a year-on-year decrease of about 8.51%. In 2024, the company achieved operating income of 112.994 billion yuan, a year-on-year decrease of 3.57%; net profit to mother of 5.703 billion yuan, an increase of 26.11%; basic profit of 0.459 yuan per share; and plans to pay a final dividend of 0.13 yuan per share. The company issued an announcement and completed the issuance of the fourth and fifth issues of medium-term notes in 2025.

Comment: The company has benefited from falling coal prices, and profits from its main business have increased dramatically; due to demand for new energy sources and electricity, the number of hours used for coal and electricity has dropped significantly throughout the year. The company's profit was restored, and dividends continued. Considering that there is still room for improvement in dividends per share, the long-term investment value is remarkable. Furthermore, the company plans to acquire the controlling shareholder's power generation assets, and the asset size and earnings per share are expected to increase. The main reason for the year-on-year decline in power generation and feed-in power in the first quarter of 2025 was the easing of electricity supply and demand in the company's region, the continuous increase in the installed capacity of new energy sources, and the decline in the number of hours used by coal-fired power units. In particular, the Shandong region was squeezed out of the power generation space of existing units by external electricity and new installations. The company plans to acquire the controlling shareholder's power generation assets, and the asset size and earnings per share are expected to increase. Shandong Guohui, a shareholder of the company, plans to absorb and merge Shandong Development. We learned from China Huadian Group that it will accelerate the injection of high-quality assets into the capital market, focus on building a new energy listing platform, and promote Huadian international mergers, acquisitions, restructuring, and infrastructure investment trust fund projects.

Currently, spot coal prices are lower than the price of Changxie coal. Until the National Development and Reform Commission has set a reasonable lower limit of 550 yuan/ton for coal prices, it is expected that the decline in coal prices will bring greater performance flexibility to the company. Although Huadian New Energy's performance may have declined year on year due to poor wind conditions, etc., considering the low base due to the Fuzhou Mining Industry's calculation, investment income may have increased year over year. The profitability of the company's thermal power assets is expected to be maintained. Combined with the injection of the Group's thermal power assets, the company's operating performance is expected to continue to grow.