BoCom International held a 2022 investment outlook conference on November 30th, which took a conservative attitude towards the situation in China and Hong Kong, and looked forward to the consumer, Internet, real estate and other industries, including China Merchants Bank (03968.HK), China International Capital Corporation (03908.HK), Meituan (03690.HK), China Electric Power International (02380.HK), China Longyuan Power Group Corporation (00916.HK), Great Wall Motor (02333.HK), Country Garden Services Holdings (06098.HK) and so on.
Hong Hao, head of BoCom's international research department, said that the recent sharp fall in gambling stocks has shown the vigorous action of regulation, and we should take this opportunity to reflect on the logic of investment. It is suggested that we should pay attention to the three major sectors of consumption, Internet and energy, which are conservative in layout and defensive in nature. Take coal power and other rigid demand industries as an example, their profit decline speed is slower than the economic decline speed, and the anti-fall ability is better. He expects public utilities to double and energy to double in 2022.
The group predicts that in the consumer industry, companies that are expected to avoid the risks of inflationary pressures and sporadic outbreaks will be favored.
The Internet industry has gradually released regulatory and competitive pressure since the fourth quarter of this year. Profit growth has improved in 2022, and the overall industry growth has slowed to 10-15%, including 27% for takeout and 20% for short videos.
In the new energy industry, BoCom International upgraded the industry to the leading rating, first China Longyuan Power Group Corporation (00916.HK); in the power industry, China Power International (02380.HK) and other companies transforming into green and clean energy; the group continues to be optimistic about the gas industry, which benefits from policy support such as Carbonne, and expects China's natural gas to grow at a compound annual growth rate of 6.7 per cent in 2025.
For the real estate sector, analysts say they believe China's policy regulation will remain in place for a long time, with weak sales expected to continue into the first half of 22, with national sales falling by about 10 per cent year-on-year in 22 years. It is expected that some small and medium-sized developers will default or carry out debt restructuring, which should be avoided in the short term. The group estimates that developers' repayment will peak in January, April and June next year, involving US $8 billion in June.
Referring to the selling pressure on Hong Kong stocks today, Hong Hao said that it was obviously affected by the latest variant of the virus Omicron. He believes that it is not difficult to repair the valuation of Hong Kong stocks from the lowest level. He also pointed out that although the growth rate of the economic cycle slows and the overall index is less likely to climb, there is no need to be overly pessimistic as the economy is recovering strongly compared with that at the height of the epidemic.
(Li Jiahui / tr. by Robert Taylor)