Focus Today

Selected viewpoints of research and newspaper

1. Xiao Mo: China is one of the preferred stock markets in the world.

2. Dah Sing Bank: Hong Kong's economic growth is expected to be only 0.5% this year.

3. Citic: electricity demand is expected to recover weakly, focusing on cleaning and growth

4. Citic: wind power installation is expected to accelerate recovery in the second half of the year.

5. Central Plains Securities: investors are advised to pay attention to investment opportunities in automobile, consumer and other industries in the short term.

6. Deutsche Bank: a large outflow of ETF funds puts pressure on gold and silver

7. Bank of America Securities: Hong Kong property prices are expected to fall 10-15% next year, adjust the target price of real estate stocks

8. BoCom International: relaxation of quarantine policy benefits tourism and Hong Kong retailers
   

9. Shen Wanhongyuan: first given Industrial and Commercial Bank of China "overweight" rating, extremely low valuation highlights allocation value

10. Macquarie: reiterate PRADA S.p.A. 's rating of "outperforming the market", and the target price is reduced to HK $75

11. Morgan Stanley: mainland relaxes quarantine regulations and continues to be optimistic about Cathay Pacific Airways and Meilan Airport

12. Shen Wanhongyuan: first give CITIC the "increase" rating, strengthen the advantages of asset management and investment banking

13. Soochow Securities: maintain the "buy" of Zhongjiao Holdings, with a rating of 2022, strong growth in enrollment in the 23 academic year

14. Morgan Stanley: raise Geely Automobile's target price to 22 yuan, rating "overweight"

15. Nomura: inner room sales continue to recover, China Resources Land is the first choice for long-term investment
    

I. Macro-market

• Xiao Mo: China is one of the preferred stock markets in the world.

Mixo Das, Asian equity strategist at JPMorgan Chase & Co, said global stock markets are facing resistance and China is currently one of the most available markets to buy. It says policy easing puts China in a very advantageous position and that its stock market valuations are still extremely low compared with the rest of the world. Das prefers high-quality growth stocks.

• Dah Sing Bank: Hong Kong's economic growth is expected to be only 0.5% this year.

According to a report released by the Department of Economic Research and Investment Strategy of Dah Sing Bank, it is expected that major central banks will continue to substantially tighten monetary policy in the second half of the year, and Hong Kong's economy may grow by only 0.5% this year. Wen Jiawei, senior economist at Dah Sing Bank, said that although the local epidemic has rebounded slightly, it is still under control, and the retail market is expected to remain stable until a new round of consumer coupons is issued in August. However, there will not be any major changes in the mainland's "zero clearance" policy in the near future, and Hong Kong's economy lacks the promotion of cross-boundary tourists. With regard to the latest "7-3" epidemic prevention measures announced by the mainland, he considered that to a certain extent, it could lead to an increase in the flow of tourists, but it could hardly help Hong Kong's tourism industry return to its peak level in 2018.

II. Industry plate

• Citic: electricity demand is expected to recover weakly, focusing on cleaning and growth

CITIC reported that overall electricity demand is expected to improve marginally in the second half of the year and is expected to grow by 3.5 per cent for the whole year. The change of power supply structure brings great opportunities for the industry to maintain the "stronger than the market" rating of the environmental protection industry. Companies with clean and growth attributes are the main line of investment in the industry, and hydropower recommends enterprises with catalytic production of power stations, as well as enterprises that benefit from rising electricity prices in the provincial market; new energy is in a high growth period and operator ROE still has room to expand. The marginal improvement of thermal power profitability in the near future is limited, and from historical experience, we still need to wait for the emergence of configuration catalysts.

• Citic: wind power installation is expected to accelerate recovery in the second half of the year.

CITIC pointed out that against the background of steady growth, rich project order reserves and high returns, the adverse factors affecting the release of wind power demand in the first half of the year are also gradually eliminated, and wind power installation is expected to accelerate recovery in the second half of the year. At the same time, the stabilization of the bidding price of the fan and the decline in the cost of raw materials for spare parts will also lead to the gradual repair of the profits of the industrial chain. Be optimistic: 1) the progress of offshore wind power reduction and bidding is better than expected, and the growth of sea breeze is further strengthened; 2) some parts and components enterprises are expected to benefit from the profit improvement brought about by the decline in raw material prices; 3) the opportunities brought about by large-scale units; and 4) the export growth opportunities of parts and components accelerated by overseas installation.

• Central Plains Securities: investors are advised to pay attention to investment opportunities in automobile, consumer and other industries in the short term.

Zhongyuan Securities pointed out that the early regulatory intensive introduction of positive policy effects are gradually emerging, economic data since May show that the economy has stabilized and rebounded clearly. The volatility of the outer disk has increased, and RMB assets and A-share markets have become better havens. The overall stock index is expected to continue to fluctuate upward in the future, while we still need to pay close attention to the changes in policy, capital and external factors. We recommend that investors focus on investment opportunities in automotive, consumer, aerospace and military industries, electronic components and some cyclical industries in the short term, and continue to focus on investment opportunities in undervalued blue chips in the middle.

• Deutsche Bank: a large outflow of ETF funds puts pressure on gold and silver

Gold erased gains in Asian trading yesterday and fell as much as $1820 an ounce, while spot silver fell to $21 an ounce from about $25 an ounce at the start of the quarter. The net outflow of ETF capital is one of the main reasons for the underperformance of precious metals. ETF positions in gold fell by 6 tons yesterday, while silver positions fell by 1100 tons since the beginning of this month, according to data tracked by the institution. The weakness of silver is also reflected in the gold-silver ratio, which is currently about 86, at a very high level. Silver as an investment metal faces the pressure of weak gold price, while the property of industrial metal faces the pressure of falling metal price.

• Bank of America Securities: Hong Kong property prices are expected to fall 10-15% next year, adjust the target price of real estate stocks

According to a report issued by Bank of America Securities, property prices in Hong Kong have temporarily fallen 3% so far this year, and the annual decline in property prices is expected to narrow from 5% to 10% to 5%. However, due to the impact of higher mortgage interest rates, property prices are expected to fall by 10% to 15% next year. The bank expects the government to start relaxing measures on the property market if property prices fall by nearly 20 per cent, believing that a 15 per cent relaxation in buyer's stamp duty (BSD) would be the most effective. The number of negative equity cases should rise, but the risk is manageable.

• BoCom International: relaxation of quarantine policy benefits tourism and Hong Kong retailers

BoCom International reported that China lowered its entry quarantine requirement to 10 days on June 28, down from 21 days before. Hong Kong retailers will benefit from a pick-up in mainland tourists and government spending vouchers: shorter days of quarantine on return trips make outbound travel more convenient. Domestic consumption picks up and the decline is likely to narrow in June: the latest quarantine policy will help to continue the sales recovery in June. The gradual relaxation of prevention and control measures will help restaurant companies such as Jiumaojiu, which are subject to seat restrictions in Shanghai and Beijing, beer companies whose sales have fallen due to the closure of bars, and shopping malls and department stores affected by the decline in passenger traffic. BoCom reiterated its preference for the consumer sector, preferring optional consumer sectors and industry leaders, and suggested the layout of optional consumer sectors to capture the revaluation driven by economic restart.

III. Individual stocks

• Shen Wanhongyuan: the first$Industrial and Commercial Bank of China (01398.HK) $"increase" rating, extremely low valuation highlights allocation value

According to a research report released by Shenwan Hongyuan, the "overweight" rating of Industrial and Commercial Bank of China for the first time, the net profit of returning home in 2022-24 is expected to increase by 6%, 6.2% / 6.5% compared with the same period last year. Out of careful consideration, it will be given a discount of 0.52 times 22 years PB, corresponding to 19% rising space. As a leading bank under the tone of stable growth, extremely low valuations highlight the value of allocation. Since the beginning of the year, it has maintained a relatively high level of credit investment and continued the logic of volume premium. The superimposed and optimized credit structure and a solid deposit base will jointly help to stabilize interest spreads. The trend of stable asset quality in 2022 will not change, and provisions are expected to continue to feed profits.

• Macquarie: reiterate$PRADA S.p.A. (01913.HK) $"outperform the market" rating, the target price is reduced to HK $75

Macquarie released a research report that reiterated PRADA S.p.A. 's "outperform" rating and expected revenue to grow by 19.4 per cent and profit before interest and tax (EBIT) to grow by 78 per cent in the first half of this year. In addition, based on strong operating leverage, the net profit forecast for this year and next year has been raised by 4.7% and 3.5%, and the target price has been lowered by 5% from HK $79 to HK $75. The bank said it believed the company's share price fluctuated because of concerns about the US recession and the potential failure to meet medium-term targets to lower valuations. But the market is overly worried because its outperformance in the global luxury market is structural, while the recovery in tourism in Europe, coupled with the reopening of some Asian countries, is more than offset by weakness in domestic business from April to May.

• Morgan Stanley: the mainland relaxes quarantine regulations and continues to be optimistic.Cathay Pacific Airways (00293.HK) $及$Meilan Airport (00357.HK) $

Morgan Stanley published a report, pointing out that the mainland's relaxation of the entry quarantine rule to "7 July 3" is a positive factor, but since restrictions on the capacity of international flights still exist, it means that there is still limited room for the increase in international passenger traffic. The bank said that continue to be optimistic about Cathay Pacific and Meilan airport, if international flight restrictions are further relaxed, will be more optimistic about the three major mainland airlines, namely Air China, China Eastern and China Southern Airlines.

• Shen Wanhongyuan: the first$CITIC (06030.HK) $"increase" rating, strengthen the advantages of asset management and investment banking

According to a research report released by Shen Wanhongyuan, the net profit of returning home in 2022-24 is expected to be 242gamma 315 / 38.2 billion yuan and ROE is 10.9%, 12.4%, 13.2%, 17.1 and 18.6 / 20.4 yuan, respectively, given CITIC's "overweight" rating. The comprehensive strength of the company is leading in the industry, and the transformation of wealth management is at the forefront of the industry. Under the background of the acceleration of the institutionalization process of A shares, the institutional business advantage is prominent, and the market share is expected to further increase. After the rights issue replenishes 28 billion capital, we can further leverage the development of customer demand trading business such as derivatives.

• Soochow Securities: maintain$Chinese Education Holdings (00839.HK) $"Buy」The number of students enrolled in the 23rd academic year has grown strongly.

Soochow Securities released a research report saying that in order to maintain the "buy" rating of Zhongjiao Holdings, the net profit of returning to its mother in the 2022-24 fiscal year was 21.8 / 2.55 billion yuan, and the latest closing price was 9 times PE in 2022. As the leading enterprise of private colleges and universities in China, it has obvious advantages in scale and outstanding teaching quality. Vocational education is the direction of policy encouragement in our country, and the industry leader may continue to benefit.

• Dama: up-regulation$Geely Automobile (00175.HK) $Target price to 22 yuan, rating "overweight"

Morgan Stanley issued a report, raising Geely Automobile's target price from 20 yuan to 22 yuan, with a rating of "overweight." According to the report, Geely's profitability may have bottomed out with the support of the recent rise in average sales prices. The good start of the new energy vehicle business has also improved the visibility of the company's further growth. The bank cut Geely's net profit forecast for this year by 11 per cent to reflect the impact on revenue and profit margins during the city closure in the first half of the year, but left its net profit forecast unchanged for next year and raised its net profit forecast for the year after that by 1 per cent. However, due to the increase in outstanding shares, Morgan Stanley reduced Geely's earnings per share for the period from 2022 to 2024 by 13 per cent, 3 per cent and 2 per cent, respectively.

• Nomura: inner house sales continue to recover, and long-term investment is the first choice$China Resources Land (01109.HK) $

Nomura released a research report saying that real estate sales in 30 major cities in the mainland last week (June 18-24) continued to recover, with total property sales reaching 4.4 million square meters, a weekly increase of 8.9%, roughly the same as a year earlier. However, due to long-term worries about the weak property price expectations of home buyers and the decline in income levels, it is still believed that the recovery of the new market will be a gradual and slow process. At the same time, worried about the performance of housing enterprises in the first half of this year, the profit guidelines for the industry this year may be lowered, and landlords will also provide rebates to tenants in the second quarter. Remain optimistic about the stock price of real estate developers in the coming weeks, optimistic about the development of new towns, etc., but believe that the current rebound in the industry will be short-lived, in terms of long-term investment, China Resources Land is still the bank's only industry first choice.