Financial Services Association, April 15 (Editor: Hu Jiarong) Benefiting from favorable markets, the leading Chinese concept stocks in Hong Kong stocks are collectively gaining strength. Among them$CRRC (01766.HK)$,$CHINA RAILWAY (00390.HK)$,$CHINA COMM CONS (01800.HK)$ ,$CHINA RAIL CONS (01186.HK)$They rose 9.36%, 5.34%, 4.30%, and 3.33%, respectively.

In terms of news, the “Certain Opinions on Strengthening Supervision and Risk Prevention and Promoting High-Quality Development of the Capital Market” issued by the State Council has an important background and significance as the third “National Nine Rules” for the capital market. Historically, similar policy documents were issued in 2004 and 2014, and after that, in 2007 and 2015, the capital market experienced significant bull markets, respectively. Therefore, many senior market players have positive expectations for the release of the “National Nine Rules”, believing that this may indicate the preparation of a new round of bull markets.

In the “National Nine Rules” issued this time, special emphasis is placed on the supervision of cash dividends of listed companies. For companies that have not paid dividends for many years or that have a low dividend ratio, measures will be taken to restrict majority shareholders from reducing their holdings and implementing risk warnings. This policy aims to enhance the stability, sustainability and predictability of dividends from listed companies, and to encourage companies to implement multiple dividends, pre-dividends, and dividends before important holidays, so as to better return investors.

According to an analysis by SDIC Securities, with the introduction of the new “National Nine Rules,” in particular, the re-emphasis on market value management and dividend requirements for listed companies, combined with the comprehensive advancement of central enterprises' market value management policies, it is expected that the assessment plan for central enterprises will gradually be implemented in the future. This will help enhance the intrinsic value and market performance of construction central enterprises, and enable undervalued construction central enterprises to benefit from it.

Guosheng Securities also expressed similar views, pointing out that the dividend rates of many central enterprises have increased in 2023. Driven by the new policy, it is expected that market value management measures for central enterprises and state-owned enterprises will be gradually introduced, further enhancing the market value management momentum of these enterprises and promoting a rapid restoration of their valuations. The implementation of this series of policies is expected to have a positive impact on the capital market, improve the overall quality and efficiency of the market, and bring more stable and sustainable returns to investors.

CRRC is receiving a sharp rise in performance expectations

In addition to the favorable “National Nine Rules”, CRRC announced this year's performance forecast on Sunday. It is expected to achieve net profit attributable to shareholders of listed companies of 923 million yuan to 1,046 million yuan in the first quarter of 2024, an increase of 50%-70% over the previous year; it is expected to achieve net profit attributable to shareholders of listed companies of 583 million yuan to 706 million yuan in the first quarter of 2024, an increase of 186%-246% over the previous year.

Note: CRRC's announcement

CRRC mentioned in its announcement that due to the low share of profit in the first quarter of 2023 in annual profit, business performance in the first quarter of this year increased to a large extent.

Boosted by this news, CRRC once rose more than 10% in the market.

Morgan Stanley released a research report. The analysis showed that CRRC's financial performance in the first quarter of this year slightly exceeded previous forecasts. Even though the comparison base is relatively low, the company's estimated median net profit for the first quarter reached 985 million yuan, which is still higher than the market's previous forecast. Based on this assessment, Morgan Stanley maintained a “gain” rating on CRRC's stock and set the target share price for the company's H shares at HK$4.5.

Editor/Somer