Which stocks made it to the institutions' July list of hot stocks? How do institutions view the future of Hong Kong stocks?
On July 4th, Cailian Press (editor Hu Jiarong) reported that, despite the downturn in the Hong Kong stock market since mid-May, there are still investment opportunities worth considering in July. According to the latest monthly reports from Zheshang Securities and Guoyuan Securities, BYD Electronic (00285.HK) and China Resources Power (00836.HK) are both mentioned.
In the short term, institutions are cautious about the market.
The Hong Kong stock market continued its downtrend in June since the end of May, with overall volatility and significantly reduced trading volume, lacking upward momentum. The Hang Seng Composite Index, Hang Seng Index, and Hang Seng Technology fell by 2.31%, 2.00%, and 3.69% respectively.
In response to this, Zheshang Securities pointed out that there is no obvious improvement in the current market fundamentals, there is great uncertainty in the capital market, and there has been a lack of significant policy stimulus recently. Along with the market retreat and the reduced trading volume, the market sentiment is relatively low. Therefore, institutions continue to maintain a cautious attitude towards the short-term market outlook.
As for the medium and long-term trend, Zheshang Securities still has a positive view on the Hong Kong stock market, and believes that the market valuation of Hong Kong stocks is still cost-effective compared to other major markets in the world, and the cost-performance ratio of bottom allocation in batches is relatively high.
BYD Electronic and China Resources Power were both listed in the recommended list of stocks according to Guoyuan Securities.
Note: Guoyuan Securities' recommended list for Hong Kong stocks.
Note: Zheshang Securities' recommended list for Hong Kong stocks.
As a subsidiary of BYD Group, BYD Electronic focuses on electronic manufacturing services, including mobile phone components, notebook computers, new smart products, and automobile intelligent systems, etc. Guoyuan Securities pointed out that the market for automotive electronics and home user storage products in Europe is expected to double by 2024, becoming the company's new performance growth engine.
At the same time, some stocks related to consumer electronics were also mentioned. Specifically, Xiaomi Group (01810.HK) benefited from the increase in domestic and foreign market share and the good start of Xiaomi Automobile; Lenovo Group (00992.HK) benefited from AI PC and servers, etc.
China Resources Power is one of the leading comprehensive energy companies in China, mainly engaged in power generation and new energy projects. Currently, the company's declining fuel costs have pushed profits up significantly, and its renewable energy business has performed well.
China Power (02380.HK) was also mentioned in Guoyuan Securities' recommended list of stocks. The securities firm pointed out that the national electric power new energy flagship platform has established its position, and the injection of group assets has kicked off. The acceleration of the transformation to clean energy will enable the company's target of 90% clean energy proportion to be achieved by 2025, and the future growth of the company's performance is promising. Smart energy storage businesses have become a new growth point for the company's business, which is conducive to improving the overall valuation level.
Meilan Airport and Pop Mart are bullish targets for institutions.
Aside from the recent attention given to consumer electronics and electrical utilities, Meilan Airport (0357.HK) and Pop Mart (09992.HK) were also listed in Guoyuan Securities' recommended stocks for July.
Meilan Airport is the first airport within the Hainan Free Trade Zone that is capable of releasing production capacity, and the main receiver of increased passenger flow in Hainan (Sanya Phoenix has a maximum capacity of 20-25 million people, while Haikou Meilan has over 40 million). By the end of 2021, the airport's infrastructure had been fully constructed, and its passenger flow had already fully recovered to the level of 2019 (the highest year on record). It is expected to see a passenger flow growth of about 15% in 2024, and the growth of passenger flow will bring profit elasticity to the company.
As a leading company in IP gaming toys, Pop Mart has unique competitiveness in original IP and IP operations. Its overseas business is in a period of rapid development, with the DTC model adopted for overseas expansion. Since 2023, it has gradually verified the overseas marketability of its IP products. Currently, the store efficiency of its overseas stores is twice that of its domestic stores, the OPM of its overseas business is better than that of the mainland, and the overseas business supports long-term growth space. Guoyuan Securities expressed that it is optimistic about the company's continued logic of overseas expansion and confirmation.