Source:Brokerage China. Original title "Crazy! Suddenly surging 123%! "

In the early morning of August 19th, the Hong Kong stock market was strong, and the Hang Seng Tech Index rose more than 3% at one point, while the Hang Seng Index rose more than 1%. Sectors such as retail, autos, real estate, and healthcare all showed strength. Among them, one of the stocks rose by more than 123%. So, why is the Hong Kong stock market so strong and what is Yestar Health Holdings Limited all about? $YESTAR HEALTH (02393.HK)$ Please use your Futubull account to access the feature.

There were many highlights in the A-share market this morning. Thematic and heavyweight stocks both performed well, and sectors such as cross-border payments, Huawei HiSilicon, banks, and insurance all showed strength. Among them, share prices of Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China all hit historical highs.

Let's take a look at the detailed report!

Hong Kong stocks surged.

In recent days, compared with other Asia-Pacific markets, Hong Kong stocks have shown significantly stronger performance. After a sharp rise last Friday, the Hong Kong stock market continued its upward trend, with the Hang Seng Tech Index rising more than 3% at one point and the Hang Seng Index rising 1.5% at one point. At noon, the Hang Seng Index rose 1.06% and the Hang Seng Tech Index rose 2.51%.

On the individual stock side, jd health rose more than 7%, li auto rose more than 6%, JD.com rose more than 5%, Ali Health, Xpeng and NIO rose more than 4%, Netease and Baidu Group rose more than 3.5%, Alibaba and Xiaomi Group rose more than 2%.

As the Hong Kong stock market rebounds, there are obviously more "monster stocks". In the early morning of August 19th, Yestar Health Holdings Limited (2393.HK) opened high and rose rapidly. A few minutes after the opening, the stock price rose more than 100%, with the highest reaching 0.085 Hong Kong dollars/share, a surge of 123.68%. At noon, Yestar Health Holdings Limited rose more than 86%.

Yestar Health Holdings Limited's surge is related to its latest earnings forecast. After the close last Friday, Yestar Health Holdings Limited announced on the HKEx that the comprehensive net profit in the first half of 2024 is expected to increase by not less than RMB 1.05 billion yuan compared to the estimated net profit of approximately RMB 116 million yuan in mid-2023 without audit verification. The main reasons are: confirming the substantial profit from the redemption of the redeemable preference shares originally due in 2026 at a discount; and a reduction in financial costs after redeeming the relevant preference shares.

In terms of business, Yestar Health Holdings Limited is a medical consumables and equipment company, and its core business focuses on high-margin medical consumables and equipment, namely medical imaging products and in vitro diagnostic products. The company is currently the exclusive manufacturer of medical films for Fujifilm in China and one of the largest dealers of Roche Diagnostics medical in vitro diagnostic products in China. The company is also the only manufacturer and exclusive distributor of Fujifilm's color photographic paper and industrial imaging products in China.

Yestar Health Holdings Limited was listed on the Main Board of the Hong Kong Stock Exchange in October 2013. In October 2016, the company's stock price reached a high of HKD 4.455/share, with a market capitalization of more than HKD 10 billion. That same year, the company's revenue exceeded RMB 3 billion yuan, and net profit exceeded RMB 0.2 billion yuan. However, starting in the second half of 2017, Yestar Health's stock price fell all the way. As of the close last Friday, the company's stock price was only HKD 0.038/share, and its market value was HKD 88.6 million. In other words, from the high point, Yestar Health's market value has evaporated by more than 99%.

Returning to the Hong Kong stock market, it has been continuously strong recently. Last week, the Hang Seng Index, Hang Seng China Enterprises Index, and Hang Seng Tech Index rose by 1.99%, 2.39%, and 0.65%, respectively, and have risen for two consecutive weeks. In terms of funding, the Hong Kong stock market had a net inflow of approximately RMB 15.2 billion yuan through southbound capital last week, which is an increase of RMB 1.24 billion yuan compared to the previous week. CICC pointed out that compared with other global markets, Chinese assets are still cost-effective. Based on the expectation of gradual recovery and the gradual improvement of basic fundamentals, Hong Kong stocks with a Chinese concept are still attractive in terms of valuation, and the risk-return ratio is high.

Key Hong Kong stock performance is outstanding, Alibaba's overall revenue performance is relatively stable, and the transaction volume of Taobao and Tmall grew by 12.0% YoY during the entire 618 shopping festival, exceeding the average growth rate of comprehensive e-commerce platforms, with Firms in the e-commerce sector expanding their leading market positions. JD.com's total revenue has maintained steady growth, with net profit margin reaching 5.0% for the first time and significant improvement in the profitability side. While Tencent's revenue is growing steadily, its profit growth rate continues to outpace revenue growth rate, and its domestic games revenue reaches a new high in recent years.

Galaxy Securities pointed out that the concentrated disclosure period of August's Hong Kong stocks is taking place and the catalytic effect brought by positive earnings is worth attention. From the clues of disclosure, the Internet companies boost market confidence. With the US Fed's interest rate cuts approaching, we will focus on the technology sector that benefits from the expectations of interest rate cuts, especially the subdivided industries with the expected double improvement in the denominator and numerator. Specifically, they include the head of the Internet, consumer electronics, and innovative drugs. In the medium and long term, the basic elements of the Hong Kong stock market rely more on the domestic economy, and we should pay attention to positive signals in domestic policies. At the same time, due to continuing geopolitical and US election disruptions, the domestic economy is still in a period of transformation from old to new momentum, and with the AH share premium, the high dividend strategy of Hong Kong stocks is still attractive, with a focus on state-owned enterprises listed on HKEX.

Xu Guanghong, Chief of Overseas Research Joint at CITIC Securities, said that since late May, Hong Kong stocks have fallen back again due to pressures from domestic fundamentals and external risk events. However, based on various indicators of Hong Kong stock market valuation levels, trading and fund behavior, the market's bottom features since 2022 have shown up again. With the gradual disclosure of mid-term report results, the profits of major Hong Kong stocks have frequently exceeded expectations. In particular, Internet companies headed by Tencent and Alibaba have repurchased a large amount of shares and are expected to significantly boost shareholders' cash return rates.

Looking ahead, Xu Guanghong believes that under the background of periodic external disturbances, highlighting the bottom features of Hong Kong stocks, and gradually delivering on earnings expectations, active foreign capital will return to the Hong Kong stock market. Meanwhile, passive foreign capital may also need to replenish Hong Kong stock positions at the time of MSCI quarterly adjustment at the end of August. Therefore, it is expected that Hong Kong stocks will usher in a monthly-level valuation repair momentum. The Internet and consumer industries with good valuation performance and significant earnings expectations are expected to benefit more.

The Big Four banks of A-shares achieve new highs.

On August 19, the three major indexes of A-shares opened low and went high, with active performance in thematic stocks, and the performance of heavyweight stocks also strengthened. As of noon, the Shanghai Composite rose 0.53%, the Shenzhen Component Index rose 0.35%, and the Chinext Price Index rose 0.21%.

On the market side, cross-border payment concept stocks rose collectively, and Huafon Microfiber, Shenzhen Forms Syntron Information, Northking Information Technology, and Rendong Holdings, etc. all hit the upside limit, with Global Infotech rising nearly 19%, and XGD Inc. rising more than 11%. Huawei Hisilicon concept stocks were also active, with Dingli Corp., Ltd. rising over 15%, and Shenzhen Huaqiang, Good Weilai, and Skyworth Digital hitting the upside limit, with Sai Microelectronics, Huizhong Instrumentation, and Wuhan P&S Information Technology, etc. all rising more than 11%.

Banking stocks were also a highlight of the morning session. The Shanghai Rural Commercial Bank rose by nearly 6%, and the Bank of Jiangsu rose by 3%. In addition, the stock prices of the Industrial and Commercial Bank of China, the Agricultural Bank of China, the China Construction Bank, the Bank of China, and the Bank of Communications all rose by more than 1%, hitting a record high. Insurance stocks also performed well, with New China Life Insurance and China Life Insurance rising more than 2%, and Ping An Insurance, the People's Insurance, etc. rising more than 1%.

Huafu Securities analysts Zhang Yu and Guo Qiwei pointed out that there are three driving factors for the performance of the banking sector this year. First, the stock selection logic of dividend yield has spread within the sector, and the high dividend strategy has spread from state-owned banks to small and medium-sized banks; second, the relaxation of real estate policies; third, market expectations for the slowing-down slope of bank net interest margins and bottoming out of the fundamentals. Looking ahead, the banking sector needs to further verify the effects of the previous policies and the trend of future fundamentals.

Guosheng Securities' team, led by Tingting Ma, said that the bank sector has a stable basic performance and features both low valuation (PB only 0.49x) and high dividends (the overall dividend yield of the bank sector is 5.02%), making it still a high-quality dividend stock. As for individual stocks, state-owned large banks have good liquidity and moderate dividend yields, and it is recommended to hold. In addition, attention can also be paid to Bank of Jiangsu, Bank of Shanghai, Shanghai Rural Commercial Bank, and Chongqing Rural Commercial Bank. At the same time, if follow-up supporting policies continue to be introduced in the future, boosting market economic expectations, the market's attention to pro-cyclical varieties will once again increase, and it is recommended to continue to pay attention to Bank of Ningbo, Jiangsu Changshu Rural Commercial Bank, and CM Bank.

Editor/Emily