According to a report by CICC, the overseas Chinese-funded stocks, measured in Hong Kong dollars, increased their profits by 2.3% year-on-year in the first half of the year, which was faster than the 0.2% growth in 2023 and better than A-shares. Internet e-commerce showed high growth, and the export chain and metal were highlights, while real estate and banks were a drag. In the first half of this year, the profit of the overseas Chinese-funded stocks in the financial industry declined by 1.1% year-on-year (compared to a 2.7% drop in 2023), and the non-financial sector grew by 6.3% (compared to a 3.9% increase in 2023).
Based on the actual growth in the first half of the year, CICC lowered its profit growth forecast for overseas Chinese-funded stocks in 2024 from 3%-4% to 2%, which is below the current consensus expectation of 10%. However, due to a higher proportion of new economy sectors and a lower proportion of manufacturing, the performance of Hong Kong stocks is still expected to be better than A-shares. At the sector level, the bank suggests focusing on sectors with higher business cycles, such as e-commerce and internet, and consumer services. These sectors have seen profit upgrades since the beginning of the year and are expected to have higher return on equity (ROE) in 2024 compared to the past 5-year average, with lower price-to-book ratios than the past 5-year average. They are expected to be a highlight in the overall moderate growth trend. In addition, utilities such as telecommunications and water and electricity have stable performance and are worth paying attention to as dividend targets.
The bank listed the annual growth rate of adjusted net profit forecasts for the top 20 H-shares of overseas Chinese-funded stocks measured in comparable market capitalization.
Shares │Year-on-Year Growth Rate of Adjusted Net Profit in the First Half of the Year │ Year-on-Year Growth Rate of Adjusted Net Profit Forecast in the Second Half of the Year
Tencent (00700.HK) │+47.1% │+24.7%
ICBC (01398.HK) │-6% │-1.2%
ABC (01288.HK) │-2.3% │+4.4%
PetroChina (00857.HK) │-0.4% │+12.7%
China Mobile (00941.HK)│+0.9%│+8%
Bank of China (03988.HK)│-6.4%│-5.6%
China Construction Bank (00939.HK)│-5.9%│+6.2%
PDD Holdings (PDD.US)│+162.6%│+71.7%
CNOOC (00883.HK)│+19.8%│+13.4%
Sinopec (00386.HK)│-1.6%│+39.3%
China Merchants Bank (03968.HK)│-5.5%│+3.5%
China Life Insurance (02628.HK)│+127%│+37%
Shenhua (01088.HK) │ -14.8% │ -1.8%
Ping An Insurance (02318.HK) │ +2.4% │ +179.2%
BYD Company Limited (01211.HK) │ +19.2% │ +19.6%
Meituan-Dianping (03690.HK) │ +53.7% │ +76.4%
China Unicom (00728.HK) │ +3.7% │ +14.6%
Bank of Communications (03328.HK) │ +2.1% │ +9%
Postal Savings Bank of China (01658.HK) │ -5.6% │ -1.1%
Xiaomi Corporation (01810.HK) │ +44.9% │ -25%
--------------------------------------
Equity │ This year's adjusted net profit growth rate forecast │ Next year's adjusted net profit growth rate forecast.
Tencent │ +34.9% │ +10.4%
Bank of China │ -3.5% │ +1.9%
Agricultural Bank of China │ +1% │ +3.2%
China Petroleum │ +5.6% │ +3.6%
China Mobile │ +3.8% │ +5%
Bank of China │ -6% │ +2.4%
China Construction Bank │ -0.1% │ -2.7%
PDD Holdings │ +105.6% │ +24.7%
CNOOC │ +16.8% │ +3.3%
Sinopec │ +13.5% │ +5.1%
CMBC │ -1.2% │ +5.8%
China Life Insurance │ +93.5% │ +6.7%
China Shenhua Energy │ -9.4% │ -1.6%
Ping An Insurance │ +33.9% │ +9.6%
BYD│+19.5%│+24.5%
Meituan-W│+63.3%│+29.9%
China Telecom│+7.3%│+7.9%
Bank of Communications│+5.4%│+3.2%
Postal Savings Bank of China│-3.8%│+3.9%
Xiaomi-W│+6.2%│+13.2%