01 Hong Kong stocks reporting season is approaching

The annual reporting season for Hong Kong stocks is coming again, which is tantamount to a big test for listed companies. after all, the interim results will directly affect the follow-up performance of stock prices.

Take the property sector of Hong Kong stocks as an example, benefiting from the growth of property management area, a number of property stocks have disclosed Yingxi announcement, of which$Zhengrong Service (06958.HK) $和$Riverside Service (03316.HK) $Forecast that the growth rate of homing net profit in 2020 is not less than 90% compared with the same period last year! The remaining six property stocks also forecast a year-on-year growth rate of no less than 50% for the reported net profit.

以$Zhengrong Service (06958.HK) $For example, after it announced the Yingxi warning on the evening of July 27, it soared nearly 12% yesterday, leading the entire property sector up; and today it recorded a positive income of 6% again. Taken together,$Zhengrong Service (06958.HK) $In the two days after the announcement of Yingxi, it soared by 18%!

02 Yingxi announcement in different markets

Then, it leads to$Zhengrong Service (06958.HK) $What is the sanctity of the skyrocketing Yingxi announcement? Generally speaking, the Yingxi or earnings announcement disclosed by Hong Kong listed companies is essentially at the request of the Hong Kong Stock Exchange that listed companies announce to investors in advance, their performance (such as a year-on-year surge in net profit growth or a sharp drop in profits, etc.) exceeded expectations, because the inside information is enough to affect investors' trading decisions, so regulators require listed companies to make forward-looking disclosure.

In the Hong Kong stock market, investors can find and issue Yingxi or CPA announcements of major listed companies in the "easy Disclosure" section of the official website of the Hong Kong Stock Exchange or professional financial database software. As far as today is concerned, seven Hong Kong listed companies have disclosed Yingxi or PCCW announcements.

It is worth mentioning that Hong Kong regulators do not specify, nor do they have a quantitative standard on the extent to which the earnings performance of the superior company can be announced.

It is only mentioned in the listing rules 13.24B (2):

(a) if profits or losses arising from business other than the day-to-day and general business of the issuer are not disclosed as expected in the document containing the profit forecast, and such gains or losses result in a substantial increase or decrease in profits for the relevant period of the profit forecast, the issuer must publish this data, including an indication of the proportion of profits increased or decreased by the non-recurrent business.

(B) the issuer shall publish the information referred to in Rule 13.24B (2) (a) of the listing rules as soon as it becomes aware that the profits or losses generated or to be incurred are likely to increase or decrease substantially.

Source: Futu Niuniu

Compared with Hong Kong stocks, the A-share market has much clearer requirements for listed companies to disclose performance announcements. According to the regulations of the Shanghai and Shenzhen stock exchanges, no matter whether the listed company belongs to the main board, small and medium-sized board, gem or Science and Technology Innovation Board, as long as the net profit is up or down by more than 50% from the same period last year, it is necessary to disclose the performance notice, except in the case of exemption.

Unlike A shares and Hong Kong stocks, in Europe and the United States, a profit warning means that a company needs to be accountable to the public when there is a certain discrepancy between the results to be announced and expectations.

Conclusion: pay attention to Yingxi announcement in time, but it is more important to analyze the quality of earnings.

For investors, on the one hand, it is indeed necessary to pay attention to and track the Yingxi or earnings alarm announcements of listed companies at the first time. after all, in the stock market, information advantage can be directly transformed into trading advantage. But on the other hand, it is necessary to keep a clear head and pay attention to the analysis of the quality of Yingxi. After all, for some unscrupulous listed companies, they can even achieve a substantial increase in net profit by selling their assets, thus issuing Yingxi announcement. Therefore, Yingxi announcement is a double-edged sword and investors need to make good use of it calmly.