Zhitong Hong Kong Stock Analysis | New funds are on the way to support the stock market, and let's see if the U.S. side will increase its efforts

[Anatomy of the Market]

Since the United States is the originator of tariffs, Hong Kong stocks tend to look to the performance of U.S. stocks for reliability. Earlier on Monday, due to reports that Trump was considering delaying tariffs for 90 days, the three major U.S. stock indices briefly surged into positive territory in the morning. However, White House Press Secretary Karine Jean-Pierre later stated that this was "fake news," causing U.S. stocks to turn back to declines. U.S. Treasury Secretary Janet Yellen stepped in again, announcing on the X platform that Trump had instructed her and Trade Representative Jamieson Greer to begin negotiations with Japan regarding tariffs, marking Japan as the first country to formally start negotiations with the U.S. Yellen added that over 50 countries have responded "openly and positively" to Trump's tariffs, and the U.S. looks forward to "meaningful negotiations" with them in the coming weeks. The market temporarily believes that the trade war is evolving positively, thus Hong Kong stocks rebounded by 1.51% today, with the Hang Seng Index regaining the 20,000-point mark.

At today's routine press conference of the Ministry of Foreign Affairs, a reporter asked, "Will there be talks or negotiations between the U.S. and China on trade issues?" In response, spokesperson Lin Jian stated that the actions of the U.S. side do not reflect a willingness for serious dialogue. If the U.S. truly wants to talk, it should adopt an attitude of equality, respect, and reciprocity. If the U.S. disregards the interests of both countries and the international community, insisting on a tariff and trade war, China will accompany them to the end. This indicates China's stance: there will be no compromise, nor will it take the initiative to seek talks. Maintaining strategic resolve, it’s a matter of who can endure. In fact, the whole world is watching. China has a cultural heritage of five thousand years, while the other side has only a few hundred years of history; such tricks are truly childish.

To say we have no impact would be false; foreign trade is certainly affected. Therefore, the stock market will also be impacted, and soothing the market and boosting confidence is inevitable. In the past two days, there has been intensive catalysis. Yesterday, China Investment Corporation announced during trading hours that it firmly believes in the development prospects of China's capital market, fully recognizes the current allocation value of A-shares, and has again increased its holdings in exchange-traded funds (ETFs), pledging to continue increasing its holdings to firmly maintain the stable operation of the capital market. Today, the overall trading volume of broad-based ETFs rose to 160.55 billion yuan, clearly indicating that the 'national team' is still active, with significant volume in the CSI 500 ETF and CSI 1000 ETF for small and mid-cap stocks. Following this, around 10 PM last night, China Chengtong also announced that its subsidiaries, Chengtong Financial Holdings and Chengtong Investment, increased their holdings in ETFs and central enterprise stocks to firmly maintain the stable operation of the capital market. At around 11 PM, China Reform Holdings Corporation issued a statement saying that the company firmly believes in the development prospects of China's capital market and is committed to being a long-term, patient, and strategic capital. Its subsidiary, China Reform Investment Co., Ltd., increased its holdings in central enterprise stocks, technology innovation stocks, and ETFs to contribute to maintaining market stability. Today, the National Social Security Fund Council stated: it will always adhere to the concepts of long-term investment, value investment, and responsible investment, firmly believes in the development prospects of China's capital market, actively integrates into the national development strategy, and has recently increased its holdings in domestic stocks, with plans to continue increasing holdings in the near future. While actively engaging in stock investments, it aims to ensure the safety and value appreciation of the fund. Additionally, the National Financial Regulatory Administration issued a notice regarding the adjustment of the regulatory ratio of equity assets for insurance funds, with the optimization of insurance fund ratio regulatory policies being the main highlight The policy for insurance funds entering the market has been further optimized, with the maximum investment ratio for equity investments reaching 50%; guiding insurance funds to be precisely directed towards new productive forces; relaxing tax-deferred pension insurance accounts to cultivate new long-term capital strength. Significant incremental funds are on the way, which plays a bottom-line role.

On the 8th, the State-owned Assets Supervision and Administration Commission of the State Council stated that it will fully support central enterprises and their listed companies to take proactive actions, continuously increase share buybacks, and fully demonstrate the responsibility of central enterprises. At the same time, it will strengthen guidance on the market value management of central enterprises, guiding them to continuously create responsible, performance-oriented, sustainable, and rule-abiding quality investment targets for investors, contributing to the healthy and stable development of the capital market. This morning, multiple A-share listed companies took simultaneous action, announcing buyback plans intensively. Companies such as State Grid NARI Technology (600406.SH), Zijin Mining (601899.SH), Sinopec (600028.SH), and Kweichow Moutai (600519.SH) have all released announcements regarding buybacks and increases in holdings. These stocks have all risen, stabilizing the situation. In the Hong Kong stock market, the strength of central enterprises is mainly due to strong first-quarter performance reports, such as China Shipbuilding Defense (00317): expected net profit growth of 1005.77%-1200.91% year-on-year in the first quarter of 2025; CRRC Corporation (01766): forecasted first-quarter net profit growth of 180%-220% year-on-year. This is mainly due to the increase in the delivery of high-speed trains (MU) and strong growth in maintenance revenue. Today, the increase exceeded 8%.

The agricultural sector mentioned in yesterday's sector gathering performed prominently, with stocks such as October Rice Field (09676) experiencing a pullback after a surge, while others like DeKang Agriculture and Animal Husbandry (02419) and COFCO Joycome (01610); as well as the agricultural machinery leader First Tractor (00038) all saw increases exceeding 8%. The countermeasure concept stock Jinli Permanent Magnet (06680) rose again by over 20%, as rare earth permanent magnets are easily speculated when the situation is tense.

The shift from foreign trade obstacles to internal circulation is an inevitable measure, including stimulating childbirth to increase the population, enhancing demand, with leading assisted reproductive company Jinxin Fertility (01951), milk powder company China Feihe (06186), and upstream company Youran Dairy (09858) all strongly rising over 9%, while leading food company Weilang Delicious (09985) rose nearly 16%. The automotive sector is also a major consumer segment, with the BMW 5 Series dropping below 290,000, and multiple brands following suit with "one price," while the "price war" for new cars returns in April. However, leading stocks remain strong; on April 8th at noon, BYD (01211) disclosed its first-quarter performance forecast for 2025, expecting a profit of RMB 8.5 billion to 10 billion, a year-on-year increase of 86.04%-118.88%. BYD's recent overseas recruitment involves multiple countries including Indonesia, Hungary, Chile, Thailand, and Brazil, covering various recruitment positions, indicating that BYD's overseas layout has taken shape.

Leapmotor (09863) also had strong sales in March, with the B10 officially launching on April 10, and plans to introduce two more models in the B series in 2025, priced between 100,000 to 150,000 yuan. The market expects the company's sales and revenue to continue to grow rapidly, driving sustained profit improvement. Looking ahead to 2025, Leapmotor has set a sales target of 500,000 units, planning to maintain high-speed growth year-on-year Today it rose over 12%.

There are reports from mainland self-media indicating that Porsche has reached a cooperation with Horizon Robotics (09660) in the field of intelligent driving technology research and development. The joint venture company CoolCore CARIZON, established by Volkswagen's software technology company CARIAD China and Horizon, will be responsible for developing the next generation of advanced intelligent driving solutions. This solution is expected to be gradually applied to new models of the Volkswagen Group starting in 2026. It is anticipated that Porsche will announce the progress of the cooperation during or after the Shanghai Auto Show. Horizon Robotics (09660) rose over 11% today.

Recently, Yujiang (02432) upgraded and launched an industry-leading new generation of CRAF intelligent force control collaborative robots. The CRAF series adopts an integrated force control architecture, successfully upgrading the collaborative robot's force control perception capabilities, achieving unprecedented breakthroughs in force control and compliance, especially demonstrating strong market potential in high-end manufacturing and medical application fields. The new robot is expected to bring new sales expectations, rising over 22% today.

On April 8, according to Xinhua News Agency, a spokesperson for the Ministry of Commerce stated that the U.S. threatened to impose an additional 50% tariff on China, to which China firmly opposes; if the U.S. escalates tariff measures, China will resolutely take countermeasures to protect its own rights and interests. Observing whether the U.S. will intensify its actions.

【Sector Focus】

According to the Hong Kong South China Morning Post on April 8, the Mongolian Parliament (State Great Khural of Mongolia) recently approved an agreement for the construction of a new cross-border railway between Mongolia and China. The report pointed out that amid Trump's global tariff war, Mongolia hopes to establish closer ties with its southern neighbor, China. It was reported that this 19.5-kilometer cross-border railway from Gashuunsukhait to Ganqimaodu had been shelved for over a decade but has made new progress in recent months. Once completed, this railway will increase Mongolia's coal exports to China. The construction of the cross-border railway project is expected to start this year and be completed by 2027, at which time coal transportation centers on both sides of the border will also be established.

Official data shows that Mongolia exported 83.7 million tons of coal last year, and it is expected that after the cross-border railway is put into operation, the country's coal transportation capacity will increase by 30 million tons, with an expected economic growth rate of over 6%.

Main Hong Kong stock varieties: Mongolian Coal (00975), South Gobi (01878), China Coal Energy (01898).

【Individual Stock Opportunities】

Huaxin Cement (06655): Profitability Expected to Improve, Overseas Business Growing Rapidly

In 2024, the company's revenue/net profit attributable to shareholders is expected to be 34.22/2.42 billion yuan, a year-on-year change of +1.4%/-12.5%, of which Q4 revenue/net profit attributable to shareholders is expected to be 9.50/1.28 billion yuan, a year-on-year change of -1.0%/+43.9%. The significant year-on-year growth in Q4 net profit attributable to shareholders is mainly due to the improvement in gross profit margin and the company realizing asset disposal gains of 730 million yuan.

Comment: Against the backdrop of tariff impacts, the cement industry is expected to benefit from domestic demand expansion policies, and profit improvement in the first quarter is worth looking forward to. In 2024, the company's cement/aggregate/concrete sales are expected to be 5.7 million tons/14.3 million tons/3.2 million cubic meters, with year-on-year changes of -2.0%/+9.0%/+16.7%, achieving revenues of 18.03/5.64/8.42 billion yuan, with year-on-year changes of -1.6%/+5.2%/+10.0%. The aggregate business continues to grow rapidly, while overall cement sales decline, but overseas sales increase by 37% year-on-year In 2024, the company's overall gross profit margin was 24.7%, a year-on-year decrease of 2.0 percentage points, with Q4 at 26.4%, showing a year-on-year and quarter-on-quarter change of -1.3/+1.7 percentage points. According to Digital Cement Network, as of March 21, 2025, the national average cement price was 401 yuan/ton, with a year-on-year price increase of 9.5%. Starting in March, cement prices have begun to rise again, which is expected to drive the company's profitability recovery in Q1 2025. In addition, the international layout continues to deepen, and energy conservation and carbon reduction are promoting long-term development. In 2024, the company's overseas revenue reached 8.04 billion yuan, a year-on-year increase of 46.5%, with the revenue proportion increasing by 7.3 percentage points to 23.5%. The overseas business continues to grow rapidly, and by the end of 2024, the company's cumulative operational and under-construction cement capacity overseas exceeded 25 million tons. At the same time, the company continues to focus on green and low-carbon development, with domestic clinker comprehensive energy consumption in 2024 decreasing by 0.67 kgce/t year-on-year. The advantages of international layout and energy conservation and carbon reduction are expected to drive the company's long-term growth. Overall, the rebound in cement prices is expected to catalyze continued recovery in profitability in Q1 2025, while internationalization and energy conservation and carbon reduction are expected to promote the company's long-term growth.

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