Zhitong Hong Kong Stock Analysis | Watching Uncertain Events, 2025 World Artificial Intelligence Conference Preheating

[Anatomy of the Market]

Due to the rapid retreat of the Yaxia Hydropower Station, the A-share Shanghai Composite Index faced resistance at 3600 points, while the Hong Kong stock market was concerned about some uncertainties next week, leading to a gap down and a decline, with the Hang Seng Index closing down 1.09%.

Yesterday, it was mentioned that Trump visited the Federal Reserve. This timing is quite sensitive, as there is less than a week left until the Federal Reserve's July interest rate decision is announced (from July 29 to July 30, Eastern Time). The purpose is clear: to exert pressure on Powell, hoping he will resign soon, but this possibility is slim. Additionally, there is a desire to lower interest rates quickly, but feedback from various parties indicates that a rate cut in July is unrealistic. It is not easy for Trump to control the Federal Reserve.

Next week, the latest Sino-U.S. talks are scheduled to take place in Sweden from July 27 to July 30, and the U.S. is starting to make statements. According to reports, U.S. Secretary of Commerce Gina Raimondo stated on July 24 that if China does not approve the sale of the short video application TikTok, TikTok will have to cease operations in the U.S. TikTok has about 170 million users in the U.S. Using everything as a bargaining chip shows that the U.S. really lacks confidence.

Regarding the meeting between Chinese and European leaders, important consensus was reached, but there were also differences. The old tune of "overcapacity" and industrial subsidies was repeated, which is quite meaningless. At this point, being so impractical is disappointing. The photovoltaic industry can only move in the direction of reducing internal competition.

The conflict between Cambodia and Thailand continues. On July 25, the Cambodian Mine Action and Victim Assistance Authority and the Ministry of Defense condemned the Thai military for using internationally banned cluster bombs on the Cambodia-Thailand border, which is a serious violation of international humanitarian law. The Thai acting prime minister stated that the border conflict has resulted in the deaths of over 20 Thai civilians. This issue stems from historical border conflicts, compounded by the phone call scandal involving former Thai Prime Minister Prayuth Chan-o-cha, making it quite tricky. There are concerns that the U.S. might intervene in Thailand, but in any case, the situation in Southeast Asia remains controllable.

Today, the A-share market did not expect the retreat of Yaxia to come so quickly, leading to many stocks hitting their limit down, which also affected the sentiment in the Hong Kong market. Huaxin Cement (06655) and Dongfang Electric (01072) both fell over 6%.

Market attention has shifted to technology, with the 2025 World Artificial Intelligence Conference set to grandly open on July 26 at the Shanghai Expo Center. This is a world-class AI conference hosted by China, with a very high standard. It is reported that this year's exhibition area has surpassed 70,000 square meters, with over 800 companies showcasing their products, and more than 3,000 cutting-edge exhibits, including over 40 large models, over 50 AI terminals, and more than 100 "global debuts." Additionally, GPT 5.0 is rumored to be launched in early August, and the market is heating up for AI in advance, with stocks like Maifushi (02556) and AsiaInfo Technologies (01675) rising over 5%.

Moreover, Huawei's Ascend 384 super node real machine is the focus of market attention at this conference. Any technological breakthrough will attract strong capital support. Reports indicate that the lithography machine industry in 2025 is undergoing a qualitative change, with the mass production of immersion lithography machines being an important signal, and both leading storage and logic customers have received machines, with initial testing feedback being positive. Recent institutional tracking has revealed that a second domestically produced lithography machine has been delivered to a certain logic customer, indicating that the first machine's test results were good, and it is expected that related supporting tracks will also be localized simultaneously The lithography machine industry continues to undergo positive changes. Referring to the semiconductor equipment verification cycle, the development of the lithography machine industry in the next 1-2 years is certain. The breakthrough of domestic lithography machines is only a matter of time, but the progress is somewhat beyond expectations. As long as this challenge is overcome, the domestic process will significantly accelerate. Yesterday, the sector focused on Hua Hong Semiconductor (01347), which surged over 9%, while SMIC (00981) and Shanghai Fudan (01385) rose over 4%.

In the context of difficulties in the European and American markets, actively exploring the Southeast Asian market is a relatively feasible strategy. Today, several stocks with good gains are in this direction. For example, Jihong Co., Ltd. (02603) announced that it expects the group to achieve a net profit of approximately 130 million to 137 million yuan in the first half of 2025, a year-on-year increase of 97.25% to 108.21%; the net profit attributable to shareholders of the listed company is expected to be about 112 million to 119 million yuan, a year-on-year increase of 55% to 65%. This is due to being a leading cross-border social e-commerce company with a strategic focus on the Asian market, ranking second among Chinese B2C export e-commerce companies, with a market share of 1.3%. Today, it surged over 15%.

Another company, Lion Group Holdings (02562), has its wholly-owned Southeast Asian leading artificial intelligence (AI) digital trade platform Synagie Pte. Ltd. (Synagie), which has established a strategic partnership with China Post Hong Kong Limited (China Post Hong Kong). The two parties will jointly create an integrated AI-driven digital trade platform and trade ecosystem, providing automated seamless solutions for Chinese brands entering the Southeast Asian market. The stock trend is also steadily rising, and Huatai Textile (01382) is building a factory in Vietnam, which also rose over 3% today. Additionally, Southeast Asian shipping is worth noting, such as DeXiang Shipping (02510).

The innovation mentioned yesterday remains impressive, with the potential for overseas expansion and competitive advantages being continuously favored by the market. Companies like Kanglong Huacheng (03759), Zhaoyan New Drug (06127), and WuXi Biologics (02269) have once again risen over 7%. In the medical sector, new stimuli have also emerged, with another Meme stock in the US making headlines. A little-known medical information technology company, Healthcare Triangle Inc, saw its stock price surge 115% to slightly above 5 cents without any significant positive news, approaching seven times its market value. In Hong Kong, Aikang Medical (01789) surged nearly 9%, while other companies like MicroPort Medical (00853) and XinTai Medical (02291) rose over 3%.

Recent media reports indicate that China COSCO Shipping Group is promoting its entry into a consortium led by Mediterranean Shipping Company to acquire over 40 port assets, including the Panama Canal. If the acquisition is successful, it will further expand the business scale and global influence of China COSCO Shipping Ports (01190), which surged over 9% today.

A "large-scale overturning scene" involving more than 20 popular best-selling models has gone viral. In this two-and-a-half-hour long assisted driving large-scale science popularization program "Understanding Cars Smart Refining Field," none of the 36 tested models passed all 15 types of high-risk accident scenarios for assisted driving simulation in urban and highway settings. Among the 15 scenarios, only the comprehensive passing rate for the three urban road scenarios exceeded 50%, while the comprehensive passing rates for the remaining 12 scenarios were all below 50%, especially in scenarios involving breakdowns, construction, and wildlife on highways, indicating that excessive trust in assisted driving can lead to risks There will be certain safety risks. Although this test has flaws, the overall feedback indicates that the current intelligent driving technology does not yet achieve full automation and still requires human intervention. For the intelligent driving industry, this is not a bad thing; this trend will not change but will further encourage companies to enhance their technological capabilities.

【Sector Focus】

On the afternoon of July 25, the Insurance Association announced that the current research value of the guaranteed interest rate for ordinary life insurance products is 1.99%. It is reported that the Insurance Association has published the research value of the guaranteed interest rate for ordinary life insurance products for three consecutive quarters. On April 21 of this year, the Insurance Association announced that the research value of the guaranteed interest rate for ordinary life insurance products in the first quarter of 2025 is 2.13%. On January 10, 2025, it announced that the research value for the guaranteed interest rate for ordinary life insurance products in the fourth quarter of 2024 is 2.34%.

Historical experience shows that a reduction in the guaranteed interest rate will trigger a "lock-in wave," and it is expected that new premium income in the third quarter will see a pulse-like growth, boosting the cash flow and short-term performance of insurance companies.

Main beneficiaries in the Hong Kong stock market: ZhongAn Online (06060), China Life (02628), China Pacific Insurance (02601), China Taiping (00966), etc.

【Stock Picking】

Evergreen Marine Corporation (02510): Expectation for Middle East and India-Pakistan routes in the medium and large vessel market

Evergreen Marine Corporation announced that its revenue in the first quarter increased by approximately 38.5% to about USD 326 million. The revenue increase was mainly driven by an overall average freight rate increase of approximately 39.1% to about USD 776 per standard container, consistent with market rate fluctuations.

Commentary: Evergreen Marine Corporation focuses on route operations in the Asia region, with revenue from Asia accounting for 83% in 2024. Revenue from mainland China increased by 169.2% year-on-year, and it also achieved rapid growth in regions such as the Philippines and Hong Kong.

In recent years, Evergreen Marine Corporation has continuously launched new ocean routes to expand its service network. In 2021, it expanded its trade routes to New Zealand and Canada, in 2022 to the UK, Netherlands, Germany, Belgium, and the East Coast of the United States, and in 2023, it opened routes to Indonesia and East Africa. As of December 31, 2024, Evergreen Marine Corporation operates 46 routes, including 11 independently operated, 22 joint ventures, 10 space swaps, and 3 space leases, covering 61 major ports in 20 countries and regions worldwide.

Focusing on the medium and large vessel market and expanding capacity, in 2021, on the occasion of its 20th anniversary, Evergreen Marine Corporation ordered 6 units of 7000 TEU container ships from Shanghai Waigaoqiao Shipbuilding, marking the first batch of medium to long-distance route vessels for the new 20 years.

Last year, Evergreen Marine Corporation also ordered 3 units of 14000 TEU container ships and 3 units of 7092 TEU container ships from Shanghai Waigaoqiao Shipbuilding, marking its first order for ten thousand container ships. The 5 units of 1900 TEU container ships and 3 units of 2700 TEU container ships previously ordered from Huangpu Wenchong have all been delivered with high quality, adding new strength to Evergreen Marine Corporation's operating fleet. In September 2024, Evergreen Marine Corporation signed a construction contract for 2 units of 4300 TEU container ships with Huangpu Wenchong. Recently, Evergreen Marine Corporation placed an order for 5+5 units of 5000 TEU container ships at Huangpu Wenchong, with the new ships expected to be delivered in the second quarter of 2028 The cost of each new ship is approximately $62.5 million, and the total transaction amount will reach $625 million after the confirmation of the alternative order.

The company's Middle Eastern shareholders empower the expansion of the India-Pakistan and Middle Eastern route businesses along the "Belt and Road," further enhancing the competitiveness and growth potential of DEXIN Shipping. Mr. Sharafuddin, the second largest shareholder and founder of Shara Shipping Agency, one of the largest shipping companies in the Middle East, has established a solid local resource foundation for DEXIN Shipping through business cooperation. It is expected that the Middle Eastern and India-Pakistan routes will become growth drivers for the company's future performance. With the gradual delivery of new ships, DEXIN Shipping's market competitiveness will be further strengthened