Zhitong Hong Kong Stock Analysis | Funds Actively Enter the Market to Snatch Shares, Tencent Hits a Four-Year High

[Market Dissection]

The postponement of tariffs between China and the United States reflects America's concession, which is understandable in the capital markets. Therefore, today both markets saw a significant rise, with the Shanghai Composite Index up 0.48%, reaching a nearly four-year high, and total trading volume exceeding 2.1 trillion yuan. The Hong Kong stock market also surged by 2.58%, with trading volume expanding to 284 billion, indicating active capital inflow.

Interest rate cuts are also supportive. The U.S. July CPI data was released, showing a month-on-month increase of 0.2%, in line with expectations, but a year-on-year increase of 2.7%, which was below the expected 2.8%. The core CPI (excluding food and energy) increased by 0.3% month-on-month, meeting expectations, while the year-on-year increase of 3.1% was slightly above the expected 3.0%, marking the highest since February. Under the tariffs, inflation has surprisingly not risen, which is indeed a miracle (could it be due to a change in personnel?). The expectation for a rate cut by the Federal Reserve in September is now firmly established. The copper sector performed notably well, primarily because major Japanese companies are preparing to raise prices. MMG (01208) surged over 10% due to a 15-fold increase in performance; other companies like China Nonferrous Mining (01258), Luoyang Molybdenum (03993), and Jiangxi Copper (00358) also saw considerable gains.

Domestic policies are also quite supportive. On the morning of August 13, the State Council Information Office held a press conference where Vice Minister of Finance Liao Min stated that the implementation of interest subsidy policies for personal consumption loans and service industry loans is the first time at the central level. Some media referred to it as another "national subsidy" in the field of consumer loans. The two policies do not set cumbersome thresholds or complex operations, aiming to benefit the lives of the general public and the operational needs of business entities, maximizing convenience for borrowers. It is evident that the higher-ups are focused on stimulating the economy with tangible benefits. If the interest subsidy ratio is set at 1%, it means that 1 yuan of subsidy funds could potentially drive 100 yuan of loan funds for resident consumption or service industry supply. Currently, banks have a lot of idle funds but find it difficult to deploy them; this personal consumption interest subsidy presents a good opportunity, and major banks are expected to intensify their efforts to promote it.

As of August 11, the total financing balance of A-shares, which symbolizes market sentiment, reached 2.0122 trillion yuan, setting a new high for the year; this is also the first time since July 1, 2015, that the financing balance has surpassed the 2 trillion yuan mark. With the stock market strengthening, even a slight amount of personal loan funds flowing into the stock market would be considerable.

Yesterday, it was mentioned that the demand for consumer electronics within personal loans is the strongest, so today consumer electronics stocks continued to perform well. Of course, performance is also an important positive factor. The continuously mentioned FIT HON TENG (06088) announced that its revenue for the first half of the year was 2.305 billion USD, an increase of 11.5% year-on-year. Today, it surged nearly 12% again, while Q Technology (01478) reported a revenue of 8.832 billion yuan for the first half of the year, a year-on-year increase of 15.1%; net profit was 308 million yuan, a year-on-year increase of 167.6%, also rising nearly 11%; other companies like Sunny Optical (02382) and AAC Technologies (02018) rose nearly 5%.

The financial report of internet giant Tencent Holdings Limited (00700) was also quite impressive, with second-quarter revenue of 184.5 billion yuan, a year-on-year increase of 15%. In the second quarter, domestic market game revenue was 40.4 billion yuan, a year-on-year increase of 17%. Capital expenditures in the second quarter amounted to 22.9 billion yuan, mainly for AI-related businesses, continuing to yield benefits While other giants are still competing in the food delivery sector, Tencent focuses on its main business, resulting in the strongest performance, with a surge of 4.74% today, reaching a new high since June 2021. Tencent's strength directly boosted its partner, Weimeng Group (02013), which rose over 6% today. The gaming sector was also stimulated, with Zhongxu Future (09890) soaring over 9%, and Bilibili (09626), one of the top stocks in August, also rising over 7%.

Innovative drugs are also a key direction for capital inflow, with the Hong Kong Stock Connect Innovative Drug ETF (159570) surging over 3%, and trading volume exceeding 2.1 billion yuan, with net subscriptions surpassing 2.7 billion yuan in the past 10 days, reaching a scale of 13.8 billion yuan. Continuous policy stimulation is evident; on August 12, the National Healthcare Security Administration announced the list of drugs that passed the preliminary review for the 2025 medical insurance catalog and commercial insurance innovative drug catalog: Basic medical insurance catalog: 534 drugs approved (310 new drugs outside the catalog, 224 renewal drugs within the catalog); Commercial insurance innovative drug catalog: 121 high-value innovative drugs approved (approval rate over 80%), covering high-priced varieties such as PD-1, ADC, CAR-T therapies, gene therapy drugs, and special drugs for rare diseases. Related stocks such as Zhaoyan New Drug (06127) surged over 10%; Innovent Biologics (01801), CanSino Biologics-B (02162), and CSPC Pharmaceutical Group (01093) all rose over 7%. Crystal Technology Holdings (02228), which sells tools to pharmaceutical companies, rose nearly 10%.

Microsoft and META released financial reports, with performance continuing to exceed expectations, and overseas AI infrastructure continues to see large-scale investment. The demand for computing power is continuously increasing; Hard Egg Innovation (00400) is a core supplier and application technology solution provider in the AI computing power supply chain, representing well-known international manufacturers such as Nvidia, Xilinx, Intel, AMD, and Microsoft, as well as many well-known domestic chip manufacturers. It fully benefits from the leadership of Nvidia's Jetson product family in the edge AI field, supporting domestic embodied intelligent robot players in participating in the global technology competition. Today, it surged over 12%, and hardware distribution leader Wistron NeWeb Corporation (00856) also benefited significantly, rising over 7%. Fiber optic leader Yangtze Optical Fibre and Cable (06869) rose over 4% again.

The financial reports of the film and entertainment sectors are also impressive. Tencent Music Entertainment Group (01698) announced its unaudited financial performance for the second quarter of 2025, with total revenue of 8.44 billion yuan (1.18 billion USD), a year-on-year increase of 17.9%. It directly surged over 15%; Sanrio announced its first-quarter performance for the 2026 fiscal year. The revenue in the China region reached 376 million yuan, a year-on-year increase of 120%, with licensing business revenue of 251 million yuan, a year-on-year increase of 158%. Sanrio's licensing business revenue in China and the IP licensing revenue of Damai Entertainment both experienced explosive growth in the 2025 fiscal year; according to estimates, over 50% of Alibaba's revenue in the 2025 fiscal year will come from Sanrio. Damai Entertainment (01060) rose over 7%.

Recently, commercial space activities have intensified, with rockets such as the Jielong-3 (Yao-6, Yao-7), Long March 6A, and 6B scheduled for launch from bases in the Yellow Sea, Hainan, Jiuquan, and Taiyuan from August 9 to 21, 2025. The previously mentioned Intercontinental Aerospace Technology (01725) surged over 18% today 【Sector Focus】

The Zhejiang Provincial Health Commission and 10 other departments issued the "Action Plan for Accelerating the High-Quality Development of 'Artificial Intelligence + Healthcare' in Zhejiang Province (2025-2027)." The plan aims to reduce the computing power usage costs of medical and health institutions through measures such as computing power vouchers; it mentions promoting the empowerment of traditional Chinese medicine development and drug/device research and development through artificial intelligence; "Artificial Intelligence +" further drives revolutionary development in the medical industry.

Related stocks: Ping An Good Doctor (01833), JD Health (06618), Yidu Tech (02158), Yaoshi Bang (09885).

【Stock Picking】

Bilibili-W (09626): Gaming business maintains strong growth, young community competitiveness significantly enhanced

In Q1 2025, the company's revenue was approximately 7 billion yuan, a year-on-year increase of 24%, with revenue from gaming, advertising, value-added services, and IP derivatives growing by 76%, 20%, 11%, and -4%, respectively. Gross margin increased to 36.3%, and non-GAAP net profit attributable to the parent company was approximately 363 million yuan, achieving a turnaround.

Commentary: The company's revenue growth and profit improvement in Q1 indicate that the Q2 financial report is expected to show steady growth. The gaming market performed strongly. "Three Kingdoms: Strategy Edition" drove gaming revenue growth beyond expectations, with the eighth season starting on May 31, aiming to create a milestone. Advertising revenue increased by 20% year-on-year, with performance advertising growing by over 30%, benefiting from an increase in the number of advertisers and advancements in AI technology. Bilibili held a live broadcast for its 16th anniversary at the end of June. From the user's perspective: 1) The user base continues to expand: In Q1 2025, the platform's DAU and MAU reached 107 million and 368 million, respectively. 2) Bilibili remains young: Over the past year, the average age of Bilibili users was 26, with over half being post-2000 users. 3) The platform continues to maintain high stickiness: The average daily usage time per user reached 108 minutes; 50 million users use Bilibili for over two hours daily; the retention rate for users who have been on the platform for 15 years is 90%. In terms of gaming business, evergreen games are stable, and attention is on the performance of new games. Looking ahead, the company expects the launch of the traditional Chinese version of "Three Kingdoms: Strategy Edition" in Hong Kong, Macau, and Taiwan to yield positive results, while also anticipating the performance of new games such as "Escape from Duckkov" and "Dudu Face Prank." With the stable performance of "Romance of the Three Kingdoms: Strategy Edition," mobile game revenue is expected to grow by 61% year-on-year; the advertising business is expected to achieve an 18% year-on-year growth, benefiting from an increase in advertising clients and technological upgrades. The competitiveness of the young community is significantly enhanced. As of February 2025, among every 10 young people from China's Z+ generation (born between 1985-2009), 7 are Bilibili users. As of Q1 2025, the number of premium members exceeded 23.5 million, a year-on-year increase of 7.3%, accounting for 6.4% of MAU, with over 80% being annual subscription or auto-renewal package users, demonstrating high user stickiness. In addition, Bilibili's gaming, value-added services, advertising, and IP derivatives are all making significant progress, accelerating the commercialization process. The gaming business shows long-term vitality, with revenue maintaining strong growth under the contribution of "Three Kingdoms," and new game launches in the second half of the year are expected to contribute incremental growth