How is the fundamental situation of the Hang Seng Technology? CAITONG SECURITIES lists 11 big stocks, with Lenovo and Tencent among them
CAITONG SECURITIES released a research report recommending an overweight position in the Hang Seng Technology sector, believing that the sector is in the early stages of a resonance between macro liquidity recovery and the AI technology cycle, possessing high allocation value. The report pointed out that the traffic dividend is gradually fading, and the shareholder return capability of high-quality companies is outstanding. It is recommended to focus on the AI mainline layout, with a key investment in high-quality leading companies such as Tencent, Alibaba, and Baidu
Recently, the team led by Hao Yanhui at CAITONG SECURITIES released a research report stating that the Hang Seng Technology sector is currently in the early stage of a resonance between macro liquidity recovery and the AI technology cycle, with high allocation value in the medium term.
What is the current fundamental situation of Hang Seng Technology?
From the molecular end, the underlying logic benefits from the explosion in application and content brought about by new technological changes, currently at the starting point of the AI technology cycle; the medium to long-term logic lies in the competition for user numbers and user duration in the existing market against the backdrop of gradually diminishing traffic dividends, as well as the operation and optimization of business models, which tests organizational capability. Currently, after the traffic dividend has faded, the shareholder return capability of quality companies is performing impressively; in the short to medium term, it is important to track changes in EPS and policies, especially the performance of profits across the entire consumer sector.
How to view the current beta background of Hang Seng Technology?
From the denominator end, after experiencing the fastest and most rate hikes by the Federal Reserve since the 1980s, from a medium-term (over one year) perspective, an important variable affecting the liquidity of Hang Seng Technology is that the Federal Reserve has entered a liquidity easing channel since September; from a valuation perspective, the TTM price-to-earnings ratio of Hang Seng Technology is currently at the 34th percentile of the past five years.
In terms of investment advice, the Hao Yanhui team suggests that looking ahead, it is recommended to layout around the AI main line, focusing on sub-sectors that are expected to achieve performance realization first. On one hand, benefiting from the accelerated capital expenditure of global major companies, the AI hardware and computing power industry chain continues to maintain high prosperity under the resonance of cloud and edge; on the other hand, the software application and content ecosystem are in the early stage of AI empowerment, optimistic about the performance release of overseas software and other industry progress bringing opportunities for "hard cutting soft." In addition, the consumer technology sectors such as e-commerce, local life, and advertising marketing are performing steadily under policy stimulation and operational efficiency improvement; intelligent driving and travel scenarios are accelerating landing, expected to become a new round of industrial growth momentum.
Overall, it is recommended to continue to overweight the Hang Seng Technology sector, with a focus on high performance certainty and leading companies in AI technology and content ecosystem layout:
Preferred: Tencent Holdings Limited
Medium-term elastic targets: Alibaba, Baidu Group
Steady slow bull: Lenovo Group, China Literature Group, Trip.com Group, Sunny Optical.
Elastic targets: Kuaishou, Horizon Robotics, Kingdee International, XPeng
