Stock speculation depends Jin Qilin analyst research report , authoritative, professional, timely and comprehensive, to help you tap potential theme opportunities!
Hong Kong technology stocks continued to recover.
In the intraday trading on May 16, Tencent Holdings (00700. HK) rose nearly 5% to HK $401 per share, a new year high. As of the close, it rose 3.98% to HK $397/share.
Tencent released its financial report for the first quarter of 2024 after hours on the 14th. The financial report shows that Tencent's revenue in the first quarter was 159.501 billion yuan, up 6% year on year, and its net profit (Non IFRS) was 50.265 billion yuan, up 54% year on year.
This round of Tencent's stock price rebound also has the background of the rebound of Hong Kong stock market since the end of April. From May 2 to 14, the stock price of Hong Kong stock technology stock JD Group rose 12.46%, Meituan rose 11.32% and Bilibili rose 16.93%. By the 16th, the Hang Seng Index had risen by 9.08% in the month, and the Hang Seng Technology Index had risen by more than 10%.
The trend of southward funds copying Hong Kong shares at the bottom has increased, and the accumulated net purchase amount since this year has exceeded HK $230 billion, of which the net inflow in March and April exceeded 80 billion. Benefiting from the rebound of Hong Kong stocks and enthusiasm for funds, Hong Kong stock theme funds led the rise of equity funds, and more than half of the fund products took the lead in improving the allocation ratio of Hong Kong stocks in the first quarter.
Tencent's share price continues to rise
According to the financial report, Tencent's online advertising revenue in the first quarter increased by 26% year on year. The game business revenue, which accounted for about 30% of Tencent's revenue, was 48.1 billion yuan, a year-on-year decrease of 0.4%, with little fluctuation. The expansion of video number and other businesses boosted the overall gross profit performance.
In the first quarter, the total user duration of the video number grew by more than 80% year on year, driving Tencent's gross margin to grow by 23% year on year, and its gross margin rose to 53% from 45% in the same period last year.
Tencent also announced its 2024 stock repurchase plan, with the planned repurchase scale increasing from HK $49 billion in 2023 to over HK $100 billion. In the first quarter, Tencent repurchased 51.04 million shares at a total price of 14.8 billion Hong Kong dollars.
Although Tencent's share price hit a new year high, it is still far from the previous high of over HK $450 in February 2022. Tencent's share price peaked in February 2021, reaching HK $700 during the session.
Since 2021, Tencent's share price has continued to fluctuate under the background of strong regulation of games, Internet antitrust regulation, and reduction of major shareholders. The company is also adjusting its own business, promoting cost reduction and efficiency increase, and looking for growth opportunities in advantageous business sectors such as WeChat.
In 2022, Ma Huateng, Chairman of the Board of Directors and CEO of Tencent, called the WeChat video account "hope for the whole audience" in his internal speech. In his internal speech at the beginning of 2024, Ma Huateng also mentioned making WeChat "old trees grow new". At the first quarter performance briefing, Tencent management also mentioned WeChat, saying that the company has a platform like WeChat, with a large number of users and high participation, and the introduction of AI can achieve more possibilities.
On the evening of May 14, Alibaba (09988. HK), another Hong Kong technology giant, released its fourth quarter and annual performance report of fiscal year 2024. On the 16th, Ali's share price fell 3.57% to close at HK $79.7. Compared with Tencent's share price, which has risen 35.22% this year, Ali's share price has risen only 5.42% this year. As of August 16, Tencent had a total market value of 3739.5 billion Hong Kong dollars, and Ali had a total market value of 1623.8 billion Hong Kong dollars. The market value of the former has exceeded that of the latter.
In the fourth quarter (the first quarter of 2024 in the natural year), Alibaba's revenue was 221.874 billion yuan, up 7% year on year, operating profit was 14.765 billion yuan, down 3% year on year, and adjusted EBITA fell 5% year on year to 23.969 billion yuan. Ali said in the financial report that the decrease in profits was mainly due to the Group's increased investment in e-commerce business and the retention incentive granted to rookie employees.
Fu Yating, an Internet researcher of Xuanjia Fund, said that Tencent's business cycle had passed the inflection point, and the valuation end repair was more obvious. Alibaba's business is still at the bottom of the cycle. Although Taotian Group's GMV growth in the first quarter of 2024 exceeded expectations, its investment increased, so the profit side is still declining. The current competitive pattern of e-commerce is still unclear, which suppresses the overall valuation of the sector.
Fu Yating believes that in terms of the business moat, WeChat is currently basically in a monopoly position in the social field, forming a strong social network effect. Users have high stickiness, so they can obtain continuous traffic sources. Based on these traffic, Tencent develops games, advertising and other high margin businesses. Ali's core business is e-commerce, which is retail in nature. The retail business is a bilateral network, which is less stable than social networking. Therefore, competitors continue to enter and seize market share.
In terms of capital, Tencent's valuation is also significantly higher than that of Ali. The former has always been the most popular individual stock to buy in Hong Kong Stock Connect, while the latter is a constituent stock of Hang Seng Index, but because of its "second listing" status, it has not yet entered the list of Hong Kong Stock Connect.
According to the closing price on the 16th day and the latest performance, Tencent Holdings' price to earnings ratio (TTM) and price to book ratio are 26 times and 4 times respectively; Alibaba is 18.5 times and 1.5 times respectively.
On the 14th, when Ali announced its performance in fiscal year 2024, it announced that it had been preparing for its main listing in Hong Kong. At present, it is expected to complete the conversion by the end of August 2024, and will make another announcement on the main listing conversion date in due course.
Hong Kong Stock Fund Rises
Zhao Xiancheng, the fund manager of the Overseas Investment Department of Bosera Fund, said that Hong Kong stocks did not perform well in the first quarter, but they still received a southward capital inflow of 120 billion yuan. It was judged that it was the result of the increased positions of insurance funds, financial products and other incremental funds. After the middle of April, the fund chose Hong Kong stock technology stocks with significantly improved fundamentals for adding positions, and Hong Kong stock Internet and other new economy stocks showed stronger performance.
Data shows that as of May 16, the Hang Seng Index and Hang Seng Science and Technology Index have increased by 13.66% and 8.18% accumulatively this year.
With the rebound of the market, the fund products investing in Hong Kong stocks have wiped out their tepid performance in the earlier period, and the net value has rebounded significantly, even leading the rise of equity products.
Wind data shows that from April 17 to May 15, 34 of the 4641 equity funds (only the initial funds, excluding feeder funds; the same below) increased by more than 20% in the range, of which 28 products accounted for more than 70% of the total asset value of the fund in the first quarter of this year. Among the 1727 fund products that have invested in Hong Kong stocks, except for more than 10 fund products, almost all of them rose.
The theme products tracking the Hong Kong Stock Connect Internet and Hang Seng Internet technology industry, for example, the seven product ranges, including E Fund China Securities Hong Kong Stock Connect Internet ETF, rose more than 23%.
Some active equity products investing in Hong Kong shares also saw a wave of net worth surge, with 39 products having a range return of more than 15%.
After this round of growth, the annual returns of many products have changed from loss to profit. According to the data, as of May 15, more than 76% of the funds invested in Hong Kong stocks had positive returns within the year, compared with 46.67% on April 16. Among them, 49 funds have accumulated returns of more than 20% year to date.
From the first quarter report, some fund managers have raised their positions in Hong Kong stocks. According to the statistics of First Finance and Economics, among the 1618 fund products investing in Hong Kong stocks that have been compared in the recent two periods, more than 56% of the products increased their positions in Hong Kong stocks in the first quarter.
"Compared with the global stock market, the absolute valuation and valuation quantile of Hong Kong stocks are in the low quantile." Zhang Dongyi, manager of Guangfa Shanghai, Hong Kong and Shenzhen New Opportunities Fund, told reporters that a large number of high-quality targets with high investment value have emerged in the Hong Kong stock market, whether measured by the valuation indicators of PE and PB, or by the earnings quality indicators of cash flow and ROE.
A Hong Kong stock investment researcher in North China also had a similar view. He believed that the recent market of the Internet sector of Hong Kong stocks might be more driven by funds, and shareholder returns were an important factor in attracting funds to the Internet sector of Hong Kong stocks. In the current market environment, many Internet companies improve the return rate of shareholders through share buybacks and dividends, which helps to enhance investors' confidence in the company and enhance the investment attraction of the Internet sector.
For example, Tencent and Alibaba have both continued to buy back on a large scale and pay high dividends. In fiscal year 2024, Ali spent a total of US $12.5 billion to buy back 1.249 billion ordinary shares. Ali's board of directors has approved the distribution of dividends in 2024, including annual regular cash dividends and one-time special cash dividends, with a total dividend of about $4 billion. Tencent had previously proposed to pay the annual dividend of 2023 at HK $3.4 per share, with a year-on-year increase of 42% in the amount of dividend per share, reaching a total of about HK $32 billion.
There are also some views that we need to be alert to future market risks. Zhao Hongmei, analyst of Zhongtai International Research, believes that the rising trend of Hong Kong stocks is mainly affected by the area of funds, which has led to a substantial repair of relative valuations. However, we should be alert later on to reduce the demand for foreign capital reallocation of Hong Kong stocks after the fluctuations in the peripheral markets have stabilized, and the short-term withdrawal of funds may cause shocks.
Investment researchers of China Merchants Fund told reporters that under the background of domestic economic policies and the expected recovery of overseas liquidity, for the short-term Hong Kong stock market, the rebound opportunity will probably continue. The medium-term trend still needs to rely on the height of domestic economic recovery.
When the stock market recovers, open an account first! Intelligent fixed investment, condition sheet, individual stock radar... for you>>
Massive information, accurate interpretation, all in Sina Finance APP
Editor in charge: Wang Xu
