Hong Kong Retail Research
Broker: CGS International
Date: November 12, 2024
Zhongsheng Group Holdings Ltd (HKG: 881) – A Bullish Break Confirmed
Zhongsheng Group Holdings Ltd has confirmed a bullish break, making it a prime candidate for investment. The company, which retails luxury and mid- to high-end automobile brands, has shown strong technical indicators supporting this bullish trend.
Technical Breakdown:
- Last price: HK\$18.94
- Entry Prices: HK\$18.94, HK\$16.00, HK\$12.52
- Support Levels: HK\$16.30, HK\$11.40
- Stop Loss: HK\$10.82
- Resistance Levels: HK\$22.00, HK\$26.80
- Target Prices: HK\$22.55, HK\$28.00, HK\$32.42, HK\$39.00
The stock has broken out of its downtrend line since July 2021, forming higher highs and lows with a strong bullish bar breaking the HK\$16.30 resistance. This breakout, along with the rebound above HK\$11.40, confirms the bullish trend. The stock’s price action is supported by several technical indicators, including positive MACD histogram, rising Stochastic Oscillator, sharp rise in 23-period ROC, and a volume spike.
Singapore Airlines (SIN: SIA) – 2QFY25 Weaker Than Expected
Singapore Airlines reported a core net profit of S\$296 million for 2QFY3/25, which was 29% below the S\$416 million preview and 54% lower year-over-year. The stock is expected to be sold off when the market reopens, as the 1QFY25 core net profit was ‘only’ 38% lower year-over-year.
Key Insights:
- Core Net Profit: S\$296 million (29% below preview)
- Year-over-Year Decline: 54%
- Quarter-over-Quarter Decline: 32%
The company continues to face weakening yields, leading to a ‘Reduce’ rating, although the target price has been revised to S\$6.
Sembcorp Industries (SIN: SCI) – Divesting Recycled Waste Asset
Sembcorp Industries is in the process of divesting its recycled waste asset. This move is part of the company’s strategy to streamline operations and focus on core business areas. The financial impact and future prospects of this divestment are yet to be fully realized, but it is a significant development in the company’s strategic realignment.
OCBC (SIN: OCBC) – On Track to Meet FY24F Targets
OCBC is on track to meet its FY24F targets, showing resilience and strong performance in its core financial metrics. The bank’s strategic initiatives are paying off, and it continues to maintain a stable outlook in a competitive market environment.
United Overseas Bank (SIN: UOB) – Capital Return on the Cards
United Overseas Bank has potential plans for capital return, which could be a significant positive for investors. The bank’s strong financial health and prudent management practices position it well to deliver value to shareholders.
Market Recap and Insights
Stocks rose at the end of their best week in 2024 amid solid consumer sentiment data and expectations that newly elected President Donald Trump’s pro-growth agenda will continue to fuel Corporate America. The S&P 500 hit its 50th record of the year, extending its weekly gain to 4.7%. Tesla Inc.’s rally brought its market cap back over the trillion-dollar mark. Defensive shares led the charge after some groups hit oversold levels, with a notable \$20 billion flowing into US equity funds on the day Trump claimed victory.
Key Market Movements:
- S&P 500: +0.4%, briefly topping the 6,000 mark
- Nasdaq 100: Little change
- Dow Jones Industrial Average: +0.6%
- Treasury 10-year yields: Declined three basis points to 4.30%
- US Dollar: Posted a sixth straight week of gains
Conclusion
The Hong Kong retail market continues to show dynamic movements with significant developments across key companies. Zhongsheng Group Holdings Ltd stands out with a confirmed bullish break, presenting a strong investment opportunity. On the other hand, Singapore Airlines faces challenges with weaker-than-expected earnings, while Sembcorp Industries, OCBC, and United Overseas Bank show strategic progressions that could influence their market positions positively. Investors should stay informed and consider these insights when making investment decisions.
