Sunday, September 22nd, 2024
Hong Kong stocksMarket Updates

Investment Opportunities: Chinasoft International, XPeng, Henderson Land, and Alibaba

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Investment Recommendation
The recommendation is to BUY the stocks of Chinasoft International (354 HK), XPeng-W (9868 HK), and Henderson Land (12 HK). Alibaba-SW (9988 HK) is highlighted as a key player benefiting from significant inflows, with a BUY recommendation for continued gains in the short term.

Investment Thesis
This report emphasizes opportunities in several major companies across diverse industries, driven by innovative developments, key contracts, and strategic partnerships. The investment recommendation to BUY stems from these firms’ growth trajectories, supported by technological advancements and new product launches.

  1. Chinasoft International (CSI)

    • Stock Code: 354 HK
    • Target Price: HKD 4.86
    • Chinasoft International focuses on providing IT solutions in China and has made a breakthrough by securing a HKD 410 million tender with the Hong Kong SAR government to develop a central digital image platform for the Hong Kong Police Force. This marks a milestone in the company’s overseas expansion efforts. Additionally, Chinasoft has entered a strategic partnership with Huawei to leverage its Ascend computing power for AI model training in power scenarios.
    • Financial Results: Chinasoft’s growth is expected to benefit from its expanding service offerings, including AI development and strategic partnerships.
    • Stock Impact: This tender and partnership with Huawei will likely bolster investor confidence, driving share price growth.
    • Earnings Revisions/Risks: While positive, potential risks may come from delays in project execution or regulatory challenges in overseas expansion.
    • Catalysts: Further wins in government contracts and successful execution of the Huawei partnership.
    • Recommendation Date: September 13, 2024
    • Broker: MIB Securities (Hong Kong) Limited

  2. XPeng-W

    • Stock Code: 9868 HK
    • Target Price: HKD 41.52
    • XPeng delivered 14,036 smart electric vehicles (EVs) in August 2024, marking a 17% year-on-year increase over the first eight months of the year. It recently launched the MONA M03, an intelligent all-electric hatchback coupe, the first vehicle globally offering high-level ADAS (advanced driver assistance systems) for under RMB 200,000. This product positions XPeng as a leading player in AI-defined vehicles, supported by its Turing chip and next-generation visual solutions.
    • Financial Results: XPeng’s strong EV sales growth and advanced technological capabilities make it an attractive buy in the EV space.
    • Stock Impact: The introduction of MONA M03 and the continued expansion of XPeng’s AI and visual technologies are expected to drive higher stock performance.
    • Earnings Revisions/Risks: Potential risks include market saturation in China’s EV sector and intensifying competition from other AI-focused automotive companies.
    • Catalysts: Increased production capacity and success in global markets could further lift share prices.

  3. Henderson Land

    • Stock Code: 12 HK
    • Target Price: HKD 24.71
    • Henderson Land’s financial results showed a 10% year-on-year decline in its 1H24 underlying net profit, primarily due to the absence of a one-off gain from 2023. Despite this, the company offers an attractive dividend yield of approximately 7.7%. Henderson has adopted a strategy to convert inventory projects into rental apartments, which could capitalize on widening rental yields.
    • Financial Results: With a stable rental yield strategy, Henderson remains well-positioned to generate consistent long-term returns.
    • Stock Impact: Although profit was down due to the absence of a prior one-off gain, the company’s focus on rental yield strategies positions it well for growth.
    • Earnings Revisions/Risks: Risk factors include fluctuations in the Hong Kong property market and broader macroeconomic conditions.
    • Catalysts: Continued conversion of inventory into rental units and growth in the real estate rental sector.

  4. Alibaba-SW

    • Stock Code: 9988 HK
    • Target Price: HKD 104.51
    • Alibaba outperformed its peers after its shares were included in the Stock Connect scheme, which allows greater mainland investment into Hong Kong-listed companies. On the first two days alone, investors bought HKD 11.6 billion worth of Alibaba shares. Bloomberg estimates that fund inflows from China could reach USD 20 billion by next year.
    • Financial Results: Alibaba’s inclusion in the Stock Connect program opens the door for substantial inflows from mainland China, positioning it for continued growth.
    • Stock Impact: The short-term demand for Alibaba shares is expected to increase significantly due to the inflows from China.
    • Earnings Revisions/Risks: Risks include macroeconomic uncertainty in China and potential regulatory challenges.
    • Catalysts: Continued fund inflows from the mainland, buoyed by its inclusion in Stock Connect.