Hong Kong Retail Research Report: Comprehensive Analysis

Trendspotter

Date: November 4, 2024

Broker: CGS International

Market Recap and Key Insights

Bloomberg reported a late-week rebound in stocks as traders looked past noisy economic data and uncertainties surrounding one of the most closely contested elections in US history. The focus shifted towards the strength of Corporate America. The S&P 500 halted a two-day rout with solid signals from industry bellwethers. Tech megacaps, which bore the brunt of the recent selling, led gains on Friday. Amazon.com Inc. surged 6.2% after strong results, Intel Corp. rallied 7.8% on a bullish outlook, Exxon Mobil Corp. and Chevron Corp. beat profit, output, and sales estimates, and Boeing Co. rose 3.5% on optimism regarding the end of a lengthy strike. Apple Inc., however, fell 1.2% after a tepid forecast.

Wall Street tried not to read too much into data showing US hiring advanced at the slowest pace since 2020 in October, while the unemployment rate remained low. The numbers were distorted by severe hurricanes and a major strike. The jobs report is the last major data point before next week’s Federal Reserve meeting and the Nov. 5 presidential election. According to Bret Kenwell at eToro, despite some additional volatility around these events, nothing has changed the big-picture view. The long-term drivers of the bull market remain intact, as evidenced by the S&P 500 rally of roughly 20% in 2024 through the end of October, marking the strongest in a presidential election year since 1936.

Company Analysis

West China Cement Ltd (2233) – Technical Buy

Last price: 1.25 HKD

Analyst: CHUA Wei Ren, CMT

West China Cement Ltd. produces and distributes cement products. The company has recently shown a possible return to an uptrend that is likely to continue. The stock has broken above the overhead resistance since May 2024, with a strong bullish break above key psychological resistance at HK\$1.10. Prices are trending above all ichimoku indicators, the MACD histogram is positive, and the MACD/signal line is rising above the zero line. The Stochastic Oscillator is rising, and the 23-period ROC is staying above the zero line, reflecting strong bullish strength. Volume has risen strongly, confirming the breakout.

Entry Prices: 1.25, 1.10, 0.90 HKD

Support Levels: 1.11, 0.80 HKD

Stop Loss: 0.84 HKD

Resistance Levels: 1.35, 1.80 HKD

Target Prices: 1.40, 1.54, 1.80, 2.00 HKD

Li Auto Inc – Eyes on BEV Models in FY25F

Li Auto Inc. reported strong Q3 2024 sales of Rmb43bn, marking a 24% year-on-year (yoy) and 35% quarter-on-quarter (qoq) increase. The company achieved a non-GAAP net profit of Rmb3.8bn, up 11% yoy and 156% qoq. The anticipation of upcoming Battery Electric Vehicle (BEV) models is expected to boost Li Auto’s margin profile significantly. The recommendation for Li Auto Inc. remains as ‘Add’, with a higher Discounted Cash Flow (DCF)-based target price of HK\$139.

Midea-A – Domestic Home Appliance Sales to Soar in 4Q24F

Midea-A is predicted to experience a surge in domestic home appliance sales in the fourth quarter of 2024. With the company’s strategic positioning and market demands, analysts expect strong performance and growth in this sector.

Advanced Info Service – 3Q24 Net Profit Supported by Handset Sales

Advanced Info Service reported a solid net profit for the third quarter of 2024, significantly supported by handset sales. The company’s performance highlights strong operational execution and market presence.

Malaysia Strategy – Monthly Wrap for October 2024

The Malaysia Strategy report for October 2024 provides a comprehensive overview of the market trends and strategic insights for investors looking to navigate the Malaysian financial landscape.

Investment Recommendations and Ratings

Stock Ratings Definition:

• Add: The stock’s total return is expected to exceed 10% over the next 12 months.
• Hold: The stock’s total return is expected to be between 0% and positive 10% over the next 12 months.
• Reduce: The stock’s total return is expected to fall below 0% or more over the next 12 months.

Sector Ratings Definition:

• Overweight: Stocks in the sector have, on a market cap-weighted basis, a positive absolute recommendation.
• Neutral: Stocks in the sector have, on a market cap-weighted basis, a neutral absolute recommendation.
• Underweight: Stocks in the sector have, on a market cap-weighted basis, a negative absolute recommendation.

Country Ratings Definition:

• Overweight: Investors should be positioned with an above-market weight in this country relative to benchmark.
• Neutral: Investors should be positioned with a neutral weight in this country relative to benchmark.
• Underweight: Investors should be positioned with a below-market weight in this country relative to benchmark.

Rating Distribution:

• Add: 67.0% (Investment Banking clients: 0.5%)
• Hold: 23.5% (Investment Banking clients: 0.9%)
• Reduce: 9.5% (Investment Banking clients: 0.2%)

This comprehensive report offers deep insights into the current market trends and provides strategic recommendations for investors. By understanding the detailed company analysis and investment ratings, investors can make informed decisions to optimize their portfolios.