China Retail Research: Comprehensive Analysis of Key Companies

Date: November 12, 2024

Broker: CGS International Securities

Yonyou Network Technology Co Ltd (600588) – Technical Buy

Last price: 13.84

Yonyou Network Technology Co Ltd is at the early stage of an uptrend, presenting a strong buying opportunity. The stock has broken out of the pennant formation with a strong bullish candle, accompanied by rising volume, confirming the bullish reversal of the cup and handle formation. This breakout above the downtrend line since March 23, coupled with higher highs and lows, confirms the uptrend. Volume has been expanding steadily for the past 26 daily periods, and prices are trending above all Ichimoku indicators, forming a potential three bullish golden crosses.

The stochastic oscillator is rising, confirming bullish momentum, while the MACD/signal line has been rising after a crossover at the bottom, with the histogram remaining positive. The 23-period ROC is rising and has broken above the zero line, and the directional movement index signals positive bullish strength.

• Entry Prices: 13.84, 11.00, 9.70
• Support Levels: 10.49, 8.26
• Stop Loss: 8.30
• Resistance Levels: 15.09, 21.23
• Target Prices: 16.25, 20.40, 28.05, 30.50

Seatrium Ltd – Execution is Still Key

Seatrium Ltd (STM) is in a crucial phase where execution remains key. The company has secured an LOI for engineering work on the Penta Ocean heavy lift vessel, estimating a contract value of US\$400m-500m by 1Q25. In its 3Q24 business update, STM highlighted a healthy pipeline and enquiries for 2024/2025, including FPSOs, rigs, and energy transition projects. Legacy projects are on track for end 2024/early 2025 delivery, and STM is not overly concerned about potential cost overruns.

We maintain an ‘Add’ rating with a target price of S\$2.69. Catalysts include the conclusion of the CAD/MAS document investigation, sequential margin improvement, and order wins.

WHA Corporation – 3Q24 Misses on FX Loss and Expenses

WHA Corporation experienced a setback in 3Q24 due to foreign exchange losses and increased expenses. However, the company remains optimistic about future performance and is focused on mitigating these impacts in the upcoming quarters.

Sunway Bhd – Expect Strong 3Q to Pave Way for Upgrades

Sunway Bhd is poised for strong performance, with expectations of a robust 3Q paving the way for potential upgrades. The company’s strategic initiatives and solid execution are expected to drive growth and enhance shareholder value.

Praram 9 Hospital – Boosted by Foreign Patient Traffic

Praram 9 Hospital has seen a significant boost in foreign patient traffic, contributing positively to its financial performance. The hospital’s focus on providing high-quality healthcare services continues to attract international patients, supporting its growth trajectory.

Market Overview and Key Takeaways

The Asian equities market experienced a drop, led by heavyweights like Tencent Holdings and Meituan. Despite China’s CSI 300 benchmark initially falling, it managed to close with modest gains. Concerns linger about the outlook of China’s economy, especially after Beijing’s 10 trillion yuan program to defuse local government debt risk, which fell short of new fiscal stimulus. Anemic inflation and slumping foreign direct investment have further dampened sentiment.

Economists believe Beijing’s stance signals an intention to preserve room to respond to potential trade wars, especially following Donald Trump’s presidential victory. This has injected fresh uncertainty over tariffs, leading to volatility in Chinese equities. UBS has lowered its 2025 growth forecast for China, expecting around 4% expansion, with a considerably lower pace in 2026.

Oil prices turned flat after earlier declines, and iron ore prices moved toward \$100 a ton, reflecting a soft outlook for China, the top importer.

Disclaimer

The content of this report, including the views and opinions expressed, has been prepared by and belongs to CGS. The information is intended for circulation among CGS’s clients and does not consider the specific investment objectives, financial situation, or needs of any specific person. The report is not a recommendation or solicitation to buy or sell any securities mentioned. Readers are advised to make their own independent evaluation of the information and consult their professional advisors before making any investment decisions. Additional information is available upon request, subject to confidentiality duties.