Midday Update: HSI Rises 425 Points; HSTI Gains 117 Points; CHINAHONGQIAO Surges Over 8%; CHINAHONGQIAO, XINYI GLASS, MTR CORPORATION, AIA, and HK & CHINA GAS Reach Record Highs
Market Performance: The Hang Seng Index (HSI) rose by 425 points (1.6%) to 26,361, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also saw gains of 117 points (2.0%) and 151 points (1.7%) respectively.
Top Gainers: Notable heavyweights like Alibaba, Ping An, Tencent, and Meituan experienced significant increases, with Alibaba closing up 3% at $163.2 and Tencent up 2.4% at $644.
High Performers: Among HSI and HSCEI constituents, Chinahongqiao surged by 8.5% to a new high, while SMIC and Xinyi Solar also posted strong gains of 4.9% and 4.8% respectively.
Notable Movements: Weichai Power saw a remarkable increase of 19.3%, hitting a new high, while Hao Tian International and YSB faced declines of 16.9% and 11% respectively.
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BofAS Begins Coverage of HK & CHINA GAS with Underperform Rating; Earnings Outlook Better, Yet Insufficient to Support Dividend
BofA Securities Coverage: BofA Securities has initiated coverage on HK & CHINA GAS with an Underperform rating and a target price of HKD6.5, despite an improved earnings outlook due to lower gas costs.
Cash Flow Concerns: The report indicates that HK & CHINA GAS' free cash flow is insufficient to cover dividends, which are expected to remain stable in the coming years.
HSBC Research Lowers Earnings Projections for TG SMART ENERGY and HK & CHINA GAS, Anticipates Strong Gas Sales in Hong Kong
Urban Gas Utility Sector Challenges: The urban gas utility sector is experiencing a slowdown in gas sales growth and a decline in new users, although profit margin expansion has mitigated some negative impacts, according to HSBC Research.
Sales and User Projections: HSBC Research anticipates stable retail gas sales in the second half of 2025, but expects a 16% year-over-year decrease in new users for TG SMART ENERGY in 2025, with gas prices likely increasing due to a hike in August 2024.
Broker Ratings and Target Price Adjustments: Daiwa has upgraded the CN gas industry rating to Neutral and HK & CHINA GAS to Outperform, while maintaining a Buy rating on TG SMART ENERGY but lowering its target price from HKD4.7 to HKD4.
Earnings Forecast Revisions: HSBC Research has revised down its earnings forecasts for TG SMART ENERGY by 6-7% and for HK & CHINA GAS by 7-8% due to reduced contributions from the renewable energy sector.
