00003 Overview

Market Overview: The Hang Seng Index (HSI) fell by 3.5% to 24,400, while the Hang Seng Tech Index (HSTI) and the Hang Seng China Enterprises Index (HSCEI) also experienced significant declines of 3.1%.

Active Heavyweights Performance: Major stocks like PING AN, HKEX, and XIAOMI saw substantial drops, with PING AN down 6% and HKEX down 3.9%, reflecting a trend of short selling across these companies.

Notable Declines Among Constituents: Companies such as CHINAHONGQIAO and LAOPU GOLD faced severe losses, with CHINAHONGQIAO dropping 11.7% and LAOPU GOLD down 10.7%, indicating a broader market downturn.

Short Selling Trends: A significant amount of short selling was observed, particularly in stocks like XIAOMI and AIA, with ratios exceeding 30%, highlighting investor pessimism in the current market conditions.

Stock Performance: HK & China Gas opened 3% lower, trading at HKD7.11, down 3.13%, with significant short selling activity amounting to $63.95M and a ratio of 18.587%.

Profit Report: The company reported a 4.2% year-on-year increase in core profit for the previous year, maintaining a final dividend per share of 23 cents.

Gas Tariff Outlook: Managing Director Peter Wong indicated that gas tariffs in Hong Kong may rise due to local inflation pressures, wage adjustments, and development projects, although specific increases remain uncertain.

Government Awareness: Wong noted that the government is aware of the pricing pressures faced by the company, reflecting ongoing discussions about tariff adjustments.

Stock Performance: CKI Holdings, HKElectric, CLP Holdings, and HK & China Gas all received a "Buy" rating, while Power Assets and HK & China Gas were rated as "Hold."

Short Selling Data: CKI Holdings and CLP Holdings experienced significant short selling, with ratios of 27.817% and 37.083%, respectively, indicating investor skepticism.

Market Movements: The stocks showed positive movements, with CKI Holdings up by 0.532%, HKElectric by 1.293%, and CLP Holdings by 0.809%.

Investment Advisory: JPMorgan suggested investors consider taking profits on some Hong Kong utility stocks due to uncertainties surrounding potential US interest rate cuts.

Stock Performance: Several Hong Kong gas companies experienced declines in share prices, with China Gas Holdings down 1.34% and China Resources Gas down 2.44%.

Short Selling Activity: Notable short selling activity was reported, with China Gas Holdings having a short selling ratio of 26.606% and HK & China Gas at 23.762%.

Analyst Ratings: ENN Energy received an "Overweight" rating with a target price increase from 66.5 to 72.5, while HK & China Gas was downgraded from "Overweight" to "Neutral".

Market Updates: Kunlun Energy saw a slight increase in share price, while Jefferies upgraded HKEX to "Buy" and raised target prices for BEA and BOCHK.

JPMorgan's Investment Recommendation: JPMorgan advised investors to take profits on certain Hong Kong utilities, noting their outperformance against the HSI and highlighting uncertainties regarding US rate cuts.

Dividend Yield Concerns: The average dividend yield for Hong Kong utilities is low at 4.4%, with limited potential for increases, leading to downgrades for CLP Holdings and HK & China Gas to Neutral.

Top Pick in Utilities: CKI Holdings was identified as JPMorgan's top pick in the sector, with an increased target price due to potential for dividend growth from its UK and Australian operations.

Market Performance Insights: The outperformance of Hong Kong utilities is attributed to the positive spillover from local banks and developers, despite the overall market uncertainties.

JPMorgan's Cautious Outlook: JPMorgan maintains a cautious view on Chinese gas utilities, predicting disappointing annual results and limited improvement for 2026.

Top Picks and Ratings: KUNLUN ENERGY is rated Overweight with a target price increase to $9, while ENN ENERGY is also rated Overweight due to a significant A/H discount, with target prices raised accordingly.

Downgrade of HK & China Gas: HK & CHINA GAS has been downgraded from Overweight to Neutral, with a slight target price increase reflecting its reasonable valuation after recent price hikes.

Market Context: The report highlights uncertainties in the market, suggesting that investors may consider taking profits on some HK utilities amid concerns over US rate cuts.