01060 Overview

Trendy Toy Industry Growth: China's trendy toy industry is experiencing significant growth, transitioning from a manufacturing focus to content elevation, driven by the "self-pleasing economy."

Investment Recommendations: CICC has expressed optimism about the growth potential of the trendy toys and IP industry, recommending stocks such as POP MART, MNSO, CHINA LIT, and DAMAI ENT.

Investment Ratings and Target Prices: CICC provided investment ratings and target prices for several Hong Kong stocks, with all recommended stocks rated as "Outperform."

Short Selling Data: The report includes short selling data for the recommended stocks, indicating varying levels of short interest among them.

Market Performance: The Hang Seng Index (HSI) rose by 435 points (1.7%) to close at 25,757, with significant gains also seen in the HSTI and HSCEI, which increased by 151 points (3.2%) and 176 points (2.1%) respectively, and market turnover reached $292.77 billion.

Top Gainers: Notable heavyweights like Xiaomi, Alibaba, and Tencent saw increases of 3.8%, 3.5%, and 3.4% respectively, while JD Logistics surged by 22.98%, and JD gained 9.95%.

Short Selling Activity: High short selling ratios were observed in several stocks, with JD having a ratio of 43.477% and Meituan at 26.184%, indicating significant market speculation.

Other Notable Stocks: Companies like Geely Auto, Trip.com, and Mengniu Dairy also experienced substantial gains, with increases of 7.9%, 7.2%, and 6.9% respectively, reflecting a positive trend in various sectors.

Financial Performance: Galaxy Entertainment reported a revenue of HKD49.242 billion for the year ended December, marking a 13.4% increase year-on-year, with a net profit of HKD10.674 billion, up 21.9%.

Dividends and Earnings: The company announced an earnings per share (EPS) of HKD2.44 and a final dividend of HKD0.80, an increase from HKD0.50 in the previous year.

Business Growth Focus: Chairman Francis Lui highlighted ongoing growth across all business segments, particularly in the premium mass and super-premium mass segments, with plans for a soft launch of Capella in May 2025.

Future Collaborations: In 2026, Galaxy Entertainment aims to enhance its event offerings through partnerships with global entertainment companies and UFC, alongside a renewed agreement with DAMAI Entertainment for ticketing services.

Lunar New Year Entertainment Trends: Offline entertainment during the Lunar New Year saw a divergence, with tourism consumption increasing by 19% YoY, while the box office dropped to RMB5.7 billion, a 40% YoY decline, attributed to a lack of quality content.

Stock Market Reactions: Recent stock price corrections in companies like Tencent and Kuaishou are noted, with some nearing the low end of their five-year PE ratio ranges, despite expectations for EPS growth in 2026.

Competitive Landscape: Kuaishou and Bilibili are recognized for their strong business foundations and AI potential, while the music and live streaming sectors face heightened competition.

Goldman Sachs Adjustments: Goldman Sachs lowered its expectations for DAMAI ENT due to potential movie losses but anticipates double-digit growth in IP-related merchandise and overall profit margins improving, maintaining a Buy rating with a revised target price.

Gaming Stocks Overview: Tencent and NetEase are rated as "Buy," with target prices adjusted to HKD752 and USD170, respectively, while other companies like XD Inc. and Perfect World hold a "Neutral" rating.

Entertainment & Media Stocks Overview: Kuaishou and Tencent Music are also rated as "Buy," with target prices set at HKD87 and HKD23, while Bilibili is projected to rise to USD34.2.

Short Selling Activity: Significant short selling is noted for Kuaishou and Tencent Music, with ratios of 12.966% and 10.637%, indicating investor caution.

Market Data Notes: Stock quotes for HK and A Shares are delayed by at least 15 minutes, while US stocks are real-time except for OTC quotes, which are also delayed.

Market Performance: The HSI fell 0.5% to 26,852, with the HSCEI down 0.7% and HSTECH dropping 1.8%, while total half-day turnover reached $163.897 billion.

TRIP.COM-S Decline: TRIP.COM-S shares plummeted 19.6% to $457.6 amid an antitrust investigation, with significant short selling activity reported.

Baidu's Potential Listing Upgrade: BIDU-SW saw a slight increase of 0.3% as rumors circulated about its potential upgrade to a primary listing in Hong Kong.

Positive Outlook for Hong Kong Property: BofA Securities predicts a 5-10% rise in Hong Kong residential property prices this year, with an additional 5% increase expected next year, positively impacting local homebuilders.