Daily Investment Strategy
Daily focus：Yum China (9987)
The third-quarter results showed steady growth in system sales and new store openings, with a significant increase in the proportion of delivery business. However, due to high delivery costs, the improvement in operating leverage was limited. A decline in average transaction value and rising employee costs put pressure on profit growth. Looking ahead, the Group will continue to expand its franchise stores, which is expected to improve capital efficiency and optimize its profit structure. However, the "revenue growth without profit growth" model of delivery is unlikely to improve in the short term, and medium- to long-term profitability will depend on efficiency improvements and product optimization.
US Tech Stocks under pressure
U.S. stocks experienced a sharp correction on November 4-5, with tech stocks leading the decline, and the Nasdaq falling more than 2%. Overvalued AI stocks became a core risk: Palantir's trading price-to-earnings ratio was as high as 700, far exceeding historical levels. The Federal Reserve's hawkish stance and inflation remaining above target for over four and a half years put pressure on tech companies heavily reliant on low-interest-rate financing. Market analysts warned of a potential 10% to 20% correction, reflecting growing investor concerns that tech stock valuations are difficult to justify, leading to a deterioration in market breadth, with over 300 S&P 500 components declining.
Hong Kong Stock Connect saw a net inflow of HK$9.8 billion on Tuesday, with CNOOC (883) experiencing the largest net inflow at HK$1.05 billion, followed by Xiaomi Group (1810). On the other hand, Alibaba (9988) recorded the largest net outflow at HK$868 million, followed by Sunny Optical Technology (2382).
Leung Kai Tong is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to https://apps.sfc.hk/publicregWeb/indi/ADU276/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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