KGI Asia Commentary

2024.04.26 09:47

HSI rose 83 points on Thursday

The Hang Seng Index rose 83 points or 0.5% to 17,284 on Thursday. HSTECH fell 19 points or 0.5% to 3,554 and HSCEI rose 20 points or 0.3% to 6,120. Daily market turnover was HK$119.9bn.

S&P 500 recovers some losses, but ends lower as tech stocks tumble

Data show that the annualized growth rate of the U.S. economy in the first quarter was only 1.6%, far lower than expected, while the core underlying inflation indicator unexpectedly rose in the first quarter, rising by 3.7%. Meta platform shares fell 10.6% to a nearly three-month low. Facebook parent company Meta expects second-quarter revenue to be lower than expected due to increased spending on artificial intelligence. The stock fell 16% intraday. IBM shares fell 8% on weak first-quarter earnings and the company announced a $6.4 billion acquisition of Hashicorp. Heavy machinery manufacturer Caterpillar's shares fell 7% after the company reported mixed results for the first quarter of 2024, with earnings exceeding analysts' expectations but revenue falling short of analysts' expectations. Ford shares fell nearly 1% despite reporting strong first-quarter earnings and positive free cash flow guidance.

GDP growth slowed to 1.6% in the first quarter, well below expectations

The U.S. gross domestic product (GDP) increased by only 1.6% in the first quarter, lower than the 2.4% expected. Among them, consumer spending grew by 2.5%, lower than the 3.3% increase in the fourth quarter of last year and lower than Wall Street's forecast of 3%. At the same time, the US core personal consumption expenditures deflator (Core PCE) rose 3.4% in the first quarter, the inflation indicator that the Federal Reserve focuses on, the largest increase in a year. Economic growth is slowing but inflation is strong, raising concerns about stagflation.

Hong Kong Stock Connect had a net inflow of HK1.88bn on Thursday, of which BOC (3988) had the largest net inflow, reaching HK$0.52bn; followed by HKEX (388). Meituan (3690) recorded the largest net outflow at HK$0.79bn, followed by HSBC (5).

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Haier
06690

Haier Smart Home's sales and net profit increased by 7.3% and 12.8% yoy respectively to RMB261.4bn and RMB16.6bn last year. The gross profit margin rose from 30.63% in 2022 to 30.87%, an increase of 0.24 percentage points, driving the net profit margin expanded by 0.31 percentage points to 6.35%. The market currently has a positive view on the prospects of Haier Smart Home, as the group maintains its leading position in the country, with the domestic market share of refrigerators and washing machines exceeding 40%. In addition, overseas markets have improved in terms of profits, benefiting from the upgrade of product mix. Secondly, the dividend policy is attractive, and management aims to increase the dividend payout ratio to no less than 50% in 2026. The group currently declares a dividend of RMB0.804, with a dividend payout ratio of 45%. Overall, the signals of improvement in the manufacturing industry, substantial infrastructure investment, and a modest rebound in consumption collectively bolstered the economic aggregate in China. Policies such as the trade-in of consumer goods will continue to be the engine of economic growth this year. It provides catalyst for the consumer goods sector. Haier Smart Home can be benefitted. Target price: $30; Stop- Loss price: $24.

Wen Kit Kenny 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/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.

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