KGI Asia Commentary

2023.01.17 09:00

Hang Seng Index rose 8 points on Monday

The Hang Seng Index closed at 21,746 yesterday, only up 8 points. HSTECH closed at 4,506, down 48 points or 1.1%. HSCEI fell 40 points, or 0.6%, to 7,350. Market turnover was HK$140.8bn yuan. Apart from Alibaba (9988), which rose 0.6%, other Chinese technology stocks fell. Tencent (0700) and JD.com (9618) fell 0.3% and 1.8% respectively.

High energy costs may continue to be a long-term risk for European countries

16 January is Martin Luther King, Jr., Day, and the U.S. stock market was closed yesterday. On the European side, according to research centers, Germany has become less attractive for investment. Among the 21 advanced western industrial countries ranked by investment attractiveness, Germany's ranking dropped by 4 ranks to 18^th. The main reasons for the sharp drop are rising energy costs and labor shortages. Although Europe's energy problems can be alleviated in the middle and late 2022, unstable energy supply is believed to be a long-term risk faced by European producing countries.

Electric vehicles accounted for 10% of the global market, especially in China

The sales of electric vehicles also entered a milestone last year. For the first time, EV sales achieved a market share of around 10%, according to research firm LMC Automotive. Among them, the penetration rate of EV in the Chinese market is increasing. Pure EV account for 19% of the total vehicle sales in China, much higher than the 11% in Europe. The CEO of Volkswagen China even said that plug-in hybrid electric vehicles (PHEV) will be more popular, and the proportion of sales last year is expected to rise from 25% to 33%

Hong Kong Stock Connect had a net outflow of HK$846mn on Monday, of which WuXi Biologics (2269) had the largest net inflow of HK$364mn. New Oriental Online (1797) ranked second. Meituan (3690) recorded the largest net outflow of HK$1.54bn; followed by HKEx (0388).

Recommended Stocks

Capture the moment and trade with KGI Asia's insights

Stocks

Recommended

Stocks

Recommended

Wuxi Biologics
02269

Recently, major shareholders have reduced their holdings. Investors can buy the share during price correction. With the bottoming out of the medical sector and the lifting of the unfavorable international geopolitics factors for WuXi Biologics, the factors that previously put pressure on the valuation are gradually decreasing. The share price of Wuxi Biologics is expected to have more upside. The Group’s end-to-end CRDMO service platform enables it to provide service offerings covering the entire biologics development process as well as customized solutions to its customers according to their respective service requirements at any stage of the biologics development process. The Group’s business model is built upon “Follow and Win the Molecule” strategies. Its customers’ demand for its services typically increases as their biologics advance through the biologics development process and ultimately to commercial manufacturing. Consequently, the Group’s revenue from each integrated project typically increases as the project advances. Recently, the company management mentioned that the 2023 revenue guidance will be maintained at above 30%, with the target number of new projects remains unchanged at 120, and the medium and long-term GPM target at about 45%. Considering the attractive long- term growth of the Company, together with the fact that the subsidiaries have been successfully removed from the Unverified List, the investment value of WuxiBio has increased. Target price: $90; Stop- Loss price: $60

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.

The materials contained herein are provided by KGI Asia Limited ("KGI") for information only. While such materials are based on or derived from sources believed to be reliable, KGI makes no representation or warranty (express or implied) as to their accuracy or reliability. Neither the information nor the opinions expressed herein constitute, or are to be construed as, an offer or invitation or solicitation of an offer to buy or sell any securities or investments. KGI and its officers, employees, agents and affiliates may have interests in the securities or investments covered herein and accept no liability whatsoever for any loss or consequence whatsoever (whether direct or indirect) resulting from any use of or reliance by you on such materials.