KGI Asia Commentary

2024.02.22 09:00

Hang Seng Index rose 255 points on Wednesday

The Hang Seng Index rose 255 points or 1.6% to 16,503 on Wednesday. HSTECH rose 86 points or 2.7% to 3,351 and HSCEI rose 123 points or 2.2% to 5,642. Daily market turnover was HK$122.4bn.

Dow closes higher as buying comes in

The minutes of the January meeting released by the Federal Reserve showed that Fed members were worried about cutting interest rates too early. Investors temporarily ignored the Fed's hawkishness and still entered the market, causing the Dow Jones Industrial Average to close higher on Wednesday. The Dow Jones Industrial Average rose 47 points, or 0.1%, the S&P 500 rose 0.1%, and the Nasdaq fell 0.3%, with the latter falling more than 1% intraday. Nvidia on Wednesday reported better-than-expected forecasts and fourth-quarter results as surging demand for chips led by artificial intelligence helped ease the hit from the U.S. chip export ban to China. After the report was released, Nvidia's stock price rose more than 7% after hours. Shares of cybersecurity company Palo Alto Networks fell more than 28% after the company lowered its full-year forecast as it changed strategy and increased its free product offerings. Telehealth provider Teladoc, best known for its BetterHelp therapy platform, fell 24% as its forecasts for the coming months were largely pessimistic and it warned that the market for virtual-healthcare services was reaching saturation. SolarEdge Technologies shares fell 12% on weak first-quarter revenue guidance and expectations that excess inventory will continue to weigh on margins. Meanwhile, energy stocks led the market higher, with oil prices closing higher as escalating geopolitical tensions in the Middle East could disrupt supply, providing continued support for oil prices.

Fed meeting minutes show members saw no urgency to cut interest rates

Minutes of the Federal Reserve's January meeting released on Wednesday showed that Fed policymakers did not express an urgent need to turn to interest rate cuts as concerns about "upside risks" to inflation began to emerge. Officials noted that rate hikes may be over, while saying they wanted to see more before starting to ease policy. Members cited the "risk of moving too quickly" on cutting interest rates.

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Bosideng
03998

The Group’s 1H23/24revenue amounted to approx. RMB7,471.7mn, representing an increase of 20.9% yoy. The branded down apparel business remained the biggest revenue contributor of the Group, and recorded revenue of RMB4,939.7mn, accounting for 66.1% of total revenue, representing a yoy increase of 28.1%. The OEM management business recorded revenue of RMB2,042.9mn, accounting for 27.3% of total revenue, representing a yoy increase of 7.8%. The gross profit of the Group increased by 20.9% to RMB3,733.5mn in the first half of FY2023/24. GPM of the branded down apparel business decreased by 2.4ppts to 61.2%. Although the GPM of the branded down apparel business segment has declined, it is the largest business unit of the group and its GPM is higher than that of the OEM processing management business and diversified apparels business, the Group's overall GPM is the same as that of the same period last year, approx. 50.0%. Profit attributable to equity shareholders of the Company increased by 25.1% to RMB918.6mn. As a renowned operator in the PRC with down apparel brands, the Group has brands include Bosideng, Snow Flying, Bengen, etc. Continued expansion of product categories and improved operating efficiencies are catalysts for the stock. Target price: $4.3; Stop- Loss price: $3.3.

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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