Daily Investment Strategy
Daily focus：Tencent Music(1698)
has demonstrated strong defensive capabilities and competitive advantages in a highly competitive market through its integrated online and offline services. While recent market concerns about competition from emerging platforms causing stock price volatility suggest an overreaction, analysts believe the market has actually overreacted. In fact, the group's paid subscriber base has increased rather than decreased, reflecting extremely high user stickiness. Through long-term exclusive collaborations with top artists and the active development of "fan economy" initiatives such as concerts and merchandise, the group has successfully consolidated its core customer base and effectively driven growth in average revenue per user (ARPU) and the number of paying subscribers by enhancing its SVIP membership strategy. In terms of valuation, the current stock price level provides an excellent margin of safety for investment. As the market digests competition concerns, the forward price-to-earnings ratio has fallen, making valuations increasingly attractive.
Baidu Announces Spin-off of AI Chip Unit "Kunlunxin"
Baidu announced the spin-off of its AI chip unit, "Kunlunxin," for a Hong Kong listing. This move significantly boosted Baidu's stock price, reflecting a market reassessment of the potential value of tech giants. From a macro-strategic perspective, this signifies a shift in the capital operation model of Chinese internet giants: from the "soft economy" of monetizing traffic to the "hard technology" of building underlying computing power. Against the backdrop of tightening US chip export restrictions, spinning off the semiconductor business not only avoids the conglomerate discount of the parent company but also allows direct access to industrial capital focused on hard technology, resulting in higher valuation premiums. If more tech leaders follow this "asset independence" strategy, it will drive the Hong Kong stock market's structural transformation from the traditional internet sector to the AI hardware industry chain through capital means, providing a new core growth engine for the market.
The Hong Kong Stock Connect was closed last Friday and will resume today.
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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