GMT EIGHT - Research

UBS: Gives Zijin Mining Group (02899) a "buy" rating with a target price of 22.3 Hong Kong dollars.

UBS released a research report stating that it has given a "buy" rating to Zijin Mining Group (02899). Due to a downward revision in production guidance by Zijin, it is expected that investors will have a slightly negative reaction. The target price is set at 22.3 Hong Kong dollars. Zijin Mining Group's net profit attributable to shareholders for fiscal year 2024 increased by 51.5% year-on-year, which is basically in line with market and the bank's expectations. During the period, copper production increased by 6% year-on-year, slightly below the full-year expectation; gold production increased by 8% year-on-year, which is basically in line with the full-year expectation. Zijin has lowered its copper production guidance for 2025 from 1.22 million tonnes to 1.15 million tonnes, while maintaining the gold production guidance unchanged.

20 min ago

Morgan Stanley: The cancellation of flights in the Greater Bay Area may have a potential positive impact on CATHAY PAC AIR (00293) and Mainland airlines.

Morgan Stanley released a research report stating that the cancellation of flights by Hong Kong Air in the Greater Bay Area may have a positive impact on CATHAY PAC AIR (00293) and mainland airlines. While Cathay Pacific does not directly compete with Hong Kong Air in the Greater Bay Area, it may benefit from improving market sentiment. It is worth noting that Cathay Pacific also owns the budget airline Hong Kong Express. The report indicated that the direct impact of the recent events on mainland airlines this year is relatively small, but it reflects the continuous supply interruptions in the aviation industry, which is a major factor that was previously emphasized as driving Chinese airlines into a multi-year growth cycle.

39 min ago

Goldman Sachs: Raise the target price of AIA (01299) to HK$94, while lowering that of PRU (02378) to HK$147.

Goldman Sachs released a research report stating that it believes with the recovery in new business sales and the continued increase in US bond yields, the distribution of profits will reach a turning point, and the expected capital return rates for AIA (01299) and PRU (02378) from 2025 to 2027 will expand. The speed of capital generation will also accelerate, providing greater potential for shareholder returns. Compared to European insurance companies, the short-term outlook for shareholder returns for both AIA and PRU is lower, partly reflecting the longer impact of the pandemic. The report states that AIA has implemented a $12 billion share buyback program (2022-2024) and is believed to be able to maintain an additional $2 billion buyback in the 2025/26 fiscal year. Looking ahead, the bank expects the capital return rate to increase from 14% in 2023 to 19% in 2027. Estimated profit growth is expected to recover to a compound annual growth rate of 8% from 2024 to 2027, similar to pre-pandemic levels. The target price has been adjusted slightly from HK$93 to HK$94. The "buy" rating is reiterated. Based on new business premiums, PRU holds a leading market share in key markets such as China, Hong Kong, Indonesia, Malaysia, Singapore, the Philippines, and Vietnam. PRU has asset management businesses in multiple Asian markets, with assets under management reaching $237 billion by the end of the 2023 fiscal year. As the impact of pandemic-related disruptions diminishes, strong growth in new business sales and the continued increase in US bond yields should benefit the company's profit growth. The bank estimates that PRU's capital return rate will increase from 17% in 2023 to 19% in 2027, and the compound annual growth rate of distributable profits is expected to recover to 7% from 2024 to 2027, returning to pre-pandemic levels. Goldman Sachs has lowered PRU's new business profit forecast for the 2024-2026 fiscal years by 8-10% to reflect the negative impact of rising US bond yields and a strong US dollar (against Asian currencies) and reiterated a "buy" rating. The target price has been reduced from HK$154 to HK$147.

59 min ago

FIRST SHANGHAI initiates coverage on CHINAHONGQIAO (01478) with a "buy" rating and a target price of 16.8 Hong Kong dollars.

FIRST SHANGHAI released a research report, covering CHINAHONGQIAO (01478) for the first time, and gave it a "buy" rating, predicting that the company will achieve operating income of 150.3/153.2/154.3 billion yuan in 2024-2026, and net profit attributable to the parent company of 20.9/22.7/23.6 billion yuan, an 82% increase from the previous year, with a target price of 16.8 Hong Kong dollars. The main points of FIRST SHANGHAI's report are as follows: Industry in high prosperity, significant performance growth: The company's subsidiary, Shandong Hongqiao, achieved operating revenue of 110.1 billion yuan in the first three quarters, a year-on-year increase of 12.5%; achieving a net profit attributable to the parent company of 15.8 billion yuan, a year-on-year increase of 141%. In Q3, Shandong Hongqiao achieved operating revenue of 38 billion yuan, a year-on-year increase of 13.9%, and a net profit attributable to the parent company of 5.96 billion yuan, a year-on-year increase of 38%, a 9.4% increase from Q2. The growth in operating income is mainly attributed to the rise in prices of electrolytic aluminum and alumina. In the third quarter, the domestic spot price of electrolytic aluminum was 19,550 yuan/ton, maintaining a high level of volatility. The average ex-factory price of alumina in Shandong in Q3 was 3,920 yuan/ton, a year-on-year increase of 37.3% and a 7.9% increase from the previous quarter; the average ex-factory price in Q1-Q3 was 3,611 yuan/ton, a year-on-year increase of 25.3%. Raw material prices are low, operating costs are decreasing: Coal and pre-baked anode prices on the cost side have fallen, with the average price of Q5500 thermal coal at Qinhuangdao Port in Q3 being 848 yuan/ton, a 2% decrease year-on-year, and an average price of 866 yuan/ton in Q1-Q3, an 11% decrease year-on-year. The price of pre-baked anodes in the East China region was 4,168 yuan/ton in Q3, a 20% decrease year-on-year, and an average price of 4,227 yuan/ton in Q1-Q3, a 22% decrease year-on-year. The decrease in raw material prices has reduced the company's operating costs, increasing profits. Integrated layout of the industrial chain: The company insists on building an integrated industrial chain to ensure supply stability. The company's joint venture Guinea bauxite project has an annual capacity of 50 million tons, with alumina production capacity of 19.5 million tons (Shandong 17.5 million tons + Indonesia 2 million tons), achieving a self-sufficiency rate of 156%; and electrolytic aluminium production capacity of 6.46 million tons (Shandong 4.46 million tons + Yunnan 2 million tons), with a clear competitive advantage in the industry with its integrated layout.

1 h ago

Goldman Sachs: Maintains "Neutral" rating on XPENG-W (09868) with target price raised to 50 Hong Kong dollars.

Goldman Sachs issued a research report stating that the risk-return of XPENG-W (09868) is currently reasonable, with a "neutral" rating. The bank said that although the strong sales momentum of the group in January this year was partly offset by intense pricing competition in the market, it still raised the group's non-GAAP net profit forecast for 2024 to 2026. The estimated losses for 2024 and 2025 are 5.2 billion and 3.1 billion yuan respectively, while a net profit of 279 million yuan is expected in 2026. The target price has been raised from 49 Hong Kong dollars to 50 Hong Kong dollars. The report stated that with the launch of the latest MONA M03 and P7+ models by XPENG Motors, it is expected that the company's vehicle delivery volume will continue its recent momentum, with an estimated 81% year-on-year growth in vehicle deliveries this year, and the introduction of 4 new models. At the same time, the bank remains cautious about the industry competition environment this year, especially in the first quarter, due to historically large price reductions and uncertain factors related to the government's subsidy for trading in old vehicles for new ones.

1 h ago

Debon Securities: The realistic expectation gap of Trump's "three fires"

Dengbang Securities released a research report stating that after the key moment of Trump's inauguration, it is expected that the short-term USD index and US bond interest rates will experience a slight decline and return to stability, suppressing or temporarily alleviating global stock markets and risk assets such as non-ferrous metals. Looking ahead, the market may return to focus on economic data and the specific implementation of Trump's policies. The focus of this week is on the Bank of Japan interest rate decision on Friday. With the short-term weakening of the USD and US bond interest rates, if the Bank of Japan decides to raise interest rates, it may further exacerbate market volatility. Event: On January 20, Eastern Time, the US President-elect Trump officially took office as the 47th President and delivered an inaugural speech. Key points of Dengbang Securities are as follows: Speech content: Strong stance on immigration issues, no mention of imposing tariffs on specific countries Trump's inaugural speech once again emphasized "America First" and stated that he would sign a series of historic executive orders on that day. Specifically, his stance on illegal immigration and drug issues was strong, mentioning that he would declare a national emergency at the southern border of the United States, send troops to the border, and increase efforts to deport criminals. The biggest expectation gap came from the issue of tariffs, as the speech did not mention imposing tariffs on any country but only emphasized comprehensive reform of the US trade system, including the establishment of a dedicated agency for external tariffs, boosting market sentiment. However, Trump later signed a series of executive orders at the White House, announcing a 25% tariff on imports from Canada and Mexico starting from February 1, triggering market expectations of fluctuations. The statements on inflation and government spending were in line with market expectations, emphasizing increasing energy production to control energy prices and general prices. Market impact: Expectations of the "Trump trade" being met led to a decline in the USD index and US bond interest rates, a rise in major global stock indices, and rapid appreciation of the Renminbi. Trump's remarks on tariffs in the speech temporarily eased market concerns, and with the market having already speculated on the "Trump trade" before the inauguration, the day of the inauguration became the point of expectation fulfillment and market reversal. The USD index briefly fell below 108, the 10Y US bond interest rate is currently around 4.54%, and the USD to offshore Renminbi rate briefly dropped to around 7.25. However, with Trump announcing a 25% tariff on Canada and Mexico, market expectations reversed, leading to an uptick in the USD index. Currently, the other executive orders signed by Trump have limited disturbance to the market, mostly reflecting the implementation of previous policy directions, including the TikTok "sell or ban" law being temporarily suspended for the next 75 days, withdrawal from the Paris Agreement and the World Health Organization, and freezing the hiring of federal civilian employees. Risk warnings: Unexpected implementation of Trump's policies; overseas inflation rebounding unexpectedly; global economic sentiment falling short of expectations.

1 h ago

Morgan Stanley: Rated CATHAY PAC AIR (00293) "In Sync with the Market" with a target price of 9.1 Hong Kong dollars.

Morgan Stanley has released a research report stating that it has set a target price of 9.1 Hong Kong dollars for CATHAY PAC AIR (00293) and a "market perform" rating. The company's passenger load factor (PLF) has increased year-on-year in the past two months, which is encouraging and will result in passenger profits exceeding expectations. Morgan Stanley believes that travel demand is strong during the holiday peak season. Revenue passenger kilometers (RPK) increased by 27.9% year-on-year, reaching 76.5% of the level in 2018, while available seat kilometers (ASK) increased by 22.5% year-on-year, reaching 75.6% of the level in 2018. The passenger load factor (PLF) is 84.8%, an increase of 3.6 percentage points year-on-year, 1 percentage point higher than in 2018. Management has noticed that the demand for premium cabins brought by business travel is encouraging.

1 h ago

Goldman Sachs: Reiterates "Buy" rating for XIAOMI-W (01810) with a target price of HK$38.

Goldman Sachs released a research report stating that it reiterates a "buy" rating on XIAOMI-W (01810) with a target price of HK$38. The country started a subsidy policy yesterday, which may lead to an increase in the sale of smartphones, but competition in the 4000-6000 RMB segment market will intensify. Looking ahead to the first quarter of 2025, Goldman Sachs believes that the national subsidy policy may increase Xiaomi's shipment volume in China. The bank believes that the gross profit contribution of Xiaomi smartphones will decrease over time, mainly due to the structural growth of Internet of Things (IoT) and internet revenue, especially rapid growth in IoT revenue. This should lead to higher sustainability of long-term profitability for CKH HOLDINGS.

2 h ago

Haitong: Maintains the "Outperform" rating for LI AUTO-W (02015) with a fair value of 104.95-112.45 Hong Kong dollars.

Haitong released a research report stating that LI AUTO-W (02015) maintained a "outperform the market" rating, with the company's revenue expected to reach 145.1/205.2/248.7 billion yuan in 2024/25/26 respectively, with net profit attributable to shareholders reaching 7.5/13.9/20.8 billion yuan and EPS of 3.54/6.57/9.78 yuan. The reasonable price range is between 104.95-112.45 Hong Kong dollars. Main points from Haitong: - Ideal car released the fast report on production and sales in December 2024. - The company delivered a total of 59,000 new cars in December, an increase of 16.2% year-on-year and 20% month-on-month, with the monthly delivery volume reaching a record high. The total number of new cars delivered in 2024 exceeded 500,000 units, an increase of 33% year-on-year. In Q4 2024, the company delivered 159,000 new cars, an increase of 20% year-on-year and 4% month-on-month. - On January 16, 2025, OTA 7.0 started full-scale push, with end-to-end +VLM expanding to high-speed and ring road scenarios, optimistic about the continuous driving of smart driving towards high-endization. - With the full push of the Ideal car's NOA in July 2024 and further upgrade of active safety capabilities, the proportion of orders for the ADMax version continues to increase. Among cars priced at over 300,000 yuan, the sales of ADMax version account for close to 70%. On October 23, 2024, the Ideal car's end-to-end +VLM dual-system intelligent driving solution was fully pushed with the OTA 6.4 version of the vehicle system. On January 16, 2025, OTA 7.0 started full push, expanding end-to-end +VLM to high-speed and ring road scenarios, and also launching the AI reasoning visualization function. According to the Ideal car official account, in 2024, the total smart driving mileage of the company reached 1.72 billion kilometers, accounting for 10% of the total driving mileage; smart parking accumulated 77.858 million times, and active safety functions successfully avoided potential accidents 3.386 million times. The bank is optimistic that the strengthening of smart capabilities will further drive the increase in sales of high-end configurations. - The dual-power strategy is accelerating, and the dealer network is rapidly expanding. - According to the fast report on production and sales in December 2024, the company has put into use 1,727 Ideal ultra-fast charging stations, an increase of 592 from the previous month, and has 9,100 charging piles, an increase of 3,420 from the previous month. The Ideal car channel is rapidly expanding, with a total of 502 retail centers as of the end of December 2024, covering 150 cities across the country, an increase of 27 from the previous month; there are a total of 478 after-sales maintenance centers and authorized body spray centers, covering 225 cities, an increase of 27 from the previous month. - The company firmly establishes the enterprise vision of "AI enterprise" and embraces AI intelligence. - According to the Ideal car official account, the company's R&D investment exceeds 10 billion yuan per year, with nearly 50% invested in AI research and development. From December 25 to 27, 2024, the Ideal car held "2024 Ideal AITalk" for three consecutive days, officially releasing the AI large model product "Ideal Classmate". The Ideal Classmate App was fully launched on December 27, extending from the vehicle to the mobile phone. - The German R&D center officially established, taking the first step in global R&D strategy. - On January 17, 2025, Ideal car's first overseas R&D center was established in Munich, Germany. The German R&D center will cooperate with the Chinese R&D team, focusing on next-generation technology research in four areas: forward-looking styling design, power semiconductors, intelligent chassis, and electric drive. At the same time, the German R&D center will also help the Ideal car understand the European market, establish development and testing capabilities based on European automotive regulations, and localize to adapt to user needs. Risk warning: New car sales may fall short of expectations; raw material prices may rise sharply; the investment in pure electric vehicle models may exceed expectations.

2 h ago

CICC: Maintains "Outperform" rating on WH GROUP (00288) with target price raised to HK$7.8

CICC released a research report stating that it maintains a "outperform industry" rating on WH GROUP (00288), expecting the ton profit of the US meat products business to further improve in 2025 due to product structure optimization and cost efficiency. The core net profit attributable to shareholders in 2025 was raised by 3% to nearly $1.47 billion USD, and a new core net profit of $1.57 billion USD was introduced for 2026. Considering the proposed split and independent listing of relevant Smithfield companies, it is expected to boost WH GROUP's overall valuation level and improve market liquidity, leading to a near 10% increase in the target price to HK$7.8. Key points from CICC: Chinese business: 1) Meat products: the bank expects a slight increase in sales volume in 4Q24 and an increase in ton profit year-on-year. It is expected that the channel terminal demand will be relatively weak in 4Q24, with slightly increased sales of meat products. 2) Slaughter: The bank expects a relatively stable profit for the slaughter business in 4Q24, with fresh meat products still facing a competitive environment. US business: 1) Meat products: The bank expects the ton profit trend to continue to improve year-on-year in 4Q24, with sales continuing to slightly decline compared to 3Q24 trend. 2) Pork business: The bank expects the upstream breeding losses to narrow in 2H24 compared to 1H24, mainly due to a slight fall in breeding costs and improvements in the company's breeding efficiency. Additionally, according to a December 2024 news on the Smithfield official website, Smithfield has signed an agreement with VisionAg, a subsidiary of HD3 Farms, to take over ownership of 28,000 sows and their offspring currently owned by Smithfield (this transaction is expected to be completed in early 2025). The company announced an update on the latest proposal for the suggested split and independent listing of Smithfield, with a dilution ratio lower than the November 2024 plan. 1) The company plans to issue up to 40.02 million shares (with the parent company selling 17.4 million shares, issuing 17.4 million new shares, and oversubscribed shares of 5.22 million), which would reduce WH GROUP's stake to about 89.9% based on the maximum issue quantity. 2) Issue price: Priced at approximately $23-27 per share, with an estimated PE ratio of about 13-15. 3) Use of funds: Based on a $25 per share offering price and deducting issuance costs, nearly $400 million USD will be used for general business development (infrastructure, automation, and capacity expansion), with WH Group estimated to receive about $415 million USD net proceeds from selling Smithfield shares, which will be used as general operating funds for WH Group. Risks: Significant fluctuations in US pork prices and breeding costs, relatively weak domestic demand for meat products, and food safety risks.

2 h ago

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