Tracking Hong Kong stock concepts | The China Securities Regulatory Commission successively implemented market value management guidelines. State-owned enterprise stocks trading below net assets value attracts attention (with concept stocks)

China Securities Regulatory Commission solicits public opinions on the "Guidelines for the Supervision of Listed Companies No. 10 - Market Value Management (Draft for Comments)". The Guidelines require listed companies to improve the quality of listed companies as the basis, enhance operational efficiency and profitability, and use mergers and acquisitions, equity incentives, cash dividends, investor relations management, information disclosure, share buybacks, and other methods legally and compliantly to promote the increase in the investment value of listed companies. The Guidelines specify the responsibilities of the boards of directors, directors and senior management of listed companies, controlling shareholders, and other relevant parties, and make specific requirements for companies included in major index components to disclose market value management systems and long-term underperforming companies to disclose valuation improvement plans. At the same time, the Guidelines explicitly prohibit listed companies from engaging in illegal activities under the name of market value management. The China Securities Regulatory Commission stated that long-term underperforming companies should disclose valuation improvement plans, including targets, deadlines, and specific measures. CITIC Securities pointed out that the implementation of the market value management guidelines and the opinions on mergers and acquisitions of listed companies by the CSRC continues the policy thinking of previous capital market reforms. On the one hand, the documents focus on requirements for companies included in major index components and long-term underperforming companies. Considering that the market value of long-term underperforming companies currently accounts for over 20%, it is expected that related companies will accelerate market value management actions. On the other hand, the documents emphasize support for new quality productivity, industry integration, and emphasize optimizing payment, pricing inclusiveness, and other supporting policies. Combing with the requirements for optimizing the layout of state-owned capital by the State-owned Assets Supervision and Administration Commission, it is suggested to focus on the opportunities for mergers and acquisitions of new industries by central enterprises. HK-listed stocks related to central enterprises with net assets lower than those: AVICHINA (02357): The only aviation high-tech industrial group listed in Hong Kong. The company is backed by Aviation Industry Corporation of China, with the State-owned Assets Supervision and Administration Commission as its controlling shareholder. Its important subsidiaries include AVICOPTER PLC, Jiangxi Hongdu Aviation Industry, AVIC Airborne Systems, and AVIC Jonhon Optronic Technology. In 2022-2023, the company continued to promote major asset restructuring, with its subsidiary AVIC Electronic absorbing and merging AVIC Machinery and Electronics through stock swap; and its subsidiary AVICOPTER PLC planning to acquire 100% equity of HAIG, Changfei. Sinotrans Limited (00598): Ultimate controlling shareholder: China Merchants Group Limited. Sinotrans Limited released its 2024 interim report. In 1H 2024, the company achieved operating income of 56.368 billion yuan, a year-on-year increase of 17.19%; achieving a net profit attributable to owners of the company of 1.945 billion yuan, a year-on-year decrease of 11.02%. In 2Q 2024, the company achieved operating income of 32.081 billion yuan, a year-on-year increase of 25.93%; achieving a net profit attributable to owners of the company of 1.142 billion yuan, a year-on-year decrease of 5.65%. It won bids from several strategic customers for new businesses in China. Overseas, it is pushing for the establishment of end-to-end resilient supply chain networks covering 48 countries in Europe and service coverage in more than 20 countries in Latin America with strategic customers. Despite pressure on mid-term profits, the company maintained the same dividend per share as the same period last year (0.145 yuan per share), with a dividend payout ratio of 54.17%.