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Tencent Holdings Ltd. (700-HK, BUY)1Q Miss and COVID Likely Delays Recovery, but Easing Regulations Should Support Investor Sentiment; Maintain BUY and Decreasing PT to HK$400 HKEX:700 We are maintaining our BUY rating but decreasing PT to HK$400 (was HK$475) after Tencent reported 1Q earnings miss and implied continued macro challenges for 2Q. Domestic game revenue declined 1% y/y. Int'l game revenue grew 8% CC y/y (vs. +24% in 4Q, excluding onetime accounting adjustments), accounting for 24% (flat y/y) of total game revenue. Advertising revenue took the biggest hit from COVID lockdowns and declined 18% y/y (vs. -13% in 4Q). FinTech+Cloud growth also decelerated to +10% y/y (vs. +25% in 4Q). On the last earnings call, mgmt. indicated a recovery could happen in 2H. But given the prolonged lockdowns in some cities including Shanghai and the weakness in recent macro data, we think the recovery will be further relayed to 4Q. In 1Q, the company repurchased 8,864,400 shares for approximately HKD3,697 million. Overall, while the operating environment will likely remain challenging in the near term, we believe that, with strong operating cash flow, Tencent is better positioned to take the opportunity to build around its long-term strategic areas such as int'l games, Video Accounts, and SaaS offerings. Moreover, while it will take time to see the benefits, the Chinese government is easing regulations for the digital economy, which should give investors more confidence in the sector
HKEX:700
by TigerBrokers
BYD.....Only one more step....to new ATH!Hello Traders, BYD, the Chinese electric vehicle car-maker, is on the run to set a new ATH in HK$! Not yet it happened, but it is a „question“ of days to my view. BYD has sold, 144203 from January-April 2022 electric units, placed on 3rd ; after SAIC and TESLA. In April, it sold 104854 units in Plugin vehicle. These are stunning numbers! And BYD is only selling his cars in China! For the chart to speak, BYD is moving in a trending channel, and the target area ranges from 256 HK$ to 370.6 HK$, depending on if and when it will be achieved. On the other hand, there is potential to decline to the mid-line of the channel, which is running @ 250 area for the month of June. Short term the stock is a bit „over-bought“ (Slow Stoch; 13,5,8) and there could be a „pause“ in the trend. At 309.8 HK$ there is the ATH based on a closing price and it needs to take this out of market to set a new buy-signal. Anyway, it is a remarkable number of sales and I think BYD will be one of the important players in that market for the future. Have a great week..... Ruebennase
HKEX:1211
by ruebennase
Rebound is around the corner for Chinese developersLast week we discussed the scenario of Hong Kong/China equity rebound due to the political environment change in China. HSI did end up close above the May open, creating a hammer candle in the monthly chart, and stood atop the 50 days moving average. Both showed strong bullishness from the chart perspective (Last week note here: ) As a continuation of the rebound story, earlier there were some developments on the Chinese developers front, which there might be a distress revaluation opportunity for traders to make bets on . Update on Chinese Developers After almost 2 years since the Chinese government imposed “3 red lines” rules on developers, which later leaded to the Chinese high-yield bond collapse in 2021 (majority of Chinese high-yield are issued by the Chinese developer), on May-17 the Chinese government finally showed sign of relaxation on the crackdown, by supporting some developers to issue domestic bond to ease their cash insufficiency . This development is under the backdrop of Chinese economic slowdown, as well as poor monetary/fiscal policy transmission capability with weakened property market. As of today, there are 5 non-state-backed developers that have confirmed on the domestic bonds issue: Longfor (HKEX:960) Country Garden (HKEX:2007) Media Real Estate (HKEX:3990) CIFI Holding (HKEX:884) Seazen (HKEX:1030) Note that investors of the newly issued bond also have the option to get protection by purchasing the credit risk mitigation warrant (CRMW), of which China Securities Finance Corporation (state-owned) is the underwriter of the warrant . The important message here is that, in order for the Chinese government to take a “short-put” position, they must have vetted the Chinese developer names and shortlisted the above 5 companies for the most solid fundamentals (and political correctness). Essentially, the Chinese government is doing stock picking for us . Among this batch of developers, I would recommend Longfor (HKEX:960) and Country Garden (HKEX:2007) . In the sector-wide distressed situation, companies with more deployable cash or financing capability actually have the optionality to acquire and consolidate weaker developers to strengthen their future market share. Longfor and Country Garden are the largest and healthiest financials among the list. Comparing Longfor (HKEX:960) and Country Garden (HKEX:2007), the former actually have demonstrated stronger confidence among investors as one can tell from the severeness of price decline for the passed year. Hence if you are a less active investor who wants to buy this idea, go for Longfor (HKEX:960); for those who have the bandwidth for active management, Country Garden (HKEX:2007) might have more room for trading around positions with leverage. Trading Plan for Country Garden (HKEX:2007) Albeit the fact that I am writing a long side execution plan, please note that the stock technically is still in a bear trend, which we still see selling pressure near 20 and 50 days moving average . Hence this is not a trend following, but reversal-plus-breakout play, where more time is needed for the turnaround and breakout from the downtrend resistant levels . Right now the stock is flirting around the 20 days moving average. One might want to place some protective bet at current level (in case of sharp upside movement with overnight news), or wait for the following 2 key level for turnaround confirmation: 5.4-5.8 : 50 days moving average and May-3 spike 6.75 : Rebound peak from March market plummet For the bearish trend to continue, the stock must go through the 2 recent troughs. According to the trader’s conviction to the rebound stock, one might choose to scale in (i.e. average down the position cost) or scale out (i.e. partial cut loss) the position at these levels: 4.1 : May-12 bottom 3.3 : Mar-16 bottom, lowest price made in march market plummet In terms of trading vehicle selection, apart from holding the stock outright, good news is that Country Garden (HKEX:2007) also has stock options available for trade. By using call option one can be immune from sharp drawdown in case of overnight bearish news, also better cash management for the natural leveraged nature of options. Note that Hong Kong listed stock options are less liquid compared to those in the US, I would recommend to choose expiration less than 3-4 months for narrower spread and more active quotation .
HKEX:2007Long
by geoffreyip523
Transportation - Marine Shipping; Strong Sector, Stronger 38771) Noticed that many stocks in this particular sector have been setting up quite nicely in both the HK and US equity markets. 2) In particular to the HK Market, things are starting to look better with some equities entering accumulation phases. The HSI also looks to finally start a new uptrend with higher lows formed. 3) SEHK: 3877 is setting up quite nicely with the initial shakeout mid march of 2022. Volume is starting to increase - clear signs of accumulation. 4) Price has now traded in a tight range between ($1.29, $1.34) - a Darvas box! Although overhead supply is right at $1.37, I do believe we might have enough fuel to punch through. 5) Call me ambitious but TP is at previous ATH of $1.76 - making this a risk to reward of about 1:4.
HKEX:3877Long
by cletibals