[Editor-in-chief Guan Shi]
The trend of Hong Kong stocks was strong during the May 1st holiday. The index directly broke through 10,000, and the mood to go long was high. There is no doubt that China has now become a popular place to invest in global capital.
The US non-farm payrolls increased by 175,000 in April, far below the forecast of 240,000. This is the first time in a few months that the non-farm payrolls report fell short of expectations. The US unemployment rate in April was 3.9%, higher than the forecast of 3.8%. The average hourly wage growth rate has also declined. These signs will mean a marked cooling of the labor market and another change in expectations. After the data was disclosed, traders advanced the forecast for the Fed's first interest rate cut from November to September this year; US interest rate futures expect the Fed to cut interest rates by 25 basis points twice in 2024, and once before the non-agricultural data was released.
Domestic high-level meetings continue to boost confidence in the market, especially new references to the real estate industry. Ministry of Natural Resources: Cities where the commercial housing removal cycle exceeds 36 months have suspended the sale of new land. It shows that the real estate supply side is also shrinking. There were positive factors in real estate in first-tier cities. Around May 1st, Beijing's purchase restrictions were adjusted for the first time in 13 years, and purchase restrictions outside the 5th Ring Road were relaxed. Will Shenzhen lift housing purchase restrictions in areas other than Futian and Nanshan after “May 1st”? Shenzhen Housing and Construction Bureau: Relevant policies are subject to official announcements. Shanghai launched a “trade-in” campaign for commercial housing. More than 20 housing enterprises and nearly 10 intermediaries participated in the first batch. If real estate can be repaired, it will have an obvious driving effect on the overall economy. The capital market already has funds to begin layout.
The annual Berkshire Shareholders' Meeting was held in Omaha, a famous US investment city. However, there aren't many things of guiding value at this event. First, Berkshire's cash reserves will reach 200 billion US dollars, indicating that there are no good investment opportunities. Furthermore, there is no clear strong interest in China or Japan; they think they will focus on investing in US stocks. Industry opportunities only mentioned the pros and cons of driverless cars. Also, continue to invest in petrochemical energy.
The current problem with Hong Kong stocks is nothing more than a matter of profit digestion, but under the stimulus of the money-making effect, the entry of incremental capital is expected to form a hedge.
In addition to real estate, the 135th Canton Fair came to a successful conclusion on May 5. As of May 4, offline export transactions at this year's Canton Fair were US$24.7 billion, an increase of 10.7% over the previous edition. E-commerce and logistics are worth paying attention to. Other than that, driverless cars were fully opened in the main urban area of Hangzhou on May 1st.
[This week's gold stocks]
Cinda Biotech (01801)
The company achieved total product revenue of over 1.7 billion yuan in the first quarter of 2024, achieving strong year-on-year growth of over 60%, and month-on-month growth. The overall product portfolio continues to grow rapidly. In the commercial pipeline, Cindilizumab is still in a leading position in the market, achieving strong sales performance, while other products have also grown significantly. (Eli Lilly disclosed that PD1 sales for the first three quarters of Caliber 23Q3 were US$115, 1.14, and US$117 million, respectively, with little fluctuation. Therefore, the 100 million yuan product revenue that increased month-on-month in the first quarter was mainly a non-PD1 contribution.)
As of the reporting period, the company already has 10 commercialized products, and 3 innovative drugs are under NMPA approval in the subsequent pipeline. At the same time, the company also has 5 innovative drugs that are in clinical phase III, and 18 innovative drugs have entered clinical trials.
Overall, the company's pipeline covers fields such as oncology, metabolism, self-immunity, and ophthalmology, and is expected to usher in multiple catalysis before the first half of next year. In the non-tumor pipeline: Mast peptide 6mg weight loss indications are expected to be approved; Mast peptides diabetes indications are expected to be submitted for marketing; IBI-112 moderate to severe psoriasis indications are expected to be submitted; IBI-311 is expected to submit marketing applications for thyroid ophthalmology indications. In the cancer product pipeline: POC data for BI-343 (CLDN 18.2 ADC) in gastric cancer and other indications is expected to continue to be read; POC data for IBI-363 (PD-1/IL-2) in patients with solid tumors is expected to continue to be disclosed.
At the 2024 ASCO conference, Cinda Biotech's IBI363 (PD-1/IL-2), IBI389 (CLDN18.2/CD3), IBI343 (CLDN18.2 ADC), and IBI310 products will all be showcased at the ASCO conference. The product types displayed by the company include monoclonal antibodies, polyantibodies, ADCs, and small molecules. As one of the few biopharmaceutical companies with an “IO+ADC” technology platform and sufficient pipeline reserves, the company will continue to advance in the field of oncology, and is expected to make continuous breakthroughs in the field of oncology in the future.
[Industry Watch]
The revenue side of the beer sector was high and low before and after 2023. The 24Q1 boom rebounded. In 2023, the revenue/sales/ton price of listed beer companies was +7.7%/1.4%/6.2%, respectively. High-end production continued, volume and price fell sharply in 23Q4, and the industry cooled down, and growth resumed in 24Q1.
Cost improvements have exceeded expectations and can support a rapid increase in profits throughout the year. Judging from the quarterly report, the cost per ton of green beer, Yanjing, and heavy beer has all dropped. Judging from the price lock in price of various companies, the drop in bulk raw material prices will bring about a significant improvement in the cost per ton throughout the year, further increasing profits.
The expense ratio performance was better than expected. The 24Q1 beer company's gross margin on the reporting side has been realized, the sales expense ratio is still low, and there has been no significant increase in investment.
The details of Q1 compiled by the agency are as follows:
Qingdao: Revenue was in line with expectations, profit exceeded expectations. Q1 volume fell by more than 7%, classics declined slightly &;; white beer is increasing, tonnage price +2.7%, tonnage cost -1%, gross margin +2.1pct, sales rate -1 pct.
Heavy Beer: Revenue was in line with expectations, profit exceeded expectations. Under a low base, Q1 volume increased in single digits, and the middle of the border fell in single digits &;; Leburg and Heavy Beer continued their growth trend. The tonnage price was +1.3%, the cost per ton was -3.3%, gross margin +2.7pct, and sales rates increased slightly.
Yanjing: Revenue expectations are low, deductions are not high. Q1 volume increased slightly, U8 +30%, low single-digit increase in tonnage prices, slight increase in gross margin, and tax rate improvements.
Pearl River: Tonnage prices exceeded expectations, profits exceeded expectations. Q1 volume increased slightly, high-end +15% led to tonnage prices +6.2%, tonnage costs +3.8%, flat gross sales margin, and other optimizations.
In a nutshell, the beer stock cost improvement report began to be realized; entering Q2, sales pressure gradually eased, compounded by the acceleration of sales during the peak season. The improvement trend is clear, and profits are expected to accelerate throughout the year. Hong Kong stocks focus on green beer (00168) and soft beer (00391).
[Data Watch]
According to data released by the Hong Kong Stock Exchange, the total number of outstanding contracts in the Hang Seng Futures Index (May) was 12,3071, and the net number of outstanding positions was 39,499. Hang Seng Futures refers to the settlement date of May 30, 2024.
Judging from the distribution of Bull and Bear Street goods in the Hang Seng Index, at 18,476 points, the concentrated area of bear securities is close to the central axis, and Hong Kong stocks are motivated to continue to increase. The Federal Reserve's Open Market Committee decided to suspend the commencement of interest rate reduction procedures. This is not a postponement of interest rate cuts, but rather a readjustment of views on the economy and inflation. As to when interest rates can be cut, Powell said he doesn't know. The Hang Seng Index is bullish this week.
[Editor-in-Chief's Testimonial]
Domestic travel and consumption were still booming during the “May 1st” holiday period. The peripheral dollar index fell sharply, gold and crude oil adjusted markedly, and risk appetite in the global market increased.
Capital flows are upward. CICC statistics show that from April 25 to May 1, EPFR's overseas active capital outflow of US$190 million from Hong Kong stocks continued to be narrower than last week's US$310 million. Among them, active global funds switched inflows of US$27 million into Chinese stocks this week, while passive global funds and global emerging market funds switched inflows of US$41 million and US$40 million respectively, which may indicate that there has been a partial return of value capital. Southbound capital was absent during the second half of the Friday and 1st holiday, and the Hong Kong stock market continued to rise, indicating that this round of rebound in Hong Kong stocks was more supported by foreign investment.
If CICC's data is accurate, it indicates a “backflow” trend, which is currently at a very early stage. Chasing highs in the short term is risky; in the medium to long term, now is still a good time to base up.