[Anatomy Board]

After three days of continuous decline, the A-share Shanghai Index finally showed some signs of stabilization. Hong Kong stocks fell slightly by 0.07%. Although the index was not red, the structure was not bad; there were more gains and fewer losses.

The latest US data is still not strong. JOLTS vacancies in July fell to the lowest level since the beginning of 2021, falling far short of the expected 8.1 million people. The previous value was lowered from 8.184 million to 7.91 million. If Friday's non-farm payrolls report confirms that the labor market continues to deteriorate, then the probability that the Fed will cut interest rates by 50 basis points in September will increase dramatically, but I personally think 25 basis points is more likely. In any case, the general direction of interest rate cuts is irreversible.

As mentioned earlier, as long as the Federal Reserve cuts interest rates, the most certain are local real estate stocks in Hong Kong, because cutting interest rates will reduce debt expenses and indirectly increase profits. Today, Sun Hung Kai Properties (00016), Hysan Development (00014), and Henderson Land (00012) are all up more than 2% today. Obviously, the above varieties have been lurking recently.

Today's major event is the China-Africa Cooperation Forum. At the opening ceremony of the China-Africa Cooperation Forum Beijing Summit on September 5, China stated that in order to promote the implementation of the “Ten Major Partnership Actions,” the Chinese government is willing to provide 360 billion yuan of financial support over the next 3 years; China has decided to grant zero tariff treatment to 100% of the least developed countries that have established diplomatic relations with China, including 33 African countries. Currently, the relationship between Europe and the US is not smooth, and Africa has great potential as an underdeveloped country. It has important strategic significance in terms of resources and geopolitics. Supporting Africa's development and construction is actually paving the way for China's future. As Africa develops well, the level of trade will continue to rise.

There are many prospects for cooperation in Africa, but it is currently estimated that the first step is infrastructure. For example, Huaxin Cement (06655) built the largest cement plant in Tanzania in September 23, up 4.38% today; while Western Cement (02233) has investments in Ethiopia, the Congo (DRC), and Mozambique, it is building the country's largest cement plant in a joint venture with Ethiopia's East Africa Holding Company. The annual output is expected to reach 4.5 million tons, which can meet 50% of Ethiopia's cement needs.

Real estate rumors have resurfaced, leading people familiar with the matter to say that China is reportedly considering lowering interest rates on existing housing loans in two steps to reduce the burden on residents' households while reducing the pressure on bank profits. People familiar with the matter revealed that the financial supervisory authority has proposed a total reduction of about 80 basis points of interest on existing mortgages across the country, in two steps. The first reduction is likely to take place in the next few weeks, and the second cut will take effect early next year. People familiar with the matter say the plan may be suitable for both the first and second homes. However, this news has yet to be confirmed by the financial supervisory authority.

According to the current economic situation, I'm afraid lowering interest rates on existing housing loans will not come out of nowhere. Let's look at the data disclosed by the central bank. At the end of the second quarter of 2024, the personal housing loan balance was 37.79 trillion yuan, which is 400 billion yuan less than the personal housing loan balance of 38.19 trillion yuan at the end of the first quarter. This shows that the number of people who repay loans early is increasing. If this situation continues, the bank's high-quality asset will be at risk. The situation can only be stabilized by lowering interest rates on existing housing loans.

According to Dama's estimates, if the mainland were to adjust the stock mortgage interest rate by 80 basis points, it would cause the Bank of China's profit to drop 9% next year. The fact that bank stocks continue to fall today has also been partially verified. As banks weakened, insurance's advantage became apparent. Capital began to group insurance stocks. China Taibao (02601), China People's Insurance Group (01339), and China Financial Insurance (02328) all increased by more than 3%.

Of course, lowering interest rates on existing housing loans directly benefited real estate stocks. Greentown China (03900) plans to acquire 40% of Nantong Chuangyu Real Estate's shares for 1.111 billion yuan, up 4.79% today. Vanke (02202) received syndicated loans of 3.5 billion yuan and 7.98 billion yuan respectively from Ping An Bank and Communications Bank as lead banks, totaling 11.48 billion yuan, up 2.52% today.

Real estate agents are also fueling the situation. On social platforms, several Beijing real estate agents posted video works, claiming that Musk bought the Sky Courtyard project at No. 8 Hesheng Xiaoyun Road in Beijing for 0.15 billion US dollars. On the afternoon of the 5th, Tesla responded calling this fake news. According to information published on the “Manhe Beijing” account, Musk's mother, Mayer Musk, visited Beijing in September 2023 to participate in the project. This kind of gimmick can also be created; it can be seen that the days of intermediaries have reached zero.

Tesla said they will launch FSD in Europe and China in the first quarter of 2025 (pending regulatory approval). FSDv13 will also be launched in October, and the mileage between necessary interventions will increase by about 6 times. Unpark, Park, and Reverse features in FSD will also be introduced at that time. This news has once again brought the popularity of driverless cars. Currently, the radish racing concept, which has already been applied in China, has once again taken the lead. A-share leading public transportation (600611.SH) took the lead, then Volkswagen Commons (600635.SH) also followed the sharp rise. H-share Volkswagen Public (01635) was also driven to a 21.14% increase in tourism, with the aim of opening up space for mass transportation.

The securities sector was mentioned yesterday. Judging from the resumption of trading of A-share Guoxin Securities (002736.SZ), there was no sharp rise; instead, it fell 4.98%. The reason was that Guoxin Securities issued an announcement that the company plans to purchase 96.08% of its total shares in Wanhe Securities from Shenzhen Capital, Kunpeng Investment, Shenzhen Venture Capital, Yuanzhi Fuhai 10, Chengdu Jiaozi, and Haikou Financial Holdings by issuing A-shares. Financing the acquisition of a Wanhe Securities with poor performance. This kind of restructuring seems to be aimed at completing a task-style restructuring, which will not necessarily bring about an obvious increase in performance, so it is normal for it to decline. However, the securities sector was not adversely affected by the weakening of Guoxin; the vast majority of securities stocks are rising today. This shows that the restructuring itself is supported by the market, nor does it mean that other restructuring is not OK.

Today, the Hong Kong stock of Haitong Securities (06837) is trending very well. The reason is that the chairman of Haifutong Fund has changed. The new chairman Lu Ying has accumulated rich experience in seller research and was the director of the Haitong Securities Research Institute. In 2014, Lu Ying completed the “seven consecutive championships” of New Fortune and became a “Platinum Analyst.” The simple explanation is that a knowledgeable appointment can bring greater benefits to the Haifutong Fund. Meanwhile, Haitong Securities holds 51% of Haifutong Fund's shares, so today it is up 5.48%. GF Securities (01776) mentioned yesterday also rose 2.89%.

According to the latest Counterpoint Research folding screen smartphone shipment tracking report, global folding screen smartphone shipments increased 48% year-on-year in the second quarter of 2024. China continues to lead the growth of the folding screen phone market, accounting for more than half of total shipments, while other regions have also seen significant market expansion this quarter. Folding screen shipments in Western Europe, Asia Pacific (excluding China, India, and South Korea), and Latin America have seen significant growth, mainly due to the strong performance of Chinese mobile phone brands, in particular Honor and Motorola. Continue to follow Sunyu Optics (02382).

The Information Office of the State Council held a series of press conferences on the 5th on the theme of “Promoting High-Quality Development”. Zou Lan, director of the Monetary Policy Department of the People's Bank of China, said that currently the average statutory reserve ratio of financial institutions is about 7%, and there is still some room for decline. Usually, after the blow is done, the next step is implementation.

[Sector Focus]

On September 4, according to media reports, Taobao Tmall responded that in order to improve the consumer shopping experience, Taobao plans to add WeChat Pay capabilities and adjust the platform rules after collecting opinions. This adjustment will cover all Taobao and Tmall merchants. WeChat Pay also stated that functional compatibility with Taobao merchants is being launched, and the specific launch time will be announced through the Taobao platform announcement.

This is a win-win pattern. For Alipay, opening up is conducive to further opening up Alipay's development space. On September 4, Meituan's six core businesses, “Meituan Takeout,” “Meituan Power Bank,” “Meituan Cycling,” “Meituan Errands,” and “Meituan Hotel,” launched Alipay mini-programs. For Tencent (00700), it is even more obvious. After all, the WeChat community is huge, and they are accustomed to using WeChat Pay more, directly increasing the payment business of Taobao and Tmall. At the same time, it will also obtain valuable consumer transaction data, which will also improve the advertising business. So Tencent went up a bit better.

At the same time, the two giants are moving in both directions, which has given great impetus to the payment industry. The main types of Hong Kong stocks are: leading serial numbers (02598) and Yeahka (09923). The downside of these two varieties is also obvious; that is, their performance is not strong; it depends on whether the future development of overseas markets can increase even more.

[Individual Stock Nuggets]

Jinshan Software (03888): Operating profit increased nearly 6 times in the first half of the year, and game business revenue increased more than expected

Jinshan Software released its second-quarter earnings report. During the period, it recorded revenue of 2.474 billion yuan, an increase of 13% over the previous year; net profit to mother was 0.393 billion yuan, an increase of 587% over the previous year.

Comment: The increase in the share of the game business exceeded expectations. Game business revenue increased 20% year-on-year to 1.29 billion yuan in the second quarter, mainly due to the outstanding contributions of “Dust and White” and the successful launch of “Sword Net 3: Unbounded”, and continued growth in subscriptions for individual and institutional users of domestic office software. WPSAI has entered the overseas public beta phase, and its enhanced product features are expected to provide a lasting increase in value for the office business, and the number of paying users and ARPU may double.

The company's future pipeline mainly includes the launch of the self-developed mobile game “World of Sword Man: Origins” on 23Q4, and the new “Sword Man Affair 3” mobile game and sci-fi mecha mobile game “CodeB.R.E.A.K.” will be launched in '24. The company mainly benefited from the year-on-year increase in DAU and total sales of the old game “Sword Net 3”. The two-dimensional shooter mobile game “Dust White Forbidden Zone” was released in July and expanded overseas to expand its customer base. “Dust White Forbidden Zone” and “Three Unbounded Swords” will be the core of incremental game business turnover for the rest of 2024. Along with the resilient performance of flagship IPs and steady breakthroughs in new tracks, the company's game business revenue is expected to record a year-on-year increase of more than 20% throughout the year.