Anatomy of the large cap market.

Today, the markets in both locations are lukewarm, which is generally the case at the end of the year, as there is pressure for capital recovery and issues with institutions redeploying. The Hong Kong stock market closed slightly down by 0.24%.

The current market is just about getting by, with institutions primarily seeking stability. Policy catalysis is hard to see, and it is estimated that it will have to wait until Trump takes office. The result of seeking stability is to follow the trend inertia. It is evident that the strong direction is in Large Cap stocks, with bank stocks being a major direction. Today, small banks performed well, such as Dah Sing Bank (02356), Bank of Qingdao (03866), and MINSHENG BANK (01988), all rising over 3%.

Last Friday, this column mentioned Shanghai: striving to have the city's intelligent computing power scale exceed 100 EFLOPS by the end of 2025. Over the weekend, there was further catalysis, as CCTV's documentary 'Cornerstone of a Great Nation' focused on the computing power engine, explicitly mentioning that computing power equals national strength; it directly elevated computing power to a new height, including a series of sectors such as chips, servers, and computing center construction.

The core of this is chips. Today, Semiconductor Manufacturing International Corporation (00981) surged over 6% again, while its similar concept of HUA HONG SEMI (01347) only rose 1.57%. Why is it much weaker? The reason is that HUA HONG is positioned on the low end, with inferior processing capabilities and unable to produce relatively advanced materials. Everything has its pros and cons; focusing on the low-end market in the early stage earned a lot of money, but the speed of technological development is too fast. If it cannot adapt or lacks reserves, it will be passive in the later stages.

Of course, from the perspective of domestic substitution, there is still potential in the consumer sector. However, with high-end car manufacturers focusing on self-researched chips, the incremental growth in this area is limited. Therefore, Semiconductor Manufacturing International Corporation (00981) still stands to benefit the most. Additionally, ZTE (00763), with strong competitiveness in AI servers, although today’s increase was only 0.80%, there is clear funding involvement, and there is still potential in 5G going forward. The December golden stock in the 5G base, Yangtze Optical Fibre And Cable Joint Stock (06869), surged over 3% again today.

Over the weekend, there was also a relatively popular news: The leading quant fund has developed an AI model called Deep seek v3, which is reported to have impressive performance using only 2048 H800 graphics cards, and completed training in less than two months with a budget of less than 6 million dollars. Many are claiming that such a high computing power is unnecessary, etc. This is simply nonsense; it's akin to knowing the answer and skipping other training and reasoning processes. Of course, it saved a lot of costs, but for many unknown things, massive computing power is still essential for support.

Following WeChat's small shop launch of the "gift-giving" feature, Douyin has also introduced a gift-giving red envelope feature. The category of small appliances with gift attributes is most benefited; JS GLOBAL LIFE (01691) has smoothly expanded into markets such as South Korea and Australia, driving a significant revenue increase of 153% in the Asia-Pacific business in the first half of 2024, resulting in a rapid overall revenue growth of 33% and quickly developing into the second growth curve for JS GLOBAL LIFE. There are expectations to continue replicating the successful experiences and business models from Europe and America in the Asia-Pacific market. Today, it surged nearly 22%.

LAOPU GOLD (06181) can actually also be included in the gift series. On December 28, the six-month ban on sales ended. Among them, the cornerstone investment holding a total of 10.8016 million restricted shares will be unlocked. Despite the pressure from the unlocking, it managed to rise over 15% today, highlighting the market's bullish outlook on its future.

SMOORE INTL (06969) can also be categorized in this regard, but its more than 16% surge is due to the fact that its major client, British American Tobacco, has recently launched a groundbreaking new HNB product called glo hilo in Serbia, with evident improvements in product capabilities, and there are plans to promote it further in core markets by 2025.

The past week can definitely be considered a "black week" for the global aviation industry. On December 29, a Boeing 737-800 passenger plane deviated from the runway and exploded during landing at Wusan Airport in South Jeolla Province, South Korea. There were 175 passengers and 6 crew members on board, totaling 181 people. On the same day, a Boeing 737-800 from KLM Royal Dutch Airlines made an emergency landing in Norway due to hydraulic system failure. This morning, another Boeing 737 of the same model from Jeju Air had to return shortly after takeoff due to landing gear malfunction, ultimately landing successfully. All these planes are Boeing 737-800, which is the predecessor of the well-known 737 Max. The 737 Max had two fatal accidents five years ago, leading to a global grounding, and various factors have severely impacted Boeing's order status this year.

According to data from Forecast International, in the first nine months of this year, Boeing delivered 291 aircraft to customers, while its competitor Airbus delivered 497 aircraft, with Boeing's delivery numbers being just over half of Airbus's. The Chinese C-919 passenger aircraft can compete with the Airbus A-320 series and Boeing 737 series in comprehensive indicators. However, the key issue is that it has not yet obtained airworthiness certification from Europe and America, currently holding certificates only from Canada, Brazil, New Zealand, Australia, and Russia, meaning these countries can sell and facilitate operations.

Therefore, when Boeing faces issues, the most favorable situation is in principle for Airbus. According to data from Forecast International, in the first nine months of this year, Boeing delivered 291 aircraft to customers, while its competitor Airbus delivered 497 aircraft, with Boeing's delivery numbers being just over half of Airbus's. However, this incident could also promote the Chinese Big Plane's market entry in other countries, and there's another advantage: the Russia-Ukraine conflict has left many European airlines in a difficult position.

To avoid Russian airspace, Western airlines have to take detours. For example, flights from London to Tokyo that previously only took about 12 hours now take an additional two to three hours due to the diversion. The longer journey increases fuel costs, naturally deterring many consumers due to higher ticket prices. Moreover, due to agreements between China and Russia, Chinese flights can still pass directly through Russian airspace. Using the Chinese C919 allows for faster and more cost-effective travel, making it significantly attractive to European airlines.

Of course, the subsequent game will be very complex, involving the interests of all parties. In short, the prospects are bright and the road is tortuous. Currently, there are 711 confirmed Orders for the C919, with 371 intended Orders, totaling 1,082 Orders. Among them, the Orders from the three major airlines are all in three digits. AVICHINA (02357) is the supplier of the domestically produced C919 Big Plane. Once the C919 opens up sales, it will be a significant Bullish signal for AVICHINA (02357), which rose by 2.62% today.

In order to support New energy Fund vehicles, the Ministry of Finance has clarified that the proportion of New energy Fund vehicles in the total annual procurement of official vehicles should be no less than 30% in principle. This news is certainly Bullish for New energy Fund vehicles, as official vehicles belong to rigid consumption, and this ratio is quite impressive. However, the performance of individual New energy Fund vehicle stocks is not strong today, as automobile companies have entered a new round of price wars.

According to incomplete statistics from the 21st Century Economic Report, including Tesla China, BYD (01211), Chongqing Changan Automobile (000625.SZ), Geely (00175), XPeng-W (09868), SAIC Volkswagen, and FAW Toyota among 20 auto companies have officially announced price cuts, starting year-end discounts with 'limited time prices' and 'firm prices'. Everyone is in a bloodbath state and cannot clarify which companies' sales will stand out. As a result, there will be a lot of watching funds, and they can only wait for the relevant sales terminal data to come out. Meanwhile, Beijing Automotive (01958) performed outstandingly today, as it received additional funding, aiming to push towards the New energy Fund direction, with expectations for exports also increasing, rising over 8% today.

On the afternoon of December 30, the National Development and Reform Commission, National Bureau of Statistics, Ministry of Education, Ministry of Finance, Financial Regulatory Bureau, and the Securities Regulatory Commission jointly issued 'Guiding Opinions on Promoting High-quality Development of the Data Industry'. It proposes that by 2029, the compound annual growth rate of the data industry scale will exceed 15%. Beneficiary varieties, the digital copyright leader VOBILE GROUP (03738) officially launched the digital content asset trading platform 'MAX' in Hong Kong on December 18, which will officially go online in the New Year of 2025. Today, it rose over 13%.

UBTECH (09880) attracted market attention today. UBTECH responded that the company respects shareholders' differing plans regarding the disposition of Pre-IPO shares based on a long-term positive outlook for the company. The management has strong confidence in the company's various operating businesses and the humanoid robot industry's implementation, while also publicly disclosing a long-term lock-up announcement regarding shares. The situation arose because there was a release from the lock-up on December 29, and some shareholders have differing opinions about the future, which may not rule out the possibility of selling. From a mid-term perspective, the outlook is worth being Bullish on, as the use of industrial robots will continue to increase, but the explosion should occur in the C-end, which is currently difficult to see. This requires a process, and whether it can withstand performance pressure is the key observation point.

Tomorrow is the last trading day of the year. From the Historical Data, the last trading day has risen for the past nine years. Let's take a look at the recent three years: December 30, 2021: rose by 0.62%, closing at 3619.19 points; December 30, 2022: rose by 0.51%, closing at 3089.26 points; December 29, 2023: rose by 0.68%, closing at 2974.93 points. If all goes well, the Hong Kong stock market should also close up tomorrow.

Sector Focus

Ukraine plans to stop transferring Russian natural gas to Europe through its natural gas transportation system starting at 7:00 on January 1, 2025. This is happening in the middle of winter, when the coldest conditions are expected, which may lead to an increase in natural gas prices.

On December 29, 2024, domestic LNG prices experienced a concentrated increase. In addition, as the winter heating season approaches, the sales prices of non-residential pipeline natural gas have been adjusted upwards in many regions, such as in Beijing, where from November 15, 2024, to March 15, 2025, the sales price of non-residential pipeline natural gas will increase by 0.47 yuan per cubic meter.

Major varieties: KUNLUN ENERGY (00135), CHINA GAS HOLD (00384), CHINA RES GAS (01193), ENN ENERGY (02688).

[Stock Exploration]

SINOTRUK (03808): The growth rate of heavy truck sales has improved, and exports are steadily increasing.

Since the beginning of this year, SINOTRUK has made every effort to seize the market, secure orders, and ensure deliveries. The total revenue for the year is expected to exceed 194 billion yuan, a year-on-year increase of more than 10%; total profits and taxes are expected to be 12 billion yuan, a year-on-year increase of more than 15%; and vehicle sales are expected to reach 0.37 million units, a year-on-year increase of more than 10%.

Comment: The government has introduced a trade-in policy to support the scrapping and updating of old operating trucks, effectively driving the development of the heavy truck industry. At the launch of SINOTRUK's new energy series products, five major new energy products were announced. In terms of sales performance, SINOTRUK's domestic heavy truck sales showed a good growth trend in the fourth quarter of this year, with the market share of its products and overall profitability steadily improving.

Heavy truck exports are steadily increasing, and SINOTRUK's export sales have always led the industry. In 2023, the company exported 0.12 million heavy trucks, an increase of 51.0% year-on-year, making it the company with the highest export sales, accounting for about 43% of the market share. The proportion of heavy truck export sales has increased from 11.1% in 2020 to 57.3% in 2023.

In-depth cooperation with quality suppliers, SINOTRUK successfully achieved strategic cooperation with MAN in Germany in 2009. In 2013, SINOTRUK launched the T series products applying MAN technology on the market. In April 2020, SINOTRUK's HOWO and Hohan models equipped with a new Weichai WP10.5H-460 horsepower engine further enhanced the performance advantages of the vehicles. The heavy truck industry is in the early stage of recovery, combined with overseas opportunities, it is expected that from 2024 to 2025, the company's heavy truck sales will increase year-on-year by 7.7% and 7.4%, higher than the industry's growth rate.