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Georgina Lee

Deb Price

Good day, traders, and welcome to a fresh week.
Catch up on the day's action below. Shoot any feedback to deb.price@scmp.com . We welcome it as we try to make our stocks blog your must-read every trading day.
— Georgina Lee and Deb Price in Hong Kong 
 


Stocks Blog: Hong Kong, mainland markets turn up on strong retail sales out of China 

The bull sculpture at Exchange Square in Hong Kong. Photo: David Wong


Bet on Macau casinos, where too much is never enough, stock analysts say

Business

Markets

Fast and all about luck, baccarat is the game of choice in Macau casinos. Photo: Deb Price

Checking in at the opulent Parisian in Macau, where it’s easy to imagine a bellhop calling out, “Paging Monsieur Sixteenth. Monsieur Louie the Sixteeth.” Photo: Deb Price

“Say ‘fromage.’” Tourists snap a selfie at Sands China’s Parisian in the Cotai strip in Macau. Photo: Deb Price

Bad earnings news sweeps across China's markets
Strategist Kenny Wen gives tips on which casino stocks are best buys


Pharmaceutical stocks jump in Hong Kong after a media report saying the nationwide expansion of a programme to try to keep a lid on drug prices will be more moderate than the industry feared.


Stocks

China markets

Hong Kong Stock Exchange

Live

US markets/ What futures foretell
-- Friday in US markets, S&P 500 was up 0.5 per cent,  Nasdaq rose 0.6 per cent, and the Dow Jones Industrial Average was up by 0.9 per cent.
 -- Hong Kong futures are down 0.23 per cent, while the China A50 futures are down 0.15 per cent.
IPO debuts:
Beijing Zhidemai Technology (300785 CH) trading debut
Economic statistics:
China: June new home prices, June retail sales, June property investment, June industrial production, second quarter gross domestic product
Corporate events: earnings, meetings, news conferences
None to note.
Good reads: Macau casino operators are ramping up the "wow" factor on the hot Cotai Strip and going after "mom and pop" gamblers, moves that offer stock-trading opportunities, Deb Price reports. Hong Kong protests fail to dampen demand for micro flats, Enoch Yiu reports. 


Morning guidance 

Betting on glitzy Macau’s casino stocks is a good long-term gamble, many analysts say – not because of high-rolling big whales but because of the casinos’ new determination to lure wave upon wave of mom-and-pop minnows.
“It’s an attractive long-term story for me,” says Kenny Wen, wealth management strategist at Everbright Sun Hung Kai. “More and more people will come there. The revenue not only comes from gambling. The father will go to the casino, and the children and wife can spend their money in other places.”
Those other places include jaw-droppingly blingy, Marie Antoinette-meets-Walt Disney fantasy worlds: opera-singing gondoliers navigate indoor canals. A laser light and water show stars an asteroid-sized swirling purple “diamond.” Free cable cars whisk riders around an undulating, dragon-backed fountain as Frank Sinatra croons “I’ve got the world on a string.”
Yes, this Las Vegas on steroids is once again amping up its dosage.
Two big changes are afoot: the hot Cotai Strip, a reclaimed area across from old Macau and its tired-feeling casinos, is experiencing a new building boom, with fanciful creations and upgrades in the works, such as Sands China’s upcoming The Londoner, with a 96-metre-tall “Big Ben,” and SJM Holdings’ long-awaited, chateau-inspired Grand Lisboa Palace, which is set to have a grand wedding pavilion and theatre in addition to 2,000 hotel rooms and hundreds of gaming tables.
Second, while VIPs will always be lavishly courted, new attention is being directed at catching “minnows” – the mom-and-pop gamblers pouring in from mainland China with selfie-loving kids and even grandparents in tow. Casino operators are scrambling to create non-gaming attractions to woo them – retail, dining and over-the-top entertainment – which, while about 12 per cent of total revenue last year, generates 40 per cent to 90 per cent profit margins, exceeding casino margins, according to Bloomberg.

Read full story here by Deb Price 
 


Macau casino operators up their 'wow' factor, and investors should take note

Shenwan Hongyuan Group (6806 HK), the mainland's oldest securities firm, said its net profit jumped 56.03 per cent in the first half of the year.
Its year-on-year first half net profit amounted to 3.22 billion yuan (US$467.96 million), the company said in a stock exchange filing on Sunday night. Basic earnings per share were 0.14 yuan, up 55.56 per cent year on year.
Total operating income amounted to 10.523 billion yuan in the first half year, representing an increase of 73.21 per cent from a year earlier.
The company said the solid result was due to the government introducing measures to enhance the capital market, which has boosted the development of the securities industry.
The company remains the largest IPO in Hong Kong this year by raising US$1.16 billion in its April offering, according to data of Refinitiv.  The two deals that could have surpassed it — the ESR Cayman's US$1.24 billion IPO in June and Budweiser Brewing's US$9.8 billion offering last week, both cancelled.
— Enoch Yiu 

 


Shenwan Hongyuan securities says 1H net profit jumped 56 per cent 

Jiayuan International (2768 HK), co-developer of the micro-home at T-plus Development in Tuen Mun, sold nearly all of its units offered on Sunday.
Of 344 units offered, 339 units sold. This left only five two-bedroom units left while all the smaller ones, including the 12 units smaller than car parking spaces, sold out. The sales brought a total of HK$1 billion.
— Enoch Yiu 


Jiayuan International sells nearly all flats offered on Sunday

The Hang Seng index was down 0.6 per cent, at 28,303.36. Trading was mixed, with selective property stocks such as Sun Hung Kai Properties (16 HK) dropping 2.1 per cent, at HK$132, and CK Asset (1113 HK) falling 1.6 per cent at HK$60.  Meanwhile, casino operator Galaxy Entertainment (27 HK) was down 2.1 per cent, at HK$54.7.
The CSI, which tracks blue chips listed on the Shanghai and Shenzhen bourses, was down 0.8 per cent at 3777.41. The Shanghai Composite Index lost 0.7 per cent, falling to 2909.85.
Liquor distiller giant  Kweichow Moutai (600519 CH) is down 1.9 per cent at 967.8 yuan, while Ping An Insurance  (601318 CH) was down 0.7 per cent at 88.1 yuan.
The market is braced for a slew of June economic data from China, with second quarter gross domestic product, retail sales, industrial production out this morning.
— Georgina Lee


Hong Kong, China stocks open lower

Video interview: Strategist Kenny Wen gives tips on which casino stocks are best buys 

Profits are up at Kweichow Moutai (600519 CH), but it wasn't enough to impress investors.
It was last trading down 2.6 per cent. 
The liquor distiller giant said a preliminary audit shows net profit rose 26 per cent for the first half from a year ago to 19.9 billion yuan, while operating income rose 16.9 per cent and totalled 41.2 billion yuan.
The index heavyweight, known for its fiery liquor called baiju, is the first stock in China whose price shot above 1,000 yuan. But in recent weeks, some foreign fund managers have been selling the stock, thinking it had become too expensive.
The latest data available on the Hong Kong stock exchange’s Stock Connect section showed that last Friday, Kweichow Moutai also had net selling amounting to 165 million yuan, as the turnover of investors who sold the stock outweighed those who bought it through the Shanghai northbound link. It was the most traded stock on the Stock Connect last Friday.
Kweichow Moutai has risen 63 per cent year-to-date, and is trading at a forward price-to-earning ratio of 34 times, according to Bloomberg data based on a poll of analysts’ estimates.
— Georgina Lee 


Even Kweichow Moutai's good profit news isn't stopping the stampede out by traders   

China’s economic growth slowed to a record low of 6.2 per cent in the second quarter of 2019 as the shock from the protracted trade war with the United States continued to resonate through the world’s second largest economy.
Gross domestic product (GDP) growth slid from 6.4 per cent in the first quarter, according to data published by the National Bureau of Statistics (NBS) on Monday. Even during the global financial crisis in 2009, China’s quarterly GDP growth did not dip below 6.4 per cent.
The figure, nonetheless, falls within the range of Beijing’s target growth rate for the year of between 6.0 per cent to 6.5 per cent, and was generally expected. The median forecast of a poll of analysts conducted by Bloomberg was 6.2 per cent, but some had predicted worse, with many having deep concerns about the effect of the trade war.
The data also showed that over the first half of the year, China’s economy grew by 6.3 per cent.
Read full story by Sidney Leng here. 


China economy showing pressure from trade dispute with US

Corporate profit warnings have been rattling China’s stocks market today, casting a shadow on the coming earnings season.
Dong-E-E-Jiao (000423 CH) and Han's Laser Technology Industry Group (002008 CH) both tumbled by the 10 per cent daily limit on the Shenzhen exchange after saying first-half profit may have fallen significantly.
Dong-E-E-Jiao, a maker of traditional Chinese medicine from donkey skins, slid to 35.42 yuan after saying profit probably fell as much as 79 per cent from a year earlier on destocking. Han's Laser, once a favourite among foreign investors, sank to 32.49 yuan after saying profit for the first six months may have dropped as much as 65 per cent due to the downward cycle on the consumer electronics sector.
— Zhang Shidong 


Bad earnings news sweeps across China’s stock markets

The Chinext index, which tracks high tech growth enterprises on the Shenzhen bourse, bucked the downward trend of the CSI 300, and was up 0.6 per cent at 1526.65.
Leading the gains in percentage terms was Beijing Lanxum Tech  (300010 CH), up 7.6 per cent at 10.22 yuan, after the company said in an exchange filing that for the first half ended June 30 it expects  net profit to reach 35 million yuan to 40 million yuan, turning around from a net loss of 56.7 million yuan a year ago.
The company, which provides information security services and education cloud platforms, attributed the improvement to growth in its education business segment.
The CSI 300, which tracks blue chips listed on Shenzhen and Shanghai, was down 0.3 per cent at 3797.74.
— Georgina Lee 


Chinext index bucks day's trend and is up 

CSPC Pharmaceutical (1093 HK) surged 7.3 per cent to HK$13.50 in morning trading. 
The blue chip was the top percentage gainer on the declining Hang Seng Index. The surge put the share price at its highest level since May 22, and its biggest percentage gain since since January 10, when it surged 7.5 per cent. 
It was also the top percentage gainer on the Hang Seng Enterprise Index.
At this level, its share price is above its 50-day moving average, at HK$12.88, but below the 12-month consensus target price of HK$17.44 of 30 analysts who were polled by Bloomberg.
Some analysts say traders have turned to pharmaceutical and healthcare stocks as safe havens amid the trade war and other uncertainties.
— Georgina Lee
 


CSPC Pharmaceutical surges 7.3 per cent 

North Mining (433  HK) plunged 21.1 per cent to 1.5 HK cents. That was its biggest percentage drop since July 16, 2018. It has been trading below 10 HK cents since then.
The company disclosed in a new Hong Kong exchange filing that a summons filed by Natu Investment Management to wind up the company has been granted by the Hong Kong high court. It will be heard at the high court on July 24.
The petition was filed against the company, which mines and trades molybdenum, for its failure to settle a claimed outstanding debt amounting to HK$170.5 million that Natu Investment says it is owed.
“The Company is actively seeking legal advice in relation to the Petition and is concurrently in the process of negotiating with the Petitioner for a settlement and an amicable disposal of the matter," adding it would endeavor to dismiss the petition as soon as practicable.
— Georgina Lee 


North Mining shares plunge 21 per cent 

China Agroforestry Low-Carbon (1069 HK) today is clawing back some of its 57 per cent Friday plunge.  It was last up 5 per cent at 21 HK cents, which is still around its lows since listing on the main board in October 2009. It is engaged in the biomass fuel business.
In light of the unusual price movement, it filed a voluntary announcement at the Hong Kong exchange on Friday night reporting that it is in the final stage of negotiating with an independent third party about a potential acquisition of a company in China. That company is  principally engaged in the trading of fuel, petroleum and oil-related products, it said. It did not provide further details on the potential transaction.
It is the second most-traded stock in volume terms in Hong Kong, with 478 millions shares having swapped hands by the lunch break.
— Georgina Lee


China Agroforestry Low Carbon clawing back some of its huge Friday losses 

Pharmaceutical stocks jumped in Hong Kong after a media report saying the nationwide expansion of a programme to try to keep a lid on drug prices will be more moderate than the industry feared.
CSPC Pharmaceutical (1093 HK) jumped 7.5 per cent to HK13.52 while Sino Biopharmaceutical (1177 HK) rose 4.5 per cent to HK$8.90.
CSPC was trading in this range in May, when the share price closed at H$13.66 on May 22. 
Overall, the health care sector has been the big gainer of the day, and is up 5.83 per cent.
The Hang Seng has been see-sawing again today, and is barely holding gains in afternoon trading. Today has been the fifth straight day of trading at no more change above or below 1 per cent.
Consumer staples are doing well, increasing 1.28 per cent.
A report in Chinese media said that a centralized drug procurement plan will be expanded nationwide but in milder terms than expected, Bloomberg reported. The plan to expand from 11 trial cities will be given to the State Council for approval next week and is expected to be implemented in October, Bloomberg said. Drugmakers rallied because the expansion allows more suppliers for each drug and didn't add more drugs to the 25 now covered on a list to use low-price bidding to try to cap medicine costs. 
Real estate, financials, consumer discretion and utilities were down on the Hang Seng.

 
— Deb Price 


Pharmaceuticals jump in Hong Kong on news China drug price plan won't be as tough as feared

Software related stocks rose in China on positive sentiment about the coming tech board in Shanghai, which officially opens on July 22.
Hitting the daily 10 per cent upside limit were Shanghai Wondertek Software (603189 CH),  at 17.55 yuan, Digiwin Software (300378 CH),  at 14.7 yuan, and Winning Health Technology (300253 CH) , at 14.41 yuan.
No specific news drove the gains, but Linus Yip, chief strategist for First Shanghai Securities, said their gains could mirror investors’ excitement about the debut of the Shanghai’s Science and Technology board, a Nasdaq-styled market for home grown technology.
China National Software & Science (600536 CH) was up 9.3 per cent at 52.19 yuan and Shenzhen Genvict Tech (002869 CH) was up 9.1 per cent at 49.91 yuan.
— Georgina Lee 


Software-related stocks rise in China on improved sentiment ahead of Shanghai tech board debut

The Shanghai Composite Index and the CSI 300 Index, which tracks blue chips listed on Shenzhen and Shanghai, reversed their early morning losses and closed higher, as investors ended up feeling fairly positive on new China data showing strong-than -expected GDP growth in June.
The Shanghai Composite Index was up 0.4 per cent, at 2942.19, while CSI 300 Index was up 0.4 per cent at 3824.19.
Despite GDP for the second quarter slowing to a record low of 6.2 per cent, down from 6.4 per cent seen in the first quarter, retail sales came in stronger-than-expected, growing 9.8 per cent in June, up from May’s 8.6 per cent. Industrial production also improved, which grew 6.3 per cent from a year earlier, and up from 5 per cent in May.
Lifting the Shanghai index higher was  Yonyou Network Technology  (600588 CH), up 6.6 per cent at 26.94 yuan, Hundsun Technologies (600570 CH), up  4.9 per cent at 68.39 yuan, and Shenzhen Goodix Technology (603160 CH), up 4.1 per cent at 145.74 yuan.
Capping the gains in the indexes was liquor distiller giant Kweichow Moutai (600519 CH), which was down 1 per cent at 975.93 yuan.
—  Georgina Lee 


IT pushes up Shanghai Composite Index, but liquor king Kweichow slips 

Shares of Foxconn Industrial Internet (601138 CH)  recovered from a 5.4 per cent intraday decline, after its former chairman Terry Gou Tai-Ming stumbled in his bid to become the presidential candidate on behalf of the Kuomintang party in Taiwan.
Foxconn Industrial's shares rose by as much as 1 per cent to 12.90 yuan in Shanghai. It closed down a hair, 0.08 per cent to 12.76 yuan. Shares of Hon Hai Precision Industry (2317 TT)  rose 0.8 per cent to NT$78.20, recovering from a 1.9 per cent decline just before the political party's presidential candidate was announced in Taiwan. It closed up 0.64 to 78.10 yuan.
— Eugene Tang


Foxconn Industrial, Hon Hai recover from drops over Terry Gou Tai-Ming's stumble in presidential bid in Taiwan  

The Hang Seng Index closed ahead a bit at 28,554.88, extending gains to a fifth day.
Overall, traders were relieved that the slowdown in China's second quarter GDP to 6.2 per cent was within expectations. They also liked the better-than-expected June retail sales figures.
The rising sentiment led index heavyweights higher, with Chinese social media giant Tencent (700 HK) gaining 1.6 per cent at HK$360.8. Insurer AIA (1299 HK) gained 0.4 per cent at HK$85.8.
Linus Yip, chief strategist at First Shanghai Securities, said the economic figures released Monday overall were within expectations. GDP for the second quarter slowed to a record low of 6.2 per cent, down from 6.4 per cent seen in the first quarter.
“While the overall economy is no doubt in a slowdown, the bright spot was in June retail sales. It highlighted the need for further stimulus measures, as the stronger retail sales were bolstered by a slew of tax cut and fees reductions by Beijing earlier this year,” said Yip, referring to incentives given to consumers of new energy cars and home appliances.
Pharmaceutical stocks stole the limelight Monday, with CSPC Pharmaceutical (1093 HK) up 7 per cent, at HK$13.46, and Sino Biopharmaceutical (1177 HK) up 5.5 per cent, at HK$8.99. They were the top two percentage gainers in the blue chip index.
— Georgina Lee 


Pharmaceuticals rally, pushing up Hang Seng