Zhitong Hong Kong Stock Analysis | The cloud of the tariff war looms again, the list of first batch distributors for comprehensive fund platforms is here

[Market Dissection]

Today, the Hang Seng Index saw a brief rally in large financial banks and securities when it fell below 24,000 points, but it could not be sustained. The index closed down 0.64%.

In June, the U.S. non-farm payrolls increased by 147,000, exceeding expectations of 106,000, and the data for the previous two months was slightly revised upward. After the non-farm data was released, the market immediately abandoned bets on a rate cut by the Federal Reserve in July. This makes sense, as it is not the best time for a rate cut, so better data is needed to gloss over the situation. The White House announced that U.S. President Trump will sign the "Big and Beautiful" bill at 5 PM local time on the 4th. This bill further exacerbates market concerns that the government will increase borrowing to offset tax cuts. However, the corporate tax cuts are a positive, reducing the corporate tax rate from 21% to around 15%, benefiting giants like Apple and Google.

Currently, the market's focus is on the upcoming tariff deadline. Trump told reporters that "on Friday, we may send out 10 or 12 tariff letters to trade partners, with more letters to be sent out in the coming days." By July 9, it will be fully covered, with tariff rates potentially ranging from 60%-70% to 10%-20%. We have completed the final version, which will basically outline the tariff levels that countries will have to pay. The current situation is that agreements have been reached with the UK and Vietnam, and a framework agreement has been established with China, leaving Japan, South Korea, India, and the European Union. Next week, the market is expected to be overshadowed by tariff negotiations.

The Middle East conflict has temporarily quieted down, but the Russia-Ukraine conflict has escalated again. Due to the U.S. reluctance to provide large-scale weapons to Ukraine, Russia has intensified its offensive. According to CCTV News, the Russian Ministry of Defense reported on the 4th that in response to the "terrorist acts" of the Kyiv regime, the Russian military used long-range precision land-based weapons, "Dagger" hypersonic missile systems, and long-range attack drones to carry out large-scale strikes against Ukraine.

In this context, large funds are hesitant to act recklessly and continue to consolidate in banks. The strength of bank stocks is also supported by continuous stake increases. Recently, Hong Kong Liyue Group Limited purchased approximately 199 million H shares of China Minmetals Bank (01988) in the secondary market, accounting for 0.455% of the total share capital. After this increase, Shenzhen Liyue Group Limited and its concerted parties hold 4.945% of China Minmetals Bank, which will soon trigger the 5% stake increase threshold, making it the fourth largest shareholder of the bank. China Minmetals Bank (01988) rose 3.81% today. Additionally, insurance companies are also major stakeholders in banks. According to data from the Hong Kong Stock Exchange, Ping An Life increased its holdings by 6.2955 million shares of China Merchants Bank (03968) H shares on June 17, reaching a holding ratio of 15% of the bank's total H share capital. This year, Agricultural Bank of China (01288) H shares, Postal Savings Bank of China (01658) H shares, and China CITIC Bank (00998) H shares have all been targeted by insurance capital. Currently, Harbin Bank (06138), Zhengzhou Bank (06196), Tianjin Bank (01578), and China Everbright Bank (06818) also show strong trends. Is there a possibility of these small banks being acquired or merged? It seems that cannot be ruled out Another sector is innovative drugs, where foreign investment is continuously increasing. Recently, the listing announcement of the Huabao Hang Seng Hong Kong Stock Connect Innovative Drug Selected ETF revealed that as of the end of June, Barclays Bank was the largest shareholder of the fund, holding a share of 5%. The fund will be listed next Monday. The institution has already positioned itself in several high-performing Hong Kong innovative drug ETFs that are expected to be champions in the first half of the year. Kangfang Biotech (09926), mentioned yesterday, surged over 9% again today. The market overall has strong confidence in the CXO sector, supported not only by policy but also by clear competitive advantages, with Kelaiying (06821), Zhaoyan New Drug (06127), and WuXi AppTec (02268) all rising over 4%. The July golden stock, Yunding Xinyao (01952), mentioned yesterday, rose nearly 5% again. Rongchang Biotech (09995) has not seen new news, but it is estimated that the main force inside is confident about the overseas promotion prospects, leading to a surge of over 15% today.

Recently, news about the photovoltaic anti-involution has emerged. On July 3rd, the 15th symposium for manufacturing enterprises organized by the Ministry of Industry and Information Technology focused on the photovoltaic industry. Leaders of photovoltaic companies attending the meeting stated, "The current situation in the photovoltaic industry can no longer rely solely on self-discipline; this time the measures will be 'very strong'." "If sales continue to be below cost, there may be severe penalties." It is evident that the regulatory authorities are serious this time. Related silicon material company GCL-Poly Energy (03800) rose over 6%, while photovoltaic glass companies Xinyi Solar (00968) and Flat Glass Group (06865) both saw increases of over 3%.

On July 3rd, the National Medical Products Administration released an announcement on optimizing the full lifecycle supervision to support the innovative development of high-end medical devices, mentioning that it will cooperate with relevant departments to introduce support policies for medical device products based on brain-computer interface technology. Products in the brain-computer interface field are mostly in the early stages, and it will take time to move from laboratory to large-scale application, leading to a high opening and subsequent decline for Nanjing Panda Electronics (00553).

In June, Zhituo's golden stock Jitu Express (01519) unexpectedly started to gain momentum this month. Credit Lyonnais issued a research report indicating that TikTok Shop's GMV growth in Southeast Asia will be strong in the second quarter of 2025, driving the recent rise in the stock price. Since Jitu Express handles over 50% of TikTok Shop's parcel volume in Southeast Asia, the bank expects the parcel volume growth in Southeast Asia for the 2025 fiscal year to exceed the management's previous expectation of 25%-30%, while maintaining stable unit profitability. Additionally, in the Chinese market, the group is expected to see a greater reduction in unit costs compared to its peers. In emerging markets, the bank expects the group to benefit from TikTok Shop's rapid expansion in Mexico. Today, the stock rose over 5%.

Last night, XPeng (09868) launched its new SUV, the XPeng G7, with the starting price further reduced from the earlier pre-sale price. Three versions were released: 602 Long Range Max, 702 Ultra Long Range Max, and 702 Ultra Long Range Ultra, priced at RMB 195,800, RMB 205,800, and RMB 225,800 respectively. Compared to the longer delivery cycle of the YU7, the G7 can be delivered immediately upon launch. After the new car went on sale, XPeng announced on Weibo that it received 10,000 orders within nine minutes. In contrast, Xiaomi Auto previously stated on Weibo that it received over 200,000 orders for the YU7 within three minutes, showing a significant difference Today, it fell over 6%, the competition in the era of stock is that brutal.

On July 3, Alibaba Group (09988) announced its plan to issue zero-coupon exchangeable bonds with a total principal amount of approximately HKD 12 billion, maturing in 2032. Alibaba may choose to fulfill its exchange obligations by delivering Alibaba Health shares, cash, or a combination of cash and Alibaba Health shares. Even if all are settled using Alibaba Health stock, Alibaba is expected to maintain its controlling stake in Alibaba Health. The exchange price represents a 37% premium over the previous day's closing price, and assuming full conversion, it would account for no more than 12% of Alibaba Health's issued share capital, leading to a disguised reduction in Alibaba Health (00241), which fell over 6%.

【Sector Focus】

On July 4, the Hong Kong Stock Exchange announced the first batch of distributors for its comprehensive fund platform. As an important financial infrastructure in the Hong Kong fund market, the IFP platform effectively connects various participants in the fund distribution ecosystem. According to the Hong Kong Stock Exchange's official website, a total of 12 Chinese-funded securities firms have become the first batch of distributors, including: China Galaxy (Hong Kong), Xingsheng International, CICC Hong Kong, CITIC Securities International, CITIC Securities Brokerage (Hong Kong), GF Securities (Hong Kong) Brokerage, Guotai Junan Securities (Hong Kong), Haitong International, Huatai Jinrong, Ping An Securities (Hong Kong), and Zhongtai International.

The selected securities firms will be able to connect with fund companies more efficiently, providing a richer selection of fund products and a smoother trading experience, which may attract more investors and increase business volume. The aforementioned varieties are worth paying attention to.

【Stock Picking】

China Biologic Products Holdings (01177): Revenue growth returns to double digits with innovative pipeline continuing to deliver

Recently, the company's developed "Recombinant Human Coagulation Factor VIIaN01 for Injection" (brand name: Anqixin®) has received marketing approval from the National Medical Products Administration of China for the treatment of bleeding in adult and adolescent (aged 12 and above) patients with congenital hemophilia who have inhibitors to factor VIII or IX > 5 Bethesda units (BU). In 2024, the company is expected to achieve revenue of CNY 28.87 billion, with a net profit attributable to the parent company of CNY 3.50 billion (+50.1%).

Comment: Anqixin is the first domestically approved recombinant human coagulation factor VIIa biological product in China. The strong clinical efficacy evidence from China Biologic Products, along with strong sales performance in March this year and the recent approval of QP001 (meloxicam injection) by both the NMPA in China and the FDA in the United States, will boost the company's revenue. The company's revenue growth has returned to double digits, and the innovative pipeline continues to deliver, driving accelerated growth of innovative products. Notably, the innovative drug has been approved by the FDA; the differentiated PD-1 monoclonal antibody jointly developed by China Biologic Products, Anike® (pembrolizumab injection), has been approved by the U.S. Food and Drug Administration (FDA) for two indications: first-line treatment for recurrent or metastatic nasopharyngeal carcinoma and for metastatic nasopharyngeal carcinoma that has failed platinum-based chemotherapy. This is the company's first innovative drug product approved for marketing in the United States. By the end of 2024, the number of the company's innovative products is expected to reach 17, and it will continue to expand at a pace of 4-7 approvals per year, providing strong momentum for the rapid growth of the company's revenue In 2024, the company will have 28 generic drugs approved for market launch, achieving overall positive growth in generic drug revenue. In 2024, the revenue from new products launched within five years will reach 10.09 billion yuan (+25.4%), and the innovative pipeline will enter a period of intensive harvest. In 2025, a batch of potential first-in-class (FIC) and best-in-class (BIC) pipelines, including JAK/ROCK inhibitors, CDK2/4/6 inhibitors, and long-acting analgesic NSAID meloxicam, are expected to be approved for market launch. In terms of generics, the company will continue to maintain stable investments, planning to file for approval and production of over 40 items by 2027. With the increasing number of IBD patients in China, the layout of Chinese biopharmaceuticals in the field of inflammatory bowel disease is expected to become a new growth point for the company in the future