HSBC Research: Stock Selection in the Year of the Horse Focuses on Five Major Themes, Urges Buy on CIMC ENRIC, GCL TECH, CKI HOLDINGS, etc

HSBC Research published a report indicating that this year, the market will focus on five major themes, including solar energy and hydrogen energy, the 14th Five-Year Plan, power grids, and green fuels. Additionally, defensive industries still hold value, and nuclear energy is also worth attention.

The report mentioned that the expansion of artificial intelligence infrastructure into space is driving new demand for solar cells. It is believed that specific equipment manufacturers in the solar supply chain and hydrogen producers as rocket fuel will benefit from this trend. Meanwhile, SpaceX's initial public offering and developments in Chinese policy will be catalysts worth watching.

The report stated that the mainland continues to combat involution. Although there is uncertainty in demand, the oversupply of renewable energy equipment will continue to adjust through supply consolidation. For the petrochemical industry, the bank expects more coordinated production cuts this year.

The bank also anticipates that investments in ultra-high voltage (UHV) power grids under the 14th Five-Year Plan will accelerate. Additionally, nuclear energy, as an alternative fuel, has become a key option with policy support, while other emerging fuels such as green hydrogen, methanol, and ammonia also show growth momentum.

The bank believes that in market volatility, the value performance of defensive assets typically outperforms the broader market. Therefore, it focuses on quality and dividend growth, using these criteria to screen stocks.

The bank holds a more cautious attitude towards Chinese power utility companies due to weak electricity demand and supply, which continue to drive down electricity prices. With the removal of price floors, thermal power and renewable energy companies will face dual challenges of pricing and utilization rates. The bank raised the target price for CIMC ENRIC (03899.HK) from HKD 11.6 to HKD 12.5, recommending a "buy." It also rated GCL TECH (03800.HK), HPEC (600312.SH), and CKI HOLDINGS (01038.HK) as "buy," with target prices of HKD 1.8, RMB 28.3, and HKD 70, respectively