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Yujing Liu

Deb Price

Srinivasan Iyer

Good day traders,
It was a mixed day for markets in Hong Kong and Shanghai. The Hang Seng was weighed down by property, utilities and consumer staples, while Shanghai closed flat.
Have a look below to see how the day's trading unfolded. 
If you have any feedback, please send them to deb.price@scmp.com .
-- Yujing Liu, Deb Price and Srinivasan Iyer in Hong Kong


Stocks Blog:  Hengan and Henderson pull Hang Seng down

Two statues of a bear and a bull are seen outside the Frankfurt Stock Exchange. Photo: Bloomberg

Business

Markets

Analysts predict 19 per cent decline in Hong Kong companies' operating profit
Investors drive Geely higher despite a tough second-half outlook   


Analysts predict 19 per cent decline in Hong Kong companies' operating profit


Stocks

China stock market

Hong Kong Stock Exchange

Hengan International Group

Live

When Taranvir Singh started investing, his parents warned him that stock investing was similar to gambling.
“I agree there is a certain element of luck. ...  But educated gambling is what makes the difference between investing and horse racing,” says the 21-year-old global business undergraduateat Hong Kong University Science and Technology.
He started investing two years ago after taking a basic finance class.
“I went up online, read a few articles, started following news and looking at all these apps. And then I just opened a brokerage account at the cheapest one of the cheapest brokerages available,” he says.
His first stock was Belle International (1880 HK), China’s top women’s shoe retailer, which eventually went private.
“I never really saw a company delisting or getting privatized after getting onto the public markets," he says.
The stock shot up, but he sold early and didn't enjoy the full upside of the gain.
"That was just one of the first stocks (which) could have been a fantastic start. But I was too early to get off the ride,” said Singh, who hopes to work in the banking and finance industry, or even open his own business.
Singh says the learning pains of investing are eventually worth it, though he warns other young investors to expect some rough days.
“It’s about being right,” he says. “Your judgement call is leading to results. The satisfaction can't be expressed in words.”

-- Joy Pamnani
Young Investors is a series appearing occasionally in the Stocks Blog in which young Hong Kong traders share what they’ve learned in their rookie days — the good, the bad and the ugly.


Young Investors: Taranvir Singh on the difference between betting on a stock and a horse

Ningbo-based auto body parts maker Minth Group (425 HK) posted late yesterday a 9.3 per cent year on year decline in net profit to 894 million yuan for the year's first half, slightly below the estimate of Macquarie Securities analyst Lou Jia's estimate of 900 million yuan.
Revenue rose 2.3 per cent to 6.13 billion yuan. Despite higher import tariffs on sales to the US, the firm said it was able to alleviate the impact by "optimising its globalised production layout and making quick response".
North America accounted for 20 per cent of total first-half sales, compared to 61.4 per cent from mainland China, 13.7 per cent from Europe and 4.9 per cent from Asia Pacific.
First-half overall gross profit margin slid to 32.4 per cent from 33.4 per cent in the year-earlier period, due to the car market downturn in China and the US import tariffs.
The stock is trading at 11.6 times its 2018 earnings per share with a dividend yield of 3.5 per cent. It has fallen 25 per cent since the start of the year, compared to a 5.3 per cent decline of the Hang Seng Index.
-- Eric Ng


Auto parts maker Minth Group profit comes below estimate

CGN Power (1819 HK), the listed flagship of China's largest nuclear power producer, reported a 10 per cent year on year rise in net profit to 5.02 billion yuan for the first six months.
It was driven largely by higher tax refunds and government grants and income from equity investments, as most of the revenue rise from high output was offset by higher finance and administrative expenses.
Revenue grew 15.3 per cent to 26.5 billion yuan, thanks to a 12 per cent rise in output as it commissioned more plants in its home province of Guangdong.
The company is forecast to post a net profit of 9.44 billion yuan for the whole of this year, according to the average estimate of 16 analysts polled by Bloomberg.
The stock has gained 12.8 per cent since the start of the year, compared to a 5.3 per cent fall in the Hang Seng Index.
-- Eric Ng


CGN Power posts 10 per cent rise in H1 net profit 

Here's what we are watching this morning:
US overnight markets/ What futures foretell
--The S&P 500 rose 0.82 per  cent, the Nasdaq rose 0.9 per cent and the Dow Jones Industrial Average climbed 0.93 per cent
-- Hong Kong futures were little changed, while the China A50 futures rose 0.4 per cent
IPO debuts: None to note
Economic statistics/Central Bank action: Nothing major scheduled
Corporate events:
Earnings: Anhui Conch (914 HK) China Life (2628 HK), China Overseas Land (688 HK), China Telecom (728 HK), Citic Securities (600030 CH), Country Garden (2007 HK), ENN Energy (2688 HK), Baiyunshan Pharma (874 HK) Hengan Int’l (1044 HK)
Good reads: Companies looking to list in Hong Kong have put their IPOs on hold amid an annual decline of as much as 40 per cent in the valuations of new share offerings in some cases, reports Enoch Yiu. China's top property developers are slashing prices to boost sluggish sales.


Morning guidance

China’s central government stepped up its efforts to support the pig farming industry, as an outbreak of African swine fever has sent output plummeting and pork prices soaring.
Subsidies to farms with culled pigs will be handed out more timely, and major hog producers and farm owners will receive more support in expanding their herds, the State Council said, according to a report by the official news agency Xinhua.
The cabinet also called on local authorities to scrap bans and limits on hog raising and encourage large-scale farming, the report added.
-- Yujing Liu


China announces support for disease-stricken pork industry

MMG (1208 HK), the Hong Kong-listed overseas mining unit of state-owned China Minmetals, posted a net loss of US$81 million for the year's first six months, compared to a profit of US$128.7 million in the year-earlier period.
It was steeper than the US$31 million loss estimated by CICC analyst Dong Yubo, according to Bloomberg. Revenue declined 27 per cent to US$1.39 billion, mainly on the back of a 11 per cent fall in international copper price and over two months of protests near its mainstay copper mine in Peru that disrupted production and led to a 25 per cent fall in sales volume.
Its mine in the Democratic Republic of Congo also saw sales plunge 29.3 per cent. MMG has revised down its production target for 2019 to 450,000-455,000 tonnes of copper, compared to an earlier target of 462,500-485,000 tonnes. It has maintained its full-year output target for zinc of 250,000-270,000 tonnes.
MMG was tipped to post a net profit of US$31.4 million for 2019, according to the average estimate of five analysts polled by Bloomberg.
-- Eric Ng


MMG, a unit of state-owned China Minmetals, swings to first-half loss

Electric vehicles maker BYD (2594 SZ), 24.6 per cent-owned by Warren Buffett's Berkshire Hathaway, announced a 203.6 per cent year on year jump in net profit to 1.46 billion yuan for the first half, below the 1.68 billion yuan average estimate of three analysts polled by Bloomberg.
Revenue of the Shenzhen-based firm grew 14 per cent to 59.2 billion yuan, as gross profit margin rose to 15.5 per cent from 13 per cent. First-half operating profit from car and related products surged to 2.38 billion yuan from 326.9 million yuan in the year-earlier period, as its market share in China's new energy vehicle market rose to 24 per cent from 20 per cent.
BYD, however, warned that its third-quarter profit will decline significantly year on year, resulting in a growth of only between 1.8 per cent and 14.9 per cent for the first nine months. It posted a net profit of 1.53 billion yuan in the year-earlier period. It cited a "considerable" reduction in new vehicles subsidies and slower demand for traditional vehicles to weigh on its earnings.
BYD is forecast to post a net profit of 3.27 billion yuan for 219, up from 2.78 billion yuan last year, according to the average estimate of 22 analysts. The stock was trading at 40.7 times its 2018 earnings per share.
-- Eric Ng


BYD profit jumps 200 per cent, but still comes below estimates

Hong Kong and mainland markets opened mixed, as no clear drivers are providing signs for traders.
The Hang Seng Index is down 0.22 per cent at 26,211.41. The Shanghai Composite Index is trading up by 0.18 per cent at 2,886.
In Hong Kong, Cathay Pacific (293) is trading up by 1.15 per cent at HK$10.54, as the stock continues to experience a bumpy ride after the city's flagship carrier got caught up in the protest storm.
On the mainland, Kweichow Moutai (600519 SH) is up nearly 1 per cent to 1,076.48 yuan. It is on track for its ninth consecutive day above the 1,000 yuan mark.
-- Deb Price


Markets open mixed

China’s cabinet has called for an expansion in the elderly care services industry to tackle problems associated with its ageing population.
The State Council has also set out goals to develop tourism and health care services suitable for the elderly, according to a report by the official news agency Xinhua.
The country will also support the development of commercial pension funds.
-- Yujing Liu


China announces guidelines to support elderly care sector

Chinese sportswear maker Xtep International Holdings (1368 HK) is heading for a second day of loss following its first-half results.
The stock plunged by as much as 9.6 per cent in early trading, before paring some of the losses to decline 7.4 per cent to HK$5.11 in the latest trading.
The sell-off has been apparently triggered by the latest earnings from Xtep, even though the company reported a 23 per cent year on year jump in net profit for the six months ended June to 463 million yuan (US$65.5 million).
-- Yujing Liu
 


Xtep on track for second day of loss after earnings

China Oilfield Services (601808 SH), whose largest customer is state-backed offshore oil and gas major CNOOC, returned to the black with a better-than-expected net profit of 973 million yuan for the first half, compared to a loss of 375 million yuan in the same period last year. The profit was much higher than 710 million yuan estimated by CCB International's analyst Cathy Chan.
Revenue jumped 66.6 per cent to 13.56 billion yuan - of which 22.3 per cent came from overseas projects, down from 24.5 per cent in the year-earlier period.
The firm is forecast to post a net profit of 1.25 billion yuan for 2019, according to the average estimate of 13 analysts polled by Bloomberg. The stock is up 18.6 per cent from the start of the year, against a 5.3 per cent decline of the Hang Seng Index.
-- Eric Ng


China Oilfield Services return to profit, beats estimates

Hong Kong stocks are poised for their worst quarter since 2015 and corporate earnings are unlikely to save them.
After a sell-off erased more than US$600 billion from the city’s equities, attractive valuations stood as a potential bright spot. But those multiples don’t look so good when analysts keep slashing their profit forecasts for 2019.
Their call for an average 19 per cent slump in operating income would be the biggest contraction for Hang Seng Index companies since the global financial crisis, data compiled by Bloomberg shows.
-- Eugene Tang


Hang Seng set for worst quarter since 2015

Shares of Bank of East Asia (23 HK) declined about 1 per cent to HK$20.65 in early trading, a day after the lender reported a 75 per cent drop in its first-half results.
Hong Kong’s largest and independently headquartered bank took a charge for impairment losses of HK$5.06 billion in the first six months of the year, largely due to downgrades of loans related to shopping malls and office space in non-tier 1 cities in mainland China as the economy slowed. As a result, its mainland business reported a loss attributable to owners of the parent company of HK$2.85 billion.
Brian David Li Man-bun, BEA’s co-chief executive, said its property lending business is now focused exclusively on top tier sponsors and cities in the mainland.The lender also warned that Hong Kong’s economy could be “constrained” through the end of 2019 because of fallout from social unrest in the city and a trade war that continues to rage between the US and China.
-- Chad Bray


Bank of East Asia down 1 per cent after profit sinks

Henderson Land Development (12 HK) plunged by 3.5 per cent to HK$37.55 in the latest trading, after it posted a 68 per cent decline in first-half revenue from real estate sales.
The developer, founded by Hong Kong’s second-richest man Lee Shau-kee, suffered the second consecutive double-digit percentage decline in interim revenue.
Henderson’s earnings have added worries to Hong Kong’s slowing property market, amid unprecedented social unrest that has lasted for almost three months.
Read full story here
-- Yujing Liu


Henderson slides after downbeat earnings

Shares of Kangmei Pharmaceutical (600518 SH) reversed some early losses and surged 4.8 per cent to 3.1 yuan in the latest trading.
The stock is on course to rise by by its daily upside limit of 5 per cent for the fourth consecutive session despite being found guilty of a massive financial fraud by the Chinese regulator.
Last Friday, the CSRC said that Kangmei had doctored its financial statements between 2016 and 2018 by 88.6 billion yuan ($12.6 billion). 
It is worth noting that Kangmei was transferred to a risk alert board under the Shanghai Stock Exchange in May as it was being investigated, so the daily stock movement band has been reduced to 5 per cent since then.
--  Xie Yu


Kangmei Pharma set to hit upside limit for fourth day in a row

Shares of Hong Kong and China Gas (3 HK) are poised to record a second day of loss, as several analysts lowered their price target for the stock following its disappointing first-half results.
The stock declined as much as 3.5 per cent in early trading, before trimming the losses to 2.3 per cent at HK$15.8. That took 12 points off the benchmark Hang Seng Index.
Shares of Hong Kong and China Gas dropped 5.2 per cent on Wednesday, after the company posted a 19 per cent decline in net profit to HK$3.9 billion for the first half from the same period last year.
Daiwa Capital Markets downgraded its recommendation for the stock to “hold” and lowered its 12-month target price to HK$17.9 from HK$18.5. Analysts at HSBC, Citi, Nomura and JPMorgan also cut their target prices.
-- Yujing Liu


Hong Kong and China Gas heading for back to back losses

Real estate stocks are getting hammered on the Hang Seng Index, with the sector down 1.9 per cent. Utilities stocks are also down, by 1.6 percent.
The only sectors seeing gains are health care and consumer discretionary stocks.
Geely Auto (175 HK) is leading gains, and is up 4.5 per cent to HK$11.54. It fell yesterday on weak earnings.
Shenzhen International Group (2313 HK), a textiles manufacturer, is on its way to being up five consecutive sessions. Its revenue is likely to grow 16 per cent a year through 2020, Bloomberg Intelligence analysts say, "as it leverages economies of scale at its Vietnamese and Cambodian factories to sidestep the risks of US tariffs on clothing produced in China."
Among property stocks, Wharf Real Estate Investment (1997 HK) is leading losses on the Hang Seng Index, falling 4.5 per cent to HK$11.54, followed by Henderson Land (12 HK), which is down 4.25 per cent to HK$37.15 after posting a 68 per cent decline in first-half revenue from real estate sales.
The Hang Seng was last down 0.8 per cent to 26,062.67.
-- Deb Price


Property stocks leading losses on Hang Seng

Investors can't seem to get their fill of Kweichow Moutai (600519 CH), which is up 1.9 per cent to 1,086.50 yuan.
The stock of the world's largest liquor maker is on its way to posting its ninth day above the 1,000-yuan mark.
Of analysts tracked by Bloomberg, 40 call it a buy, one a hold, and one a sell, with a consensus target price over the next 12 months of 1,104.91 yuan.
-- Deb Price


Investors drinking up Kweichow Moutai stock

Country Garden (2007 HK), China's largest builder by sales, reported a drop of 9 per cent of its contracted sales in the first six months ending June 30.
Its contracted sales fell to 281.95 billion yuan compared to 310.82 billion yuan in the same period in 2018.
The company reported a 23.4 per cent increase in core net profit,  which excludes valuation gains and foreign exchange losses, to 15.98 billion yuan, while total revenue grew 53.2 per cent to 202.02 billion yuan, it said in a filing to the Hong Kong stock exchange.
It released the results during the market's lunch break.
-- Pearl Liu 
 


Country Garden's contracted sales drop 9 per cent in first half of year

Cathay Pacific (293 HK) is on track to post losses for a third consecutive day.
Hong Kong's flagship carrier got tangled up in the protests that have rocked Hong Kong since June when Beijing disapproved of how it handled its employees' participation in the demonstrations. The turmoil for Cathay led to the resignation of CEO Rupert Hogg and hurt its brand among China travellers.
When the protests first led to the cancellation of flights at Hong Kong airport on August 12, the stock fell 4.85 per cent to HK$9.80. It rallied for the last three days of that week, ending at HK$10.60. It rose on Monday 0.9 per cent to HK$10.70 after Hogg's resignation. Since then, it has fallen.
It is trading down 1.3 per cent at HK$10.28.
 

-- Deb Price


Cathay Pacific shares lose altitude

Country Garden Holdings (2007 HK) is trading down 1.4 per cent to HK$9.86, after reporting a drop of 9 per cent in contracted sales.
-- Deb Price


Country Garden shares edge down

The ongoing protests could push the city's economy into a recession, says Kenny Wen, wealth management strategist at Everbright Sun Hung Kai.
"No one knows when the protests will end. The social unrest will hurt Hong Kong's economy. I worry that in the third quarter, we will have negative GDP growth and we will fall into recession," he said.
He said the Hang Seng Index is seeing selling pressure at about 26,200 points.
"Investors think further upside may be very limited above that level," Wen said.
The Hang Seng is trading down about 1 per cent at 26,011.27 points.
-- Deb Price


Crystal Ball: Hong Kong could fall into a recession, says analyst Kenny Wen

Electric vehicles maker BYD (1211 HK) is down 5.8 per cent to HK$40.70 after its first-half results came in below estimates.
It announced a 203.6 per cent year on year jump in net profit to 1.46 billion yuan for the first half, below the 1.68 billion yuan average estimate of three analysts polled by Bloomberg.
It also trades in China (002594 CH), where it down 3.1 per cent, at 50.01 yuan.
-- Deb Price


BYD slumps 5.8 per cent despite profit jump

MMG (1208 HK), the Hong Kong-listed overseas mining unit of state-owned China Minmetals, is down about 4 per cent to HK$1.69 after reporting a net loss of US$81 million for the year's first six months.
In the same period a year ago, it reported a profit of US$128.7 million.
-- Deb Price


MMG weighed down by first-half loss

China Overseas Land & Investment, a leading Chinese developer, said that its core profit, excluding net gains after taxes arising from changes in fair value of investment properties, rose 9.5 per cent to HK$20.99 billion in the first half.
It reported a 14.3 per cent increase in core profit in the same period last year.
The developer saw its revenue for the first six months rise 5 per cent to HK$88.6 billion.
Its contracted sales for the first six months were HK$ 194.2 billion, up nearly 30 percent from 18.5 per cent a year earlier. The gains come amid a cooling housing market in China where most developers have seen sales slow down or even drop.
The company announced an interim dividend of HK$0.45, up from HK$0.4 paid last year.
-- Pearl Liu


China Overseas impresses with core profit gains, contracted sales 

Kweichow Moutai (600519 CH) has crossed the 1,100-yuan mark for the first time. It is on track to end the day at an all-time high.
It is trading up 3.4 per cent at 1,102.20 yuan.
-- Deb Price


New milestone for Kweichow Moutai

Geely Automobile (175 HK) is on track to post its biggest gain in four months.
The Chinese car maker is up 7.4 per cent to HK$11.86.
That's its best day since April 17, when it jumped 12.8 per cent to HK$18.82.
It closed down on Wednesday, when it reported its profit fell 40 per cent to 4 billion yuan in the first half, while revenue was down 11 per cent to 47.55 billion yuan in the same period.
"Geely's earnings could struggle in coming months as rivalry intensifies in China's sluggish auto market," Bloomberg Intelligence analysts write. "... Margin pressure should persist on tougher competition from Japanese rivals -- such as Toyota, Nissan and Honda -- as they push for greater market share."
Investors, however, are taking a second look.
-- Deb Price


Geely stock hits the gas, is up more than 7 per cent

The Shanghai Composite Index ended with small gains, closing up 0.1 per cent at 2,883.44 points.
The Shenzhen Composite Index closed up 0.4 per cent, at 1,578.91 points.
-- Deb Price


Chinese markets end with tiny gains

The Hang Seng closed down 0.8 per cent at 26,048.72 points, weighed down by real estate, utilities and consumer staples.
Bucking the trend was Geely Automobile (175 HK), which ended up 7.6 per cent to HK$11.88, even as it faces a tough road ahead, according to analysts.
Leading losses was Hengan International Group (1044 HK), which sells sanitary napkins and disposable diapers in China. It fell 5.3 per cent to HK$53.70, after it reported first-half net income that was 3.6 per cent lower than the same period last year. It beat estimates by Bloomberg but that was not enough for investors.
Property stocks were hammered, as investors fled as worries mount about the impact of ongoing city protests on businesses including malls.
Wharf Real Estate Investment (1997 HK) fell 1.8 per cent to HK$44.80.
-- Deb Price
