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Deb Price

Yujing Liu

Good day, traders --
Catch up on the day's action below.
And if you'd like the Live Stocks Blog emailed to you each morning, shoot Deb a message at deb.price@scmp.com.
-- Deb Price and Yujing Liu 
 


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Stocks

Stocks Blog: CK Life Sciences shoots up, HKEX rises on better-than-expected Q3 net profit drop 

Hotpot chain Haidilao is looking at acquiring four restaurants. Here, customers eat at a Haidilao hotpot restaurant in Hong Kong on September 22, 2018. Photo: Bloomberg 

Business

Markets

China hotpot leader Haidilao looking at 'possible' acquisition of four companies
First stocks drop below IPO price on new Star board


 CK Life Sciences soared on its reported advance in a melanoma vaccine in an ongoing clinical trial. HKEX reports a 10 per cent decline in its Q3 net profit. 


China stock market

Hang Seng Index

Apple

HKEX

Tencent Holdings

Live

The decision by China’s central bank to cut a key lending rate – the medium-term lending-facility (MLF) rate – for the first time since 2016 on Tuesday was a surprise to the market and could lead to further rate cuts, Citic Securities said.
The brokerage predicts a cut between 5 to 10 basis points to the loan prime rate (LPR), a new benchmark rate, in as soon as this month, analysts wrote in a report today.
The reduction in MLF rate has “sent a strong signal and opened up the room for interest rates to go lower,” chief economist Zhu Jianfang wrote.
-- Yujing Liu 


China's surprise cut in key rate could lead to further easing, Citic says

Here's what we are watching this morning:
Overnight markets/ What futures foretell
--The S&P 500 slipped 0.12 per cent, the Nasdaq inched up 0.02 per cent and the Dow Jones Industrial Average rose 0.1 per cent. 
-- Hong Kong futures are ahead 0.07 per cent, while the FTSE China A50 futures were down 0.09 per cent
IPO debuts: Changsha Broad Homes Industrial Group (2163 HK), Yincheng Life Service (1922 HK), Wenling Zhejiang Measuring and Cutting Tools Trading Centre (1379 HK),  Bloomage Biotechnology  (688363 CH), Hangzhou Hopechart IoT Technology (688288 CH), Ninbo Solartron Technology (688299 CH), Aofu Environmental Technology  (688021 CH), Lihe Technology Hunan (300800 CH). 
Economic statistics/Central Bank action: None to note
Earnings: HKEX (388 HK), Wynn Macau (1128 HK)


Morning guidance 

Haidilao (6862 HK), China's largest hotpot restaurant chain, has inked a non-binding memorandum of understanding on the "possible" acquisition of four companies, including Shanghai Yuanshu Catering Management, which runs nine Chinese food restaurants under the brand "Madam Zhu's Kitchen" in Beijing, Shanghai and Hangzhou. 
Also on the acquisition spree are Hao Noodle & Tea and Hao Noodle -- each of which operates one noodle restaurant under the brand "Hao Noodle" in New York -- and Shanghai Haocui Catering Management, which runs a "Hao Noodle" shop in Shanghai. 
Any such possible acquisition will be subject to due diligence, negotiation and formal agreement. The seller has agreed to negotiate exclusively with Haidilao for six months.
Haidilao, which operated 593 restaurants -- with 550 in mainland China -- aims to reap "synergy" and business growth from the acquisition targets, it said in a filing to Hong Kong's bourse late on Tuesday.
-- Eric Ng    


Haidilao looking at 'possible' acquisition of four companies

Sing Tao News Corp. (1105 HK), publisher of the Sing Tao Daily newspaper and free paper Headline Daily, said its largest shareholder and chairman Charles Ho Tsu-kwok is in preliminary talks with an independent potential purchaser, on a possible sale of a stake in the firm. 
Ho owns 48.98 per cent of the company's shares, it said in a filing to Hong Kong's bourse late on Tuesday. This follows the firm's announcement on Friday that it is in discussion with a possible independent investor that has shown interest in the firm. No potential buyer was named.
-- Eric Ng    


Sing Tao News in preliminary talks with potential purchaser 

Luxshare Precision Industry (2475 CH) is the main assembler of Apple AirPods, the company's second fastest selling product ever. It shot up 5.9 per cent Tuesday. 
 

   


Chart: Luxshare Precision has skyrocketed this year on popularity of Apple AirPods 

The Hang Seng Index slipped 0.4 per cent to HK$97.40 
Three heavyweights are mixed.
-- AIA (1299 HK) slipped 0.6 per cent to HK$81.90
-- HSBC (5 HK) inched up 0.08 per cent to HK$60.15
-- Tencent (700 HK) slipped 0.1 per cent to HK$332.60
Other stocks of note:
-- Haidilao (6862 HK), China's largest hotpot restaurant chain, slipped 0.5 per cent to HK$37.90, after it disclosed it has inked a non-binding memorandum of understanding on the "possible" acquisition of four companies.
-- Chinese mobile game giant CMGE (302 HK), which started trading on the main board of Hong Kong’s stock exchange last Thursday, rose 2.3 per cent to HK$3.96
-- Pork processing giant WH Group (288 HK) slipped 0.3 per cent to HK$8.72
-- Budweiser Brewing APAC (1876) fell 0.5 per cent to HK$29.20
-- Meituan Dianping (3690 HK) is flat at HK$97.15
-- Deb Price    


Hang Seng slips; Tencent, AIA down

The Shanghai Composite Index fell 0.2 per cent to 2,987. 
Here's how some of the most heavily traded stocks on the Shanghai-Hong Kong Stock Connect are doing:
-- Jiangsu Hengrui Medicine (600276 CH)  fell 0.5 per cent to 90.89  yuan
-- Kweichow Moutai (600519 CH)  inched up 0.2 per cent to 1,201.06 yuan
-- Ping An Insurance (601318 CH)  slipped 0.1 per cent to 89.96 yuan
-- Industrial Bank (601166 CH)  slipped 0.2 per cent to 19.96  yuan
Also of note: 
-- Luxshare Precision Industry (002475 CH), the main assembler of  AirPods – dropped 1.3 per cent to 34.31 yuan  
-- Deb Price 


Shanghai Index slips, Kweichow Moutai inches up 

The first stock on the new technology Star board in Shanghai has dropped below its initial public offering (IPO) price.
Shanghai Haohai Biological Technology (688366 SH) dipped by as much as 1.6 per cent to 88.53 yuan in early trading, trending below its IPO price of 89.23 yuan.
Stocks rarely decline below their IPO prices in China’s A-share market, where the securities watchdog has a tight grip over the approval of new listings.
Investors expressed mixed feelings on online stocks forum Xueqiu.
“It’s a good thing that the market is becoming more rational,” one user wrote. “It finally came – I’m a little scared to subscribe for new shares today,” another wrote.
Shanghai Haohai Biological Technology jumped 46 per cent from its IPO price to close at 130.7 yuan on its first day of trading on October 30.
-- Yujing Liu


First stock drops below IPO price on new Star board

Two Chinese companies, Changsha Broad Homes Industrial Group (2163 HK) and Yincheng Life Service (1922 HK), started trading on the Hong Kong Stock Exchange today.
Chinese property management company Yincheng Life Service rose 13.8 per cent to 2.48 at the open from the offer price of HK$ 2.18. It is now trading at HK$2.58.  
The shares were oversubscribed by 382.88 times before trading. The company will raise about HK$ 108.2 million.
Yincheng Life Service had a revenue of 468 million yuan and a net profit of 27.09 million yuan in 2018. Property management services were the main source of revenue, accounting for more than 78.6 per cent.  The majority of the money raised, 60 per cent, will be used to invest in property management companies in the Yangtze River Delta region.
Meanwhile, the shares of Chinese prefabricated construction company Changsha Broad Homes Industrial Group fell 10.1 per cent to open at HK$8.7 from the initial offering price of HK$9.68. It then started climbing and was last trading at HK$9.38.
It aims to raise about HK$ 1.07 billion. The shares were oversubscribed by 1.38 times before trading.
It will use the majority of the proceeds to invest in precast concrete unit manufacturing and expand business overseas.
In terms of revenue in 2018, Changsha Broad Homes Industrial Group is the largest precast concrete unit and equipment manufacturer in China with market shares of 13 per cent and 38.3 per cent respectively, according to Frost & Sullivan.
Changsha Broad Homes Industrial Group has three cornerstone investors — Zoomlion International Trading (HK), Changsha Changtou Industry Investment, and Evergreen Commercial Company.
Wenling Zhejiang Measuring and Cutting Tools Trading (1379 HK) was to go public today, but has delayed its listing.
 
Changsha Broad Homes Industrial Group Co., Ltd. (2163), and Yincheng Life Service CO., Ltd. (1922) started trading on the Hong Kong Stock Exchange today. @SCMPNews @scmpbusiness @HKEXGroup pic.twitter.com/XJxf0VNbuc
  — Snow Xia (@SnowXia05) November 6, 2019
-- Snow Xia   


Two Chinese companies bang the gong in Hong Kong

Shares of Bloomage Biotechnology (688363 CH) , which produces skincare and medical products in Shandong province, jumped 46 per cent to 78 yuan, from an initial public offering price of 53.40 yuan on the Shanghai exchange.
Hangzhou Hopechart IoT Technology (688288 CH), a Zhejiang-based producer of smart automotive systems, traded for the first time at 35 yuan, a 25 per cent premium to its initial public offering price of 27.93 yuan in Shanghai.
Ningbo Solartron Technology (688299 CH), which makes optical films and solar panels in Zhejiang province, rose 20 per cent in its Shanghai trading debut to 18.45 yuan, from its IPO price of 15.32 yuan.
Aofu Environmental Technology (688021 CH), a Shandong-based maker of high-tech ceramic products such as regenerators and catalyst carriers, advanced 2.6 per cent to 30 yuan when its shares traded for the first time in Shanghai, from an IPO price of 29.24 yuan.
Lihe Technology Hunan (300800 CH), a Hunan-based producer of measuring and control devices, opened 7.4 per cent higher at 60.77 during its trading debut on the Shenzhen exchange, compared with an IPO price of 56.59 yuan.
-- Eugene Tang 


Busy IPO morning in China 

Yincheng Life Service (1922 HK), which debuted today, will expand its non-residential property management business in the Yangtze River Delta region, one of its executives said.
“In the future, the company will continue to expand its non-residential business, so as to improve the level of profit,” said Li Chunling, executive director of Yincheng Life Service.
Yincheng Life Service’s shares were oversubscribed by 1.38 times before trading.
“The high subscription ratio indicates that Hong Kong's capital market is mature, and investors have their own evaluation of the value of Yincheng Life Service," said Xie Chenguang, chairman of the board. "To some extent, it is a recognition of our business model and the value we provide to customers.”
Chinese property management company Yincheng Life Service rose 13.8 per cent to 2.48 at the open from the offer price of HK$ 2.18. It is now trading at HK$2.51.
Changsha Broad Homes  (2163 HK), a construction company also started trading today. A reporter asked about how Changsha Broad Homes would perform without government subsidies. This year, it received a more than 20 million yuan subsidy.
“Government subsidy is the icing on the cake. The most important thing for enterprises is to rely on their own management, their own competitiveness to win more space for development,” Tang Fen, general manager and executive director, said in response.
Shares fell 10.1 per cent to open at HK$8.7 from the initial offering price of HK$9.68. They were last trading at HK$9.66.
-- Snow Xia    


Yincheng Life Service -- which debuted today -- will expand its non-residential property management business, one of its executive said.

China's currency strengthened for the fourth day against the US dollar, rising above the 7 per dollar level for the first time in three months. Offshore yuan strengthened to 6.9990 per dollar.
-- Eugene Tang


Yuan strengthens for fourth day 

Wireless headset-related stocks -- making up a new hot sector -- are mixed, with a gauge tracking them rising 0.2 per cent. Of the 25 stocks on the gauge compiled by data provider Xuangubao, 12 have risen in morning trading while 13 have fallen.
Battery maker Guangzhou Great Power Energy & Technology (300438 CH) shot up 8.7 per cent to 24.15 yuan.
Cosonic Intelligent Technologies (300793 CH), which makes bluetooth headphone products, jumped 6.8 per cent to 61.20 yuan. 
But Luxshare Precision Industry (002475 CH), the main assembler of  AirPods – the company’s second fastest-selling new product of all time -- fell 1.6 per cent to 34.19 yuan. The stock price is up more than 200 per cent this year due to Apple's upbeat outlook.
-- Deb Price    


Wireless headset-linked stocks mixed in early trading

Tencent (700 HK) is on track for its fifth straight day of gains, rising 0.06 per cent to HK$333.20 in morning trading.
China's social media and gaming giant is expected to report its third quarter results next Wednesday after market close.
Bloomberg Intelligence expects that its mobile game business will be strong but online advertising will be "tepid."
"Tencent may deliver accelerating growth for its mobile games business, but its online advertising segment could stay tepid. 3Q mobile games' sales growth could be the strongest in six quarters, based on SensorTower estimates," Bloomberg Intelligence analysts write in a new note.
"This is likely to be driven by the resilience of Honour of Kings, explosive growth of Peacekeeper Elite, and the low comparison base from 3Q18 stemming from China's freeze on game approvals in March 2018. While social ads growth should stay strong, media ads could see another quarter of decline, as macro factors hurt advertisers' sentiment, competition persists and content restrictions hit video ad sales. Nevertheless the recovery of the company's highly-profitable game segment should help to keep margins sequentially stable," they write. 
In the latest on ratings, BOCOM International Holdings maintained a buy on the company, but reduced its target price to HK$403 from HK$452.  
Previously, of analysts tracked by Bloomberg, 49 rate it a buy, eight a hold and zero a sell, with a 12-month target price of HK$411.77.

 
-- Deb Price 


Tencent looking for fifth straight day of gains

The Shanghai Composite Index will start afternoon trading underwater. It fell 0.2 per cent to 2,986 in the morning session.
Among sectors, new energy vehicles, wireless headsets, lithium batteries and steel rose, while blockchain, pig and chicken producers, and animal feed manufacturers fell.
Chinese stocks of note:
-- Jiangsu Hengrui Medicine (600276 CH)  fell 0.2 per cent to 91.16  yuan
-- Kweichow Moutai (600519 CH) slipped 0.02 per cent to 1,198.74
-- Luxshare Precision Industry (002475 CH), the main assembler of  AirPods – dropped 1.9 per cent to 34.09 yuan  
-- Deb Price    


Shanghai falls 0.2 per cent to 2,986 in morning session

The Hang Seng Index ended the morning session down a hair, slipping 0.08 per cent to 27,661.02.
Among Hong Kong stocks in the news of late:
-- Budweiser Brewing APAC (1876 HK) fell 0.3 per cent to HK$29.25
-- Chinese game giant CMGE (302 HK), also recently listed, gained 2.6 per cent to HK$3.97
-- Meituan Dianping (3690 HK), which recently became available to southbound traders through the Stock Connect program, fell 0.8 per cent to HK$96.35
-- Deb Price    


CMGE gains in Hong Kong, while Meituan Dianping falls

Tianjin Jiuri New Materials (688199 SH), a producer of photoinitiator  -- a common material used in the chemicals industry -- has become the second stock on the Shanghai technology Star board to drop below its initial public offering price.
The stock declined by as much as 7 per cent to 66.01 yuan in the morning session, plunging below its IPO price of 66.68 yuan on the second day of its public trading. The company rose 6.4 per cent on its trading debut on Tuesday.
-- Yujing Liu 


A second stock dives below IPO price on Star board

Hong Kong Exchanges and Clearing (388 HK) rose after reporting a 10 per cent decline in its net profit during the third-quarter as stock market turnover and fundraising activities fell due to unprecedented anti-government protests.
The operator of Asia’s third-largest stock market and owner of the London Metal Exchange said that its July to September quarter net profit stood at HK$2.2 billion (US$280 million), or HK$1.76 per share, down from HK$2.44 billion a year earlier. This has decreased by 15 per cent from the net profit of HK$2.6 billion in the second quarter before the city was hit by protests.
Its earnings per share of HK$1.76 per share beat market forecasts of HK$1.6, according to analysts polled by Bloomberg.
Its third-quarter revenue fell 6 per cent year on year to HK$3.34 billion, again beating consensus estimates of a 10 per cent drop.
Read full story here. 
-- Enoch Yiu  


HKEX rises after reporting Q3 decline in net profit that beat expectations 

In contrast, Chinese smartphone maker Xiaomi (1810 HK) is essentially flat since being available to mainland traders a little more than a week ago. Today it is down 0.6 per cent to HK8.98.
The two Hong Kong-listed stocks were the first to be added to the Stock Connect programme that have so-called weighted voting rights, which give founders and others more control over a company.
Xiaomi's shares have been beaten down this year as it struggled to create a revenue stream beyond smartphone sales, while investor darling Meituan has soared more than 100 per cent for the year.
Analysts predicted the stocks would get a bounce because mainland traders haven't had access to many of their biggest home-grown tech superstars, which usually choose to list elsewhere.
Here's a feature for investors by stocks reporter Yujing Liu on the development.
 

-- Deb Price 


Meituan Dianping has jumped since Stock Connect inclusion, but not Xiaomi

CK Life Sciences International Holdings (775 HK) shot up 69 per cent to 60 HK cents after reporting "improved outcomes" in clinical trials of a melanoma cancer vaccine by its wholly-owned US subsidiary Polynoma. 
On Friday, Polynoma will present clinical data from its ongoing phase III clinical study of seviprotimut-L, an investigational melanoma vaccine candidate, CK Life said in an exchange filing.
It said highlights will include improved outcomes of patients with melanoma. 
"Polynoma considers that the initial data from  (Melanoma  Antigen Vaccine Immunotherapy  Study) are  encouraging and that  with promising evidence of efficacy  and safety  as seen  in the analysis, seviprotimut-L has the potential to be an important new option for the adjuvant treatment  of patients with localized  melanoma," it said in its filing. "The preliminary  data from  MAVIS also suggest that seviprotimut-L could serve as  an important innovation  in the  vaccine-based treatment of  melanoma, where to date,  no vaccine has been approved for  the adjuvant treatment of melanoma."
It noted that the clinical trial is ongoing and the data must be reviewed. 
"There is accordingly no assurance of the outcome.  Shareholders of the company and potential investors are therefore advised to exercise  caution when dealing in the securities of the company," it said.  
-- Deb Price    


CK Life Sciences shoots up on reported advance in melanoma vaccine in clinical trial

The Shanghai Composite Index fell 0.4 per cent to 2,978.60, while the CSI 300 of large cap stocks traded in Shanghai and Shenzhen fell 0.5 per cent to 3,984.88.
Blockchain, pig and chicken producers, and animal feed manufacturers fell.
Chinese stocks of note to northbound Stock Connect traders:
-- Jiangsu Hengrui Medicine (600276 CH)  fell 0.1 per cent to 91.19  yuan
-- Kweichow Moutai (600519 CH), the world's most valuable liquor maker, fell 0.5 per cent to 1,193.
-- Luxshare Precision Industry (002475 CH), the main assembler of  AirPods – dropped 1.5 per cent to 34.24 yuan  
-- Deb Price 


China stocks fall, with AirPod assembler Luxshare Precision dropping 1.5 per cent

The Hang Seng Index extended a winning streak to a fifth session, eking a teensy gain as investors bagged profits awaiting fresh news on the US-China trade negotiations. 
The Hang Seng rose 0.02 per cent to 27,688.64, with a mere 5.24 point gain.
“The (China currency) back to 7 further boosted market sentiment yesterday, but we see investors willing to take profit at this level,” said Alan Li, portfolio manager at Atta Capital. “The (Hang Seng) index is likely to adjust back to 27,000 before challenging 28,000.
China Mengniu Dairy (2319 HK) was the benchmark's top loser, falling 5.9 per cent to HK$30.50, after the management of the milk and ice cream maker said the core operating gross profit margin can’t meet the target.
Property stocks rose. New World Development (17 HK) rose 1.2 per cent to HK$11.62, Sun Hung Kai (16 HK) rose 0.7 per cent to HK$121.30, China Overseas Land and Investment (688 HK) rose 1.1 per cent to HK$27.40, while Wharf Real Estate (1997 HK) climbed 1.2 per cent to HK46.80.    
CK Life Sciences International Holdings (775 HK) shot up 153.5 per cent to 90 HK cents after reporting "improved outcomes" in clinical trials of a melanoma cancer vaccine by its wholly-owned US subsidiary Polynoma. 
Hong Kong Exchanges and Clearing (388 HK) rose 0.4 per cent to HK$251.20 after reporting a 10 per cent decline in its net profit during the third-quarter as stock market turnover and fundraising activities fell amid the ongoing anti-government protests.
Haidilao (6862 HK), China's largest hotpot restaurant chain, fell 2.9 per cent to HK$37 after reporting in an exchange filing that it has inked a non-binding memorandum of understanding on the "possible" acquisition of four companies.
-- Deb Price    


CK Life Sciences shoots up 153.5 per cent; Hang Seng extends gains to fifth session

Tencent (HK 700)  and China property stocks were the drivers of the Hang Seng Index today, said Louis Tse Ming-kwong, managing director of VC Asset Management in Hong Kong.
Tencent rose 0.3 per cent to HK$334, marking its fifth consecutive session of gains. 
“Compared to other tech stocks, Tencent is a bit of a laggard. It has been down for some time…There were a couple of days with the news that the central government wants to control the time youngsters spend on games. There's a small impact on today's share price. Other than that, it’s OK,” said Tse.
In order to fight against video games addiction, the Chinese government issued new rules Tuesday to limit the time and money minors can spend on games, the state-owned Xinhua News reported.
Tencent’s upcoming release of its third quarter results next Wednesday boosted investors’ sentiment. 
“We do believe they [Tencent] are doing not bad during the third quarter, so the share price is still quite strong at the moment,” Tse said.
Tse believes another driver of the Hang Seng today was property stocks, in particular, China property stocks. 
“September and October are the golden months for property developers in China. These are the best months because they sell residential units,” said Tse.
Tse said, the latest interest rate cut also makes the property developers happy. 
On Tuesday, the People’s Bank of China lowered the the medium-term lending facility rate by 5 basis points to 3.25 per cent.
“So that could go well for those developer because property developer have high gearing, which means that they are laid with debts. You have to borrow to build and develop land. The best thing is that with the rate cut, you can sell more residential units during the two months of the year. That is also a bonus to developers,” said Tse.
Tse added that the other reasons behind the market burst are the positive outlook on the US-China trade talks and stronger RMB against the USD.
-- Snow Xia   


Stocks Blog: CK Life Sciences shoots up, HKEX rises on better-than-expected Q3 net profit drop

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}China hotpot leader Haidilao looking at 'possible' acquisition of four companies First stocks drop below IPO price on new Star board

China hotpot leader Haidilao looking at 'possible' acquisition of four companies

First stocks drop below IPO price on new Star board