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Deb Price

Yujing Liu

Snow Xia

Happy Friday, traders --
Today, China exports fell again, but the October drop was smaller than expected. CK Life Sciences (775 HK), which shot up more than 220 per cent over two days on its announcement of progress in clinical trials of a skin cancer drug, plunged in afternoon trading.
Catch up on the day below.
And if you'd like the Live Stocks Blog sent to you each morning via email, send Deb a message at deb.price@scmp.com.
-- Deb Price, Yujing Liu and Snow Xia 
 
 


Stocks Blog: CK Life Sciences plunges; 6 companies debut in Hong Kong -- the most on one day in 2019

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


Business

Markets

Rusal plunges on nine-month results 
Xiaomi’s price target dropped by First Shanghai Securities


Swire Pacific falls after saying it expects to post a lower recurring profit for this year. 


Stocks

China stock market

Tencent

HSBC

Swire Pacific

Cathay Pacific

Kweichow Moutai

Live

Overnight markets/ What futures foretell
--The S&P 500 rose 0.27, the Nasdaq climbed 0.28 per cent and the Dow Jones Industrial Average rose 0.66.
-- Hong Kong futures gained 0.39 per cent, while the FTSE China A50 futures rose 0.07 per cent
IPO debuts: 
In Hong Kong, TOT Biopharm International  (1875 HK), Shanghai Kindly Medical Instruments (1501 HK), Dalipal Holdings (1921 HK), Xinji Shaxi Group (3603 HK), Acme International Holdings Limited (1870 HK). On the mainland: BrightGene Bio-Medical Technology (688166 CH), Zhubo Design (300564 CH), Guangzhou GRG Metrology & Test (002967 CH)
Economic statistics/Central Bank action: China export and import trade data
Earnings: AAC Technologies (2018 HK), Rusal (486 HK)


Morning guidance 

All eyes will be on CK Life Sciences (775 HK) this morning, as speculators look for signs of whether its spectacular two-day run of more than 220 per cent gains is over.
On Wednesday, the stock soared 153.5 per cent. On Thursday, it added another 23.33 per cent in gains to end at HK$1.11. 
But there was some rollercoastering of the share price on Thursday, with the price ranging from a low of HK$1.02 to a high of HK$1.34.
 

-- Deb Price    


CHART: CK Life Sciences, which shot up 220 per cent over past two days

Swire Pacific (19 HK), parent company of Hong Kong carrier Cathay Pacific (293 HK), said on Thursday it expected to post a lower recurring profit for this year, mainly because of poor results at the airline, which has been adversely affected by about five months of anti-government protests in the city.
“The company’s consolidated recurring underlying profit for 2019 is expected to be below that of 2018,” it said in a filing to the Hong Kong bourse after the stock market closed on Thursday. “The expected results of Cathay Pacific are the principal reason for this,” it added.
However, after taking into account HK$13.4 billion (US$1.7 billion) in investment property disposal gains in the year’s first seven months and other non-recurring factors, overall profit for 2019 is still expected to be substantially above that of 2018.
Swire Pacific, one of Asia’s largest and oldest conglomerates controlled by the British Swire family, posted 40 per cent year-on-year growth in underlying profit to HK$4.23 billion in the year’s first half, with Cathay turning in an interim net profit of HK$1.35 billion – a turnaround from a loss of HK$263 million last year.
But Cathay’s fortunes have rapidly deteriorated in the past few months, with passenger throughput falling 11.3 per cent year on year in August and by 7.1 per cent in September. Its September inbound traffic dived 38 per cent from a year ago, as travellers were deterred by the city’s increasingly violent protests, some of which took place at the airport.
Read full story by Eric Ng here. 


Swire issues profit warning, as protests hurt Cathay Pacific 

The Hang Seng Index slipped 0.2 per cent to 27,802.06.
Three index heavyweights are mixed.
-- AIA (1299 HK) rose .0.1 per cent to HK$83.45
-- HSBC (5 HK) slipped 0.2 per cent to HK$60.10
-- Tencent (700 HK) fell 0.4 per cent to HK$332.20
Other stocks of note:  -- CK Life Sciences (775 HK) jumped again, rising 6.3 per cent to HK$1.18. It has had a spectacular two-day run of more than 220 per cent gains. It reported “improved outcomes” in clinical trials of a melanoma cancer vaccine by its wholly-owned US subsidiary Polynoma. 
-- Blockchain-related stocks rose. Pantronics (1611 HK) climbed 2.2 per cent to HK$5.92, while Grandshores Technology Group (1647 HK) climbed 1.6 per cent to 64 HK cents.
-- Budweiser Brewing APAC (1876) is flat at HK$29.30
-- Meituan Dianping (3690 HK) fell 3.5 per cent to HK$95.05
  -- Deb Price    


Hang Seng slips, while CK Life Sciences jumps up again

The Shanghai Composite Index rose 0.4 per cent to 2,989.
Here’s how some of the most heavily traded stocks on the Shanghai-Hong Kong Stock Connect are doing:
-- Jiangsu Hengrui Medicine (600276 CH)  rose 1.1 per cent to 91.59 yuan
-- Kweichow Moutai (600519 CH) climbed 1 per cent to 1,214.18 yuan
-- Ping An Insurance (601318 CH)  inched up 0.1 per cent to 89.85 yuan
-- Industrial Bank (601166 CH)  fell 0.5 per cent to 20.06  yuan
Also of note: 
-- Luxshare Precision Industry (002475 CH), the main assembler of  AirPods – rose 0.8 per cent to 34.68 yuan  
-- Deb Price    


Shanghai rises, Kweichow Moutai climbs 

Guangzhou GRG Metrology & Test (002967 SZ), which provides environmental and other kinds of testing services, surged by 33 per cent to 9.9 yuan in Shenzhen’s early trading from its initial public offering (IPO) price of 7.43 yuan.
Zhubo Design (300564 SZ), an architecture designing firm, soared by 32 per cent to 30 yuan from its IPO price of 22.69 yuan.
BrightGene Bio-Medical Technology (688166 SH), a biopharmaceuticals firm based in Jiangsu province that went public on Shanghai’s Star technology board, skyrocketed by 130 per cent to 29.3 yuan from its IPO price of 12.71 yuan.
-- Yujing Liu 


Chinese IPOs soar in early trading

Six companies, Shanghai Kindly Medical Instruments (1501 HK), Acme International Holdings Limited (1870 HK), TOT BIOPHARM International (1875 HK), Dalipal Holdings (1921 HK), Beng Soon Machinery Holdings (1987 HK), and Xinji Shaxi Group (3603 HK) started trading on the main board of Hong Kong Stock Exchange today.
  Shanghai Kindly Medical Instruments, a producer of heart surgery equipment, shot up 29.8 per cent to HK$27 in the trading debut, from the offering price of HK$ 20.8. The shares were oversubscribed by 120 times. It is trading at HK$28.25.  In terms of sales revenue in 2018, Shanghai Kindly Medical Instruments was ranked as the first in China’s market of Percutaneous Coronary Intervention (PCI) device, which is inserted to open up blood vessels in the heart. The company has a market share of 3.1 per cent, according to business consulting firm Frost & Sullivan.
Acme International Holdings Limited jumped 13.4 per cent to HK$1.1 in the trading debut, from the offering price of HK$ 0.97. The shares were oversubscribed by 19.13 times. It then slipped and was recently trading at HK$0.97. 
In terms of revenue in 2018, Acme International was ranked first among the providers of building maintenance unit (BMU) systems, which are machines put on top on buildings for cleaning, with a market share of 49.9 per cent. Also, it was ranked eighth among the top ten Hong Kong’s providers of facade works, with a market share of 4.7 per cent, according to global market research firm Ipsos’ report.
TOT BIOPHARM International fell 1.8 per cent to HK$6.43 in the trading debut, from the offering price of HK$ 6.55. The anti-cancer biotech company’s shares were oversubscribed by 11.95 times. It continued to sliped and was recently trading at HK$6.24.
It is an unprofitable anti-cancer biotech company with 12 drugs under development, among which, four drugs are at the clinical stage.
The core drug, TAB008 that can treat non-squamous non-small-cell lung cancer (nsNSCLC) and metastatic colorectal cancer (mCRC), is going through Phase III clinical trials.
Dalipal Holdings was flat on its opening from the offering price of HK$ 1.59. The shares were oversubscribed by 1.5 times. It has slipped to HK$1.51 in early trading. 
Dalipal is a manufacturer of oil country tubular goods (OCTG), which are used for oil and gas exploration. The company was ranked third among all the OCTG manufacturers in China with the market share of 9.6 per cent, according to a report by the Construction Industry Council.
Beng Soon Machinery Holdings Limited, a demolition service provider in Singapore, rose 6 per cent to HK$.53 in its trading debut, from the offering price of HK$ 0.5. The shares were oversubscribed by 25 times. It is now trading at HK$.51.  It is the largest demolition services provider in Singapore in terms of total revenue in 2018, with a 33.2 per cent market share, according to Frost & Sullivan. It is one of the few companies in Singapore with expertise in demolishing power and chemical plants.
Xinji Shaxi Group jumped 29 per cent to HK$1.29 in its trading debut, from the offering price of HK$ 1.00. The shares were oversubscribed by 3.58 times. It slipped afterwards and is now trading at HK$1.18.  Xinji Shaxi Group operates five shopping malls with hospitality and home supplies in two cities of China, Guangzhou and Shenyang, with a gross floor area of 363,000 square meters in total.
 
Shanghai Kindly Medical Instruments (1501), Acme International Holdings (1870), TOT BIOPHARM International Company (1875), Dalipal Holdings (1921), Beng Soon Machinery Holdings (1987) & Xinji Shaxi Group (3603) started trading on the Hong Kong Stock Exchange today @scmpbusiness pic.twitter.com/FUPJnuzSJI
  — Snow Xia (@SnowXia05) November 8, 2019
— Snow Xia   


Six companies bang the gong in Hong Kong

Swire Pacific (19 HK), parent company of Hong Kong carrier Cathay Pacific (293 HK), fell 0.5 per cent to HK$76.25 after saying in a filing late Thursday that it expects to post a lower recurring profit for this year.
It blamed most of the problem on poor results of Cathay, which got got up in the turmoil of the anti-government protests in Hong Kong.
Cathay Pacific fell 0.8 per cent to HK$10.20.
-- Deb Price    


Swire Pacific falls after reporting it expects to post lower recurring profit

Aluminum producer United Company Rusal (486 HK) plunged 6 per cent to HK$3.41 after reporting its revenue fell 8.8 per cent in the first three quarters of the year.
In an exchange filing, it said revenue in the nine months dropped to US$7.22 billion as compared to US$7.9 billion for the same period of 2018. 
It cited the decline of the London Metal Exchange aluminium price by 16.4 per cent to US$1,804 per tonne as compared with US$2,158 per tonne for the comparable period.
It said that weight was partially offset by a 9.8 per cent increase in primary aluminium sales volume.
Its EBITDA -- earnings before interest, tax, depreciation and amortization -- in the third quarter decreased to US$237 million representing a decline of 64.9 per cent from US$676 million for the corresponding period of 2018. 
Its net profit was US$819 million for the nine months, as compared with US$1.54 billion for the same period of 2018.
“While the potential for future price recovery and market growth is still largely undermined by the ongoing US-China trade tensions, positive signs in the automotive markets across Europe and South America and the interest rate cut in Russia should boost demand for end-use aluminium in the upcoming year,” it said in its filing.
“Another source for future growth will come from the rising consumer demand for green aluminium as sustainability continues to advance as a major issue in the industry. Being one of the leading producers of green aluminium globally, RUSAL is ready to provide new opportunities for environmentally concerned consumers and investors.“
-- Deb Price     


Rusal plunges on nine-month results 

Yunnan Water (6839 HK) fell 0.6 per cent to HK$1.74, getting no bounce off its announcement that it is one of three companies awarded a public-private partnership contract to build wastewater treatment plants in Guangdong province. 
The project, valued at 191 million yuan (US$27.37 million), involves the building of five wastewater treatment plants in five towns including Shitan Town, Jintan Town, Longjing Town, Sankeng Town and Shantang Town, it said in an exchange filing.
“The Directors are of the view that the Project, as one of the ten welfare projects in Guangdong Province, is highly regarded by the government, and its implementation can present a golden opportunity to the Group to further expand its business in the northwest of Guangdong, improve its profitability, enhance its influence in the environmental protection industry of Guangdong and achieve cross-regional development,” it said in its filing. 
“Through the implementation of the Project, the Group can fully leverage on its experience in undertaking wastewater treatment projects in other regions of Guangdong to form a synergistic effect, thereby achieving more refined water supply and drainage management and boosting the Group’s profitability,” the company said.
-- Deb Price    


Yunnan Water falls despite contract award to help build 5 wastewater treatment plants 

China's October trade balance comes in at US$42.81 billion, beating the estimated US$40.10 billion.
China's October exports shrank 0.9 per cent in dollar terms, a smaller decline than the estimated 3.9 per cent.
China's October imports fell by 6.4 per cent in dollar terms, smaller than the estimated 7.8 per cent decline. 
-- Eugene Tang 


China trade balance for October is US$42.81 billion, beating estimates

Chinese computer maker Lenovo (992 HK) fell for a second day, declining 1 per cent to HK$5.99 after failing to excite investors with its Thursday report that its six-month profit attributable to shareholders rose 48 per cent. 
In a stock filing at Thursday’s lunch break, it said profits attributable to shareholders in the six-month period were US$364 million. For the second quarter, they increased 20 per cent to US$202 million.
Revenue for the six months was up 3 per cent to US$26.034 billion, while for the second quarter it was up 1 per cent to US$13.52 billion. 
Lenovo is threatened by new US tariffs on laptops starting December 15, if a trade deal isn’t worked out. 
“Looking ahead, the global demand for technology products is expected to remain volatile amid a complex macro environment. However, going forward, Lenovo is well positioned to manage complex and dynamic market conditions, while continuing to deliver sustainable long-term results,” it said in its filing.
“The Group will continue to target premium-to-market revenue growth with industry-leading profitability in its PCSD business through further expansion in the high-growth and premium segments. Building capabilities to drive sales growth in software and services will remain a focus. For its Mobile business, the Group will continue to strengthen its competitiveness in target markets to sustain profitable growth while extending its technology leadership,” it said.
Of analysts tracked by Bloomberg, 15 rate it a buy, five a hold and 1 a sell, with a 12-month target price of HK$6.83.
In a new note, Bloomberg Intelligence analyst Anand Srinivasan said the company’s PC segment growth “tapered to its lowest level in the past nine quarters, potentially affected by Intel CPU shortages. This, coupled with its continuing weakness in the hyperscale-driven Data Center Group, led to below-consensus sales.
“Cheaper memory pricing expanded pretax margins in both the PC and the Mobile groups, which continued to be profitable for the fourth quarter in a row. Data Center weakened amid inconsistent hyperscale buying, and subscale revenue expanded the segment’s pretax losses. Management still sees its 2H being stronger than 1H, even as its China region saw sales strength.”
Its second quarter sales of  $13.52 billion were slightly lower than consensus of $13.7 billion, but better margins propelled net income to top consensus, the BI analyst wrote.
It closed down 0.3 per cent on Thursday. 
 

-- Deb Price 


Lenovo slides for second day after results fail to ignite investor excitement

Shares of Link Reit (823 HK), one of the biggest operators of suburban shopping centres and car parks in Hong Kong, reversed two days of gains with an intraday decline of as much as 0.8 per cent to HK$85.35, after a 22-year-old student who took a fall on Monday at its Sheung Tak Estate car park died from his injuries.
The student had been in a coma since Monday after taking a fall from the third floor to the second floor of the car park. 
-- Eugene Tang 


Link Reit declines as student who suffered brain injury after fall dies

TOT Biopharm International  (1875 HK) expects a number of its new anti-cancer drugs will reach the market in the next five years, its chief executive said at the company’s trading debut in Hong Kong.
Liu Jun, chief executive of TOT BIOPHARM, said while China has a big market for generic drugs, his company is positioned  on developing original medicines.
“We are a professional anti-tumor company, different from other companies. We have a whole industrial chain, research and development, production, clinical trials, and marketing. We have built a large-scale monoclonal antibody production base. Our drugs can treat nine of the top 10 cancers in China, especially with the monoclonal antibody being our main product,” said Huang Chunying, general manager and chief executive.
Its core drug is TAB008, which is going through Phase 3 clinical trials. It will be in the market next year. And the company will have medicines going to the market each year in the next five years.
Huang said the company aims to provide high-quality, reasonably priced drugs to cancer patients in China.
“Patients in China cannot access to adequate drugs. The survival rate of cancer patients in China is much lower than that in the United States, because there is a shortage of important drugs,” Huang said.
About 3.93 million people in China were diagnosed with cancer and about 2.34 million patients died from cancer in 2015. The mortality rate of cancer grew at 2.5 per cent each year, according to a report released by China’s National Cancer Center (NCC) in 2015.
The shares have slipped from their opening price of HK$6.43 to HK$6.14 at the lunch break.
-- Snow Xia 


TOT Biopharm expects to get a number of new anti-cancer drugs to market over next 5 years, executives say

Chinese smartphone maker Xiaomi (1810 HK) fell 0.3 per cent to HK$8.90, as First Shanghai Securities dropped its target price on shares to HK$12.73 from HK$12.76 while maintaining a “buy” rating.
Xiaomi’s shares are down more than 30 per cent this year as it has struggled to create a revenue stream beyond smartphone sales. 
It became available on the Stock Connect to mainland China traders on October 28.  Some analysts expected that to give Xiaomi a boost. But since the close on October 25, after which China authorities said it and online ticketing to food delivery services Meituan Dianping (3690 HK) would be available on the Connect, to Thursday’s close, its shares have fallen 1.4 per cent. 
It reports results next Thursday.
Of analysts tracked by Bloomberg, 27 rate it a buy, nine a hold, and two a sell.
 

-- Deb Price    


Xiaomi’s price target dropped by First Shanghai Securities 

“We saw a correction today because the HSI rose to overbought level at 27,900 points yesterday, ” said wealth management strategist at Everbright Sun Hung Kai. 
“While waiting for more news about the trade deal, some investors choose to lock in profits. That’s why today Hong Kong stocks didn’t follow U.S. market,” Wen said.
While saying he feels saddened by the death of a Kong University of Science and Technology student who reportedly fell to his death near where police were carrying out a dispersal operation  with rounds of tear gas, he said it is not having a significant impact on the Hong Kong market.
Meanwhile, on Tencent (700 HK), which is down 1.5 per cent to HK$328.60, Wen said investors are worried about Beijing policy risks and also want to have money to invest in Alibaba, which is the focus on hot speculation it will do a secondary listing in Hong Kong. The company, which owns the South China Morning Post, has declined to comment on its possible listing.
The Shanghai Composite Index, which is down 0.3 per cent at 2,969 is “range trading without clear direction. Sentiment improved and valuations are cheap, but 3,000 points seems to be a key resistance,” Wen said.
-- Deb Price 


Hang Seng weighed down by profit taking, says Kenny Wen

CK Life Sciences (775 HK) plunged 8.1 per cent to HK$1.02 in afternoon trading.
The stock had shot up more than 200 per cent on Wednesday and Thursday on news of positive signs for its skin cancer treatment in clinical trials.
-- Deb Price    


CK Life Sciences plunges in afternoon  

Chinese insurance stocks could lead the market in the remainder of 2019 as the sector has underperformed significantly this year, according to a recent report by investment bank Credit Suisse.
“Given their higher beta, sensitivity to headline macro risks and attractive valuation, a partial trade deal should lead to renewed investor interest in the sector,” the report says.
Credit Suisse is neutral on China equities, as it thinks the toughest issues in the US-China relations are yet to be resolved even with an initial ceasefire to the trade war.
-- Yujing Liu 


Chinese insurers to outperform with partial trade deal, Credit Suisse says

The Shanghai Composite Index fell 0.5 per cent to 2,964.19, failing to break through the 3,000-point resistance level. 
It last closed above 3,000 on October 14, when it finished at 3,007.88. The benchmark is up about 19 per cent for the year.
The CSI 300 of large cap stocks traded in Shanghai and Shenzhen fell 5 per cent to 3,973.01.
Winning sectors, according to gauges tracking them, included wireless headsets, up 2.3 per cent, while blockchain-related stocks fell 1.2 per cent, and chicken stocks dropped 2.5 per cent.
Here’s how some of the most heavily traded stocks on the Shanghai-Hong Kong Stock Connect did:
-- Jiangsu Hengrui Medicine (600276 CH)  rose 0.8 per cent to 91.30 yuan
-- Kweichow Moutai (600519 CH) inched up 0.3 per cent to 1,205 yuan
-- Ping An Insurance (601318 CH)  slipped 0.7 per cent to 89.17 yuan
Also of note: 
-- Luxshare Precision Industry (002475 CH), the main assembler of  AirPods – made a small 0.2 per cent gain to 34.46 yuan  
-- Deb Price    


Shanghai slides, failing to break through 3,000 -- again 

Shares of Geely Automobile Holdings (175 HK) rose by as much as 3.4 per cent to HK$15.78, the highest intraday level since April 30, after China's largest privately owned carmaker said it plans to sell a US dollar-denominated perpetual bond.
Moody's Investors Services assigned a Baa3 senior unsecured rating to the plan, with a "stable" outlook.
"The proposed perpetual securities issuance will further boost Geely's liquidity buffer and support its ongoing investments in research and development, without significantly affecting its solid credit metrics and reported net cash position," says Gerwin Ho, a Moody's Vice President and Senior Credit Officer.
It closed with a gain of 1.8 per cent at HK$15.54.
-- Eugene Tang


Geely gets boost on plan to sell USD-denominated perpetual bond

Six new companies started trading in Hong Kong today -- the most in one day this year.
Three of them soared: Acme International Holdings Limited (1870 HK) skyrocketed 46 per cent to HK$1.4, Xinji Shaxi Group (3603 HK) soared 30 per cent to HK$1.30, and Shanghai Kindly Medical Instruments (1501 HK) shot up 29.8 per cent to HK$27.
TOT BIOPHARM International (1875 HK) fell 4.4 per cent to HK$6.26,  Dalipal Holdings (1921 HK) dropped 3.8 per cent to HK$1.53, and Beng Soon Machinery Holdings (1987 HK) declined 5.7 per cent to HK$50.
One Hong  Kong-listed stock in the spotlight this week -- CK Life Sciences (775 HK) -- plunged 9.9 per cent to HK$1. It had been up more than 200 per cent over two days after it announced progress in the clinical trials of its treatment for skin cancer.
Chinese smartphone maker Xiaomi (1810 HK) fell 1 per cent to HK$8.8 per cent, as First Shanghai Securities dropped its target price on shares to HK$12.73 from HK$12.76 while maintaining a “buy” rating. 
Aluminum producer United Company Rusal (486 HK) closed down 3.9 per cent at HK$3.49 after reporting its revenue fell  8.8 per cent in the first three quarters of the year.
The Hang Seng Index finished down 0.7 per cent at 27,651.1, as investors pocketed gains after the late rally Thursday on positive news on US-China trade negotiations. 
But its weekly performance was its best in two months, as it gained 2 percent on progress on a US-China trade deal.
The tragic death of a college student who suffered a brain injury after he fell from a car park near a confrontation area of protesters and police did not weigh on the index, said Dickie Wong, executive director of research at Kingston Securities.
“Very sad,” Wong said. “Although I don’t see the correlation between this tragedy and the pullback of the stock market. Inevitably the death of the student may increase the tension between protesters and the government.”
-- Deb Price 
