Hong Kong Stock Market Review: Adding Insult to Injury
The Hang Seng Index continues to decline, with WuXi AppTec and WuXi Biologics stock prices falling. Both the PB and PE of WuXi Biologics have decreased, with the company's revenue mainly coming from outside China, facing uncertainties in legislation and EU protectionism. Platforms such as Temu, AliExpress, and Shein may raise the tax-free threshold. WuXi has suspended projects in the United States, potentially resulting in impairment losses. The management failed to instill confidence in the market, with minimal shareholder increases and discontinuous company repurchases. The consumer sector experienced a sharp decline, impacting Macau gaming stocks, but Trip.com remained resilient. The number of foreign visitors entering China has significantly increased, and Trip.com expects optimistic Q3 performance
Affected by the A-share market, the Hang Seng Index continues to decline. This year, WuXi AppTec and WuXi Biologics have fallen by more than 60%, leading other constituent stocks, but also hitting new lows for the year.
According to market forecasts, WuXi Biologics' PB ratio has fallen to 1x, and the PE ratio is also approaching single digits. However, with less than 20% of the company's revenue coming from China in 2023, uncertainties in legislation still reflect a bearish sentiment, while also fearing the increasing protectionism in the European Union. Apart from the recent implementation of new energy vehicle taxes, there are reports that thresholds for tax exemptions for platforms like Temu, AliExpress, and Shein are also being studied for cancellation.
Currently, it is said that WuXi has suspended a $300 million project in the United States, indicating that more projects may be suspended in the future or face overcapacity issues, which could lead to asset impairment losses.
Furthermore, with a bleak fundamental outlook, the management's inability to instill market confidence is adding insult to injury. Although major shareholders have increased their holdings, the amount is insignificant compared to past reductions, and the company's buybacks are not consistent, giving the appearance of perfunctory actions to the outside world.
In addition, the recent decline in the consumer sector has affected casino stocks today, but Trip.com remains resilient, likely due to its recent China Travel initiatives attracting many foreign tourists to visit China.
According to data, in the first half of this year, a total of 14.635 million foreigners entered China, a year-on-year increase of 152.7%, with 52% entering under visa-free policies, a 190% year-on-year increase.
This result can be considered more positive than expected. Trip.com also indicated that current summer inbound order volumes have increased by 100% year-on-year, mainly driven by a 150% year-on-year increase from 14 visa-free countries. The increase in volume offsets the price decline, indicating that Q3 performance can continue to be optimistic, and Trip.com will also maintain strong growth