Zhitong Hong Kong Stocks Early Insight | CPIC's net profit for the first three quarters is expected to increase by 60% to 70% year-on-year. Horizon Hong Kong IPO plans to issue 1.355 billion shares

[Today's Headlines]

State Council Information Office to hold press conference on promoting stable and healthy development of real estate market

The State Council Information Office will hold a press conference at 10:00 am on Thursday, October 17, 2024, where Minister of Housing and Urban-Rural Development Ni Hong, as well as officials from the Ministry of Finance, Ministry of Natural Resources, People's Bank of China, and China Banking and Insurance Regulatory Commission will introduce the relevant situation of promoting the stable and healthy development of the real estate market and answer questions from reporters.

[Market Outlook]

Philadelphia Semiconductor Index falls more than 5%

As of the closing of the U.S. stock market overnight, the Dow Jones fell 324.80 points, or 0.75%, to 42,740.42 points; the Nasdaq fell 187.10 points, or 1.01%, to 18,315.59 points; and the S&P 500 fell 44.59 points, or 0.76%, to 5,815.26 points. The Philadelphia Semiconductor Index fell more than 5%, with NVIDIA (NVDA.US) down 4.6%, AMD (AMD.US) down 5%, and ASML (ASML.US) down 16%.

The Nasdaq Golden Dragon Index fell by 5.9%, with Alibaba (BABA.US) down 5.5%. The Hang Seng Index ADR fell, closing at 20,081.29 points, down 237.50 points or 1.17% from the Hong Kong market close.

[Hot Topics Preview]

Ministry of Finance and two other departments: Implementing water resource tax based on quantity for groundwater and determining tax amount based on high usage

According to the Securities Times, the Ministry of Finance, the State Administration of Taxation, and the Ministry of Water Resources recently jointly issued the "Implementation Measures for Pilot Reform of Water Resource Tax." It mentions that the water resource tax will be based on quantity. The tax amount for using groundwater will be determined based on high usage. For the same type of water usage, the tax amount for groundwater should be higher than surface water. In areas with severe water scarcity and overload, the tax amount for water usage will be determined based on high usage. For unauthorized water usage, exceeding permitted water usage, or exceeding the water withdrawal plan, the tax amount will be appropriately increased based on the actual situation.

China Construction Machinery Industry Association: Sales of various forklifts in September reached 106,002 units, a year-on-year increase of 6.06%

According to statistics from the China Construction Machinery Industry Association on major forklift manufacturers, in September 2024, a total of 106,002 forklifts of various types were sold, representing a 6.06% year-on-year increase. Of these, domestic sales were 62,755 units, a 5.32% decrease year-on-year; while exports reached 43,247 units, a 28.5% increase year-on-year.

Pharmacist Help (09885) plans to acquire 100% of the issued and outstanding shares of Folding Space (Cayman) Ltd. for approximately 1.035 billion RMB

According to the Securities Times, Pharmacist Help (09885) announced that on October 15, 2024 (after the trading hours of the Hong Kong Stock Exchange), the company, the seller, founders, target guarantors, Great Dehongyi, and Dezhiqing entered into an agreement. Under this agreement, the seller agreed to sell and the company agreed to purchase the shares to be sold (in total representing 100% of the issued and outstanding shares of the target company Folding Space (Cayman) Ltd.), for a total consideration of approximately 1.035 billion RMB. The cash consideration is 420 million RMB, and the share consideration is 615 million RMBThe consideration for the share part is to issue new shares to a pharmaceutical original shareholder at HKD 12 per share, with a premium of 63.04% over the closing price on the day the acquisition agreement was signed, reflecting the mutual recognition of the value of Pharmacist Help Company by both buyers and sellers.

Established in 2019, One Pharmacy is headquartered in Changsha, focusing on providing medical health products and services to downstream chain pharmacies, multi-body pharmacies, and single-body pharmacies. Its own drug brands such as Yuandian, Antaibang, and Xinglintai cover multiple categories including Chinese medicine, chemical medicine, and health supplements. Currently, One Pharmacy has established strategic partnerships with over 1,000 pharmaceutical companies, providing about 700 own-brand SKUs to the headquarters of 3,000 chain pharmacies and tens of thousands of multi-body and single-body pharmacies.

China Jinmao (00817) plans to acquire Shanghai Congmao B-class limited partnership interests held by Huafu Securities for RMB 966 million

According to the Zhitong Finance APP, China Jinmao (00817) announced that on October 15, 2024, Shanghai Congmao, a wholly-owned subsidiary of Jinmao Group, and Huafu Securities entered into a limited partnership interest transfer agreement. Based on this, Jinmao Group ultimately chose to exercise the priority acquisition right for target two, that is, Jinmao Group will acquire the underlying assets (i.e., the B-class limited partnership interests held by Huafu Securities (representing 69.95% of all limited partnership interests)) as stipulated in the transfer agreement, for a total consideration of RMB 966 million.

JD Logistics (02618): Plans to achieve over 100% growth in global overseas warehouse area by the end of 2025

JD Logistics announced plans to achieve over 100% growth in the global overseas warehouse area by the end of 2025, while further expanding the layout and construction of bonded warehouses and direct mail warehouses.

China Taiping Insurance (02601): Net profit for the first three quarters is expected to increase by 60% to 70% year-on-year

China Taiping Insurance (601601) announced on the evening of October 15 that the company's net profit attributable to the parent for the first three quarters of 2024 is expected to be between RMB 37 billion and RMB 39.4 billion, an increase of RMB 13.9 billion to RMB 16.3 billion compared to the same period last year, representing a year-on-year increase of 60% to 70%. Based on the strategic asset allocation plan, the company maintains a certain proportion of equity assets in the investment portfolio. With the recent rise in the capital market, the company's investment income for the first three quarters of 2024 is expected to achieve a significant year-on-year increase.

PICC (01339): Net profit for the first three quarters is expected to increase by 65% to 85% year-on-year

PICC announced that the net profit attributable to the parent company's shareholders for the first three quarters of 2024 is expected to be between RMB 33.83 billion and RMB 37.931 billion, an increase of RMB 13.327 billion to RMB 17.428 billion compared to the same period last year, representing a year-on-year increase of 65% to 85%. Excluding non-recurring gains and losses, the expected net profit is between RMB 33.579 billion and RMB 37.649 billion, representing a year-on-year increase of 65% to 85%. The main reasons for the performance increase are the continuous optimization of the business structure, effective risk control, significant cost reduction and efficiency improvement results, and the significant year-on-year increase in total investment income due to the warming of the capital marketChina International Travel Service (01880): Net profit for the first three quarters decreased by 24.7% year-on-year

China International Travel Service disclosed its performance report on the evening of October 15, 2024. The company achieved operating income of RMB 43.021 billion in the first three quarters of 2024, a year-on-year decrease of 15.38%; net profit was RMB 3.92 billion, a year-on-year decrease of 24.7%. In the first three quarters of 2024, the company's main business gross profit margin was 32.57%, an increase of 1.09 percentage points year-on-year.

China National Building Material (03323) issues profit warning, expecting a net loss of approximately RMB 700 million attributable to equity holders in the first three quarters, turning from profit to loss year-on-year

According to the Zhixin Finance APP, China National Building Material announced that it expects an unaudited net loss attributable to equity holders of approximately RMB 700 million in the first three quarters of 2024, while in the same period of 2023, the profit attributable to equity holders was approximately RMB 2.353 billion. The expected decrease is mainly due to the decrease in sales prices of the group's main products such as cement, ready-mixed concrete, and glass fiber, a decrease in cement sales volume, and a decline in the performance of equity-accounted investees. However, some of the decrease was offset by the decrease in sales costs of cement and ready-mixed concrete, as well as the decrease in net losses from fair value changes of financial assets recognized in profit or loss.

Horizon Robotics: Plans to issue 1.355 billion shares in Hong Kong IPO with a maximum price of HKD 3.99

Horizon Robotics announced on the Hong Kong Stock Exchange that it plans to issue 1.355 billion shares in its Hong Kong listing, with an expected price range of HKD 3.73 to HKD 3.99 per share. The pricing is expected to be on October 22 and trading will commence on October 24 on the Hong Kong Stock Exchange.

[Stock Highlights]

Gaoxin Retail (06808): Expected significant improvement in mid-term net profit after tax

Gaoxin Retail's stock will resume trading in Hong Kong on Wednesday. Gaoxin Retail announced that it expects a significant improvement in net profit after tax for the first 6 months ending September 30, 2024, compared to the same period last fiscal year, turning from a loss to a profit. The unaudited net profit after tax for the first 6 months ending September 30, 2024, is expected to be approximately RMB 1.5 billion to RMB 2.0 billion, calculated in accordance with the Hong Kong Financial Reporting Standards. The group incurred a net loss of RMB 3.78 billion in the first 6 months ending September 30, 2023. The expected improvement in net profit after tax is mainly attributed to the stabilization of same-store customer traffic, achieving positive growth in same-store sales; and rapid progress in cost reduction and efficiency improvement, with significant results.

Gaoxin Retail announced that on September 27, 2024, the board of directors received a letter of intent from a potential offeror expressing interest in making a voluntary conditional offer with pre-conditions for all issued shares of the company. Alibaba Group indirectly holds approximately 73.66% of Gaoxin Retail's issued share capital through a wholly-owned subsidiary, while New Retail Strategic Opportunities Investments 1 Limited holds approximately 5.04%. Currently, Alibaba Group is in discussions with other relevant parties but has not reached any agreement or transaction.

As of the announcement date, Gaoxin Retail has a total of 9.54 billion issued ordinary shares and 45 million unexercised warrants, of which 20 million warrants have an exercise price of HKD 2.18 and 25 million warrants have an exercise price of HKD 1.54Gaoxin Retail reminds shareholders and potential investors that the implementation of any tender offer must meet certain conditions precedent, and investors should act prudently when buying and selling shares.

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