Hong Kong Stock Market Review: Constantly Speculating on Expectations

Speculating on policy expectations is currently the theme of the market. It's hard to say how the real estate sector will perform tomorrow. It could be a disappointment or it could turn out to be positive, and the interpretation can vary.

However, looking at Sunac China today, with a surge of 40% and a trading volume of 5.5 billion, higher than before, but the increase is not as high as on September 30th and October 2nd, which may indicate increasing resistance.

The surge in the real estate sector and Sichuan sector suggests that the direction of debt restructuring ultimately points to infrastructure. However, these directions are difficult to sustain a bullish trend in the long term. Stimulating consumption is the key, regardless of real estate or infrastructure development.

Previously, Miniso's investment in Yonghui Superstores shows confidence in the potential of offline retail industry. It's not difficult to transform Yonghui Superstores; significant cost savings can be achieved by drastically reducing the number of stores. The reason why Sam's Club is doing well is largely due to having fewer stores compared to Yonghui, less than 1/20. Although it's just an equity investment, Yonghui is undoubtedly a drag on Miniso. If there is confidence in successful transformation, it might be better to directly acquire Yonghui.

In addition, Alibaba's holding, Sunart Retail, resumed trading today. Sunart Retail's revenue scale is comparable to Yonghui, but the former has less than half the number of stores compared to the latter.

Sunart Retail also announced a profit increase, with a net profit of 150 to 200 million in the first half of the 25th fiscal year, compared to a loss of 378 million in the same period last year. This is mainly attributed to the stabilization of same-store customer traffic and rapid cost reduction and efficiency improvement, which seems to be credited to the new CEO who took office in March.

As of the end of March 2024, the company's net asset value is 21.8 billion, with net cash reaching 16.5 billion. Over 30% of the company's stores are self-owned properties. In 2020, the company conducted an asset evaluation, with the property assets valued at 38.9 billion at that time.

Considering the current market value of less than 20 billion Hong Kong dollars, it would be reasonable for industrial capital to consider acquisition. Moreover, Alibaba has shown no signs of empowering new retail for many years and should also seize the opportunity to exit