Morning Brief

MarketResearch MorningBrief [May6th,2024] MorningBrief NoahHudson852-25095441noah.hudson@gtjas.com.hkSFCLic:AVV666 Contents TopRecommendations ●MacroResearch:UpdateReport ●A-ShareStrategySpecial:MorePositionsof“ValueoftheValue” ●CosmeticsSector:SpecialReport ●Food&BeverageSector:SpecialReport ●Hutchmed(0013.HK):OW LatestReports ●TsingtaoBrewery(600600):OW,TP@RMB120.50 ●Kingnet(002517):OW,TP@RMB27.73 ●Sonavox(688533):OW,TP@RMB47.40 ●Midea(000333):OW,TP@RMB84.96↑ ●RichfulLubeAdditive(300910):OW,TP@RMB55.70 ●ChongqingDepartmentStore(600729):OW,TP@RMB40.13 ●King’sLuckBrewery(603369):OW,TP@RMB79.80 ●NewChinaLife(601336):OW,TP@RMB46.79 ●AofeiData(300738):OW,TP@RMB15.00↑ ●Roborock(688169):OW,TP@RMB491.57↑ ●SDICPower(600886):OW,TP@RMB18.24↑ ●ThreeSquirrels(300783):OW,TP@RMB31.70↑ ●LaoFengXiang(600612):OW,TP@RMB92.72↑ ●GreatWallMotor(02333HK):Buy,TP@HKD16.00↑ SectorRatingsoftheMonthMarketStrategyWeeklyViewpoint 本报告部分内容译自同日发布的简体中文报告《国泰君安晨报》，报告观点及内容如有任何不一致的地方，一律以该简体中文版报告为准。本报告仅在中国香港地区使用。 TopRecommendations MacroResearch:UpdateReport Whileacknowledgingthe“increasingnumberofpositiveeconomicfactorssincethisyearbeginning,thePolitburo’smeetingthisAprilstillsetthekeynoteof“continuingtoridethetrendsoastoavoidpolicylooseninglater”.Thiswillhelptoassuagethemarketconcernover“exitofpolicieswheneconomygoesup”.Besides,thismeeting’sstatementsaboutreformsandriskpreventionalsobroughtmorehopestothemarket.Upontheclarificationofthegovernmentsolutionstothemedium-andlong-termeconomicproblems,theriskappetiteofmarketmaymoveupgradually. ThisPolitburo’smeetinghasputforwardhigherrequirementsforpreventinganddefusingrisksinkeyareas.Therecentrealestatepurchasebylocalgovernmentswillhelprealestatedeveloperstoreduceinventoriesandincreasecashflowfor“optimizingnewsupply”,andfinancialsupportbyPBoCisanticipatedlater.Asthemeetinglaidemphasisonboth“reallyreducinglocalgovernmentdebts”and“stabilizingeconomicgrowth”,theregionswhichdoreducetheirdebtsmayenjoysome“easing”oftherestrictionsoninfrastructureinvestmentandfinancing. A-ShareStrategySpecial:MorePositionsof“ValueoftheValue” In2024Q1,activeinvestmentfundsincreasedtheirpositionsof“ValueoftheValue”stocks.Onthewhole,thetotalstockpositionfell0.5%qoqto84.0%,withtheholdingconcentrationofthetop20stocksup2.4%qoqto28.0%.Intermsofsectorpositions,thefundsincreasedconsiderablytheirpositionsofMainBoardstocksandreducedtheirpositionsofChiNextandSTARstocks.Intermsofinvestmentstyle,thefundsincreasedlarge-capstockssuchasCSI300andreducedSMEstockssuchasCSI500andCSI1000;increasedcyclicalandstabilizationsectorsandreducedgrowthandconsumergoodssectors.ThepositionsofSOEsincreasedalot,probablybecauseofthepreferenceofnewlong-termcapitalforhigh-dividendassets.Thepercentageofthepositionsofprivateenterprisesdecreased.Inparticular,thepositionsoftheSOEsintransportation,publicutilitiesandupstreammaterialsindustriesincreasedmostrapidly.ThepositionsofHongKongstocksalsoincreased,suchasoil&petrochemical,socialservicesandnonferrousmetalsstocks. CosmeticsSector:SpecialReport Thenetprofitofcosmeticsindustryincreasedmarginallyin2024Q1.Thecompaniesofstrongbrandpowerandproductpowerrealizedfastprofitgrowth,andthecompaniesofmultiplebrandsmanagedtoreducecosts,expandproductrangeandrestoreearnings. Offeaturedcompanies,wesuggest“Overweight”ratingfor(1)(brandpower;starsingleproducts)ProyaCosmetics(603605)andGiantBiogene(2367.HK);(2)(beneficiariesfrom“fair-priceconsumption”;fastgrowththankstobetterdistributionchannelsandorganization)Freda(600223),Runben(603193)andChicmax(2145.HK); (3)(turnaroundofmarketexpectations)Botanee(300957),Marubi(603983),SYoung(300740),BeautyFarm(2373.HK),Jahwa(600315)andBloomage(688363);(4)(rising productioncapacity;overseasmarketexpansion)Cabio(688089). Food&BeverageSector:SpecialReport Duringthemixedbusinessperformancesoffood&beveragecompanies,itmaybecomemorecommontoseetheriseofdividenddistributionrates.Ofsub-sectors,werecommended: (1)Liquor:(a)(stablesales)FenWine(600809),YingjiaDistillery(603198),GujingDistillery(000596),andKweichowMoutai(600519);and(b)(low-valuationoversoldstocks),Wuliangye(000858),LuzhouLaojiao(000568),King’sLuckBrewery(603369),LaobaiganLiquor(600559),JinhuiLiquor(603919)andZJLD(6979.HK); (2)Beer:TsingtaoBrewery(600600),YanjingBrewery(000729),EastrocBeverage(605499)andChinaResources(0291.HK); (3)MassConsumerGoods:(a)(fastgrowth)JinzaiFood(003000),ThreeSquirrels(300783)andYanKerFood(002847);(b)(cateringsupplychain)QianweiyangchuFood(001215),QianheCondiment(603027),Jonjee(600872),BolexFood(603170)andTewayFood(603317);(c)(lowvaluation;highdividendyield;stablebusinessperformance)ChengdeLolo(000848),ChachaFood(002557),ShuanghuiDevelopment(000895)andYili(600887). Hutchmed(0013.HK):OW [Rating:OW(Prv:OW);TP:N/A(Prv:N/A);MP:HKD30.70;Mkt-Cap:HKD26748mn] AftergettingFDAapprovalinNovember2023,theCompany’sFruquintinibwassupportedbyCHMPonApril26,2024byCHMPtotreatmetastaticcolorectalcancerandmaybeapprovedforsalesoon.InSeptember2023,theNDAofFruquintinibwassubmittedtoJapan,andmaybeapprovedforsalebeforethisyearend.Weare