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<Research>BOCOMI Focuses on BABA-W/ TRIP.COM-S/ NTES-S/ TENCENT for Techs; Investors Should Strategize Before Acting for HK Stocks This Yr
Recommend 50 Positive 86 Negative 35 |
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BOCOMI has issued a market outlook report for 2025. As geopolitical situations and the rise of trade protectionism are creating structural challenges beneath the surface, the growth landscape faces a tug-of-war between policy easing and structural challenges in the post-tightening era. The broker suggested that investors must strategize before taking action to seize opportunities in a changing environment. In terms of the insurance sector, the broker recommended Ping An and CPIC given that they offer both defensiveness and flexibility even though assets and liabilities face high bases. Among bank stocks, the broker focused on state-owned banks and CM BANK (03968.HK), suggesting seizing high dividend themes and moderately increasing flexibility. As for brokers, the broker estimated business trends to improve, but valuations will be reasonable. It preferred CITIC SEC (06030.HK) and HTSC (06886.HK). Regarding the technology sector, BOCOMI believed that foundational investment in AI will continue to grow, and there may still be gaps in hardware supply. CSP cloud services are accelerating again to support long-term investment in AI infrastructure, while hardware companies' inventories are steadily decreasing with noticeable declines in inventory days for smartphones, servers, and PCs. The broker recommended maintaining at least some exposure to AI and diversifying more within the technology sector. In the internet sector, the broker favored quality platforms with attractive valuations in light of demand recovery. The effect of the new policies on both online and offline consumption may be realized the soonest. The broker recommended focusing on opportunities for valuation recovery driven by stable core business growth, enhanced profitability, and high shareholder returns. It also expected the competition in OTA and local life services to ease and results to remain stable. The prospects for valuation recovery were ranked by the broker as "e-commerce > education > gaming > software". Its key focus was on BABA-W (09988.HK), TRIP.COM-S (09961.HK), NTES-S (09999.HK), TENCENT (00700.HK), TAL Education (TAL.US), New Oriental (EDU.US), MEITUAN-W (03690.HK), and opportunities for correction in companies with ultra-low valuations. With regard to the Hong Kong property market, some factors are turning around and helping to stabilize the residential and retail markets. However, BOCOMI remained cautious about the office sector. As interest rate cuts are a positive catalyst for the next 12-18 months, the broker selected LINK REIT (00823.HK) as its industry top pick. Looking ahead to 2025, with advancements in range-extending/hybrid technology, BOCOMI projected the penetration rate of new energy vehicles in China to rise to 60% this year, while smart driving may quickly penetrate the market below RMB200,000. The broker also forecasted the penetration rate of natural gas heavy trucks to climb to 31% in 2025 and Sinotruk's market share to increase. As the two-wheeler industry is seeing a recovery in consumer sentiment, industry leader YADEA (01585.HK) is expected to raise its market share. AAStocks Financial News |
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