Macro and market
Market review – Hang Seng Index fell 1.02% to 24329 points. The Hang Seng technology index fell 1.67% to 5437 points. The national index fell 0.89% to 8513 points. The turnover of the market was 129.511 billion yuan. New economy stocks generally fell, with Tencent Holdings (700hk) down 1%, meituan (3690hk) and Alibaba (09988hk) down 2% and 3% respectively. The subsidiary of YaoMing Biology (2269hk) was included in the “unverified list”. Yaoming biology once fell by 31%, and the company suspended its trading halfway and fell by 22% before the suspension. Homologous Wuxi Apptec Co.Ltd(603259) (2359hk) fell 11%. Other pharmaceutical stocks developed individually. Kingship Biotechnology (1548hk) fell nearly 4% and Cinda Biology (1801hk) rose 4%. Financial stocks bucked the trend, with HSBC Holdings (5hk) rising 1% to a more than one-year high, while Hang Seng Bank (11hk) and AIA (1299hk) also rose 1%. Industry outlook / quick review of individual stocks
Real estate sector – the impact and analysis of the exclusion of affordable rental housing loans from real estate loan concentration management. Yesterday afternoon, the central bank and the China Banking and Insurance Regulatory Commission jointly announced that affordable rental housing loans would not be included in the concentration management of real estate loans. We believe that the relaxation will have limited benefits for real estate enterprises, because it accounts for only 1% of the total real estate loans, which may release the amount of 400-500 billion. However, more importantly, the cancellation of the quota can actually promote the goal of building 6.5 million affordable housing units from 2021 to 2025. We expect that this relaxation may increase new construction and real estate investment (REI) by 5% / 5% respectively, and reduce the market’s concerns about the decline of real estate investment. Returning to the real estate sector, we are still optimistic about CNOOC, China Resources Land and Longhu, but the investor positions of these three companies are relatively concentrated. Therefore, the key at present is to choose second tier state-owned enterprises or some non-state-owned enterprises. We still prefer state-owned enterprises such as Yuexiu and Jinmao to private enterprises (Xuhui). The reason is that the overseas debt refinancing risk and partner risk of private enterprises have not been completely resolved. (real estate team)
Zhongji Innolight Co.Ltd(300308) (300308ch) – confirm the prosperity of the industry. Recently, we had a telephone communication with Zhongji Innolight Co.Ltd(300308) management, and the company confirmed the positive prospect of the optical module market. This is consistent with our recent industry report: Based on the positive guidance of overseas cloud manufacturers on future capital expenditure, the prosperity of the optical module industry is expected to continue. Since about 70% of the company’s sales come from overseas data communication market, we expect Zhongji Innolight Co.Ltd(300308) to achieve a profit growth of 27% / 23% in 2022 / 23. According to the adjusted profit data, maintain the buy rating, and the adjusted target price is 45.60 yuan. (technology team)
Yaoming Biology (2269hk) – the subsidiary is listed in the unverified list in the United States. The subsidiaries of YaoMing Biology (2269hk) in Shanghai and Wuxi are listed in the unverified list by the United States. We believe that the list has a certain short-term impact on the company’s supply chain, but it can be controlled. The company’s factories in Wuxi and Shanghai have been completed, and there is no need to buy equipment in the future. The new production capacity in 22-23 years is mainly in Ireland, Shijiazhuang and Chengdu (a total of 150000 liters). These factories can normally import equipment. The company has a global supplier network, which can reduce the risk of interruption of supply by a single supplier. The company is currently negotiating with the U.S. government to allow the other party to conduct on-site inspection of factories in Shanghai and Wuxi as soon as possible. The company’s current share price corresponds to a 22 year PE of 40x, the lowest in history. We think the current valuation is attractive. We maintain the buy rating of YaoMing biology with a target price of HK $159.19. (medical team)
