In today’s briefing:
- [Tencent (700 HK, BUY, TP HK$545) Target Price Change]: C4Q24 Review: Good Time to Pick up Shares
- HK Connect SOUTHBOUND Flows (To 21 Mar 2025); Lots Of “Day Trading” And Behind the Scenes Div-Buying
- Xiaomi (1810 HK): Earnings Beat, Volatility Retreat, and Straddle Success
- Hong Kong Earnings in the Week Commencing March 24
- Monthly Container Shipping Tracker | Rates Down | Chorus of Weak Guidance | USTR-MARAD (March 2025)
[Tencent (700 HK, BUY, TP HK$545) Target Price Change]: C4Q24 Review: Good Time to Pick up Shares
- Tencent reported C4Q24 revenue, IFRS op. profit, and IFRS net income in-line, (5.3%), 6.0% vs. our est. and 2.1%, (12.6%), 5.3% vs. cons.
- We shifted our game TOP PICK from Tencent to NetEase on January 16 2025, due to pipeline gaps.
- We reiterate our BUY rating and raise TP to HK$545 on Tencent. We expect game pipeline to fill the gap with the launch of two blockbusters in C3Q25.
HK Connect SOUTHBOUND Flows (To 21 Mar 2025); Lots Of “Day Trading” And Behind the Scenes Div-Buying
- Gross SOUTHBOUND volumes dropped again somewhat but still high at HK$619bn. NET buying by SOUTHBOUND was HK$23bn which is much smaller than the last several weeks.
- The flows here are still striking and net to buy. There has to be institutional buying. And I assume it is to get the earnings yield and div pickup.
- Included is a summary of important China Stocks-relevant news as I saw it this week.
Xiaomi (1810 HK): Earnings Beat, Volatility Retreat, and Straddle Success
- Xiaomi Corp (1810 HK) significantly beat Q4 2024 earnings expectations, yet the stock showed minimal price movement with just a 1.0% gain immediately after the announcement.
- Post-Earnings implied volatility declined substantially from 72% pre-earnings to below 53.4% after earnings, confirming pre-announcement predictions of overpriced volatility.
- Straddle positions were actively traded around the earnings event. A case study showcases a profitable short straddle strategy.
Hong Kong Earnings in the Week Commencing March 24
- The Hong Kong earnings season enters its final week with at least 17 Hang Seng Index companies reporting their 2024 results and announcing dividends.
- The proportion of companies reporting in the coming week and the week after is significant at an index level, with notable weightings in the HSI, HSCEI, and HS TECH indices.
- Opportunities to profit from price movement around earnings are manifold and include event-focused trading, statistical arbitrage, hedging, and capitalizing on changes in dividends and implied volatility.
Monthly Container Shipping Tracker | Rates Down | Chorus of Weak Guidance | USTR-MARAD (March 2025)
- Price momentum remains very weak, and spot rates are already below 2024 lows
- Multiple deep-sea carriers have recently guided to a collapse in core earnings in 2025
- USTR / MARAD proposed rule changes could add to US tariff chaos & raise carriers’ costs
Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
Unlock all research summaries