A Sky Full of STAR Board, Trip.com Beats
5 Min. Read Time
Trip.com Q2 Earnings Review
Trip.com reported Q2 financial results after the US market close yesterday that beat analyst expectations on revenue, adjusted net income, and adjusted earnings per share (EPS). Analysts had expected adjusted net income and adjusted EPS to decline year-over-year (YoY), but they increased, propelling the company's Hong Kong listing to rise +7.71% overnight. The company announced a $5 billion stock buyback, which accounts for 12% of the market cap.
% Changes are YoY
- Revenue increased +16% to RMB 14.8B ($2.1 billion) from RMB 12.8 billion versus analyst expectations of RMB 14.7 billion
- Adjusted Net Income RMB 5 billion ($699 million) versus analyst expectations of RMB 4.35 billion
- Adjusted EPS RMB 7.2 ($1.0) from RMB 7.3 versus analyst expectations of RMB 6.2
Key News
Asian equities were mixed overnight despite the weakening US dollar. Mainland China outperformed, while Hong Kong, Taiwan, and the Philippines underperformed.
There were precisely zero headlines about the RMB appreciating to 7.13 per the US dollar. This is good for China stocks, including the US listings, as their underlying businesses are in China. Hence, the underlying companies are worth more due to the currency's appreciation.
Mainland China had a choppy session as it bounced around the room before ripping higher in afternoon trading. The 22 most heavily traded stocks by value ended with gains. Nine of them gained more than 10%. Five of China's seven most heavily-traded stocks gained more than 10%, led by Semiconductor Manufacturing (SMIC), which gained +17.45%, China Northern Rare Earth, which gained +5.01%, and Cambricon Technology, which gained +15.73%. China's government’s AI push, which was announced on Tuesday, has led to absolute rips in multiple semiconductor stocks, along with technology hardware and software. The semiconductor-heavy STAR Board, where Cambricon is listed and explains today’s headline based on the Coldplay song, ripped +7.23% overnight!
Meituan’s lousy results hit its Hong Kong listing hard today, as shares fell -12.55%, due to JD.com entering the restaurant delivery business and deciding to operate at a loss to gain customers. JD.com fell -5.03% overnight, while Alibaba fell -4.69%, ahead of tomorrow's post-Hong Kong close results, as its Ele.me restaurant delivery unit is ~10% of revenue.
The Hang Seng Index fell 202 index points due to Meituan’s decline, which contributed -127 index points, and Alibaba's downdraft, which contributed -94 index points. My point is to subtract out those three stocks, and Hong Kong would have been higher: Horizon Robotics (9660 HK) gained +14.74% post results, along with energy giant CNOOC, which gained +4.08%. Mainland China-based investors sold a healthy net $2.62 billion worth of Hong Kong-listed stocks overnight via Southbound Stock Connect.
The State Council and the Central Committee of the Communist Party of China announced support for urban development and “mega cities” by “creating a main engine for high-quality development” by supporting tech and scientific innovation. Issue #1 in China is real estate, though the anti-involution campaign should pivot to restaurant delivery IMO.
Our friend David of ACG Analytics, a DC-based political research firm we utilize, asked me about ETF flows. Despite the strong performance on an absolute and relative basis, US-listed China equity ETFs are seeing a net outflow year-to-date of $434 million. Knock on wood, we’ve bucked the trend. European-listed China equity ETFs have received $4.29 billion worth of net inflows.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.8% |
| Hang Seng Tech | HSTECH Index | -0.9% |
| Hong Kong Turnover | HKTurn Index | 5.4% |
| Hong Kong Short Sale Turnover | HKSST Index | -1.4% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 16.4% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 2,116.56 |
| China (Shanghai) | SHCOMP Index | 1.1% |
| China (Shenzhen) | SZCOMP Index | 1.5% |
| China (STAR Board) | Star50 Index | 7.2% |
| Mainland Turnover | .chturn Index | -6.2% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.5% |
| Japan | NKY Index | 0.7% |
| India | SENSEX Index | -0.9% |
| Indonesia | JCI Index | 0.2% |
| Malaysia | FBMKLCI Index | -0.1% |
| Pakistan | KSE100 Index | -0.2% |
| Philippines | PCOMP Index | -1.3% |
| South Korea | KOSPI Index | 0.3% |
| Taiwan | TWSE Index | -1.2% |
| Thailand | SET Index | 0.2% |
| Singapore | STI Index | 0.2% |
| Australia | AS51 Index | 0.2% |
| Vietnam | VNINDEX Index | 0.5% |
| Indicator | Hong Kong | Mainland |
|---|---|---|
| Today's Volume % of 1-Year Average | 174 | 102 |
| Advancing Stocks | 192 | 1919 |
| Declining Stocks | 291 | 3113 |
| Outperforming Factors | Dividends, Momentum, Low Volatility | Liquidity, EPS Revision, Momentum |
| Underperforming Factors | Growth, Buyback, Liquidity | Low Volatility |
| Top Sectors | Tech, Financials | Tech, Real Estate, Communication |
| Bottom Sectors | Discretionary, Staples, Healthcare | Energy |
| Top Subsectors | Semis, Tech Hardware, Petroleum | Communication Equipment, Semis, Electronic Components |
| Bottom Subsectors | Consumer Discretionary Distribution, Household/personal Products, Textiles | Office Supplies, Coal, Highway |
| Southbound Connect Buys | SMIC, Hua Hong Semi (Moderate), Alibaba, Meituan (Small) | N/A |
| Southbound Connect Sells | HK Tracker ETF (Very Large), Tencent (Moderate) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -1.41 |
| Communication Services | 9 | -0.71 |
| Consumer Discretionary | 28 | -3.96 |
| Consumer Staples | 13 | -1.86 |
| Energy | 6 | -0.46 |
| Financials | 24 | 0.56 |
| Health Care | 12 | -1.83 |
| Industrials | 21 | -1.15 |
| Information Technology | 10 | 0.69 |
| Materials | 10 | -0.5 |
| Real Estate | 7 | -0.84 |
| Utilities | 12 | -0.91 |
| Mainland China Listed | 395 | 2.12 |
| Communication Services | 7 | 1.81 |
| Consumer Discretionary | 29 | 0.49 |
| Consumer Staples | 24 | 0.08 |
| Energy | 13 | -0.3 |
| Financials | 64 | 1.31 |
| Health Care | 32 | 0.21 |
| Industrials | 61 | 1.23 |
| Information Technology | 90 | 6.74 |
| Materials | 54 | 1.51 |
| Real Estate | 6 | 2.11 |
| Utilities | 15 | 0.32 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.8 |
| Alibaba HK | 9988 HK Equity | -4.7 |
| JD.com HK | 9618 HK Equity | -5 |
| NetEase HK | 9999 HK Equity | 0.7 |
| Yum China HK | 9987 HK Equity | -1 |
| Baozun HK | 9991 HK Equity | 1.8 |
| Baidu HK | 9888 HK Equity | -1.3 |
| Autohome HK | 2518 HK Equity | -1.7 |
| Bilibili HK | 9626 HK Equity | -1.9 |
| Trip.com HK | 9961 HK Equity | 7.7 |
| EDU HK | 9901 HK Equity | 0.9 |
| Xpeng HK | 9868 HK Equity | -8.2 |
| Weibo HK | 9898 HK Equity | -0.1 |
| Li Auto HK | 2015 HK Equity | -3.6 |
| Nio Auto HK | 9866 HK Equity | -2.2 |
| Zhihu HK | 2390 HK Equity | 3.7 |
| KE HK | 2423 HK Equity | -2.4 |
| Tencent Music Entertainment HK | 1698 HK Equity | -0.4 |
| Meituan HK | 3690 HK Equity | -12.6 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| MEITUAN-CLASS B | -12.6 |
| ALIBABA GROUP HOLDING LTD | -4.7 |
| SEMICONDUCTOR MANUFACTURI-H | 8.3 |
| TENCENT HOLDINGS LTD | -0.8 |
| HORIZON ROBOTICS INC | 1.5 |
| XIAOMI CORP-CLASS B | -0.8 |
| BYD CO LTD-H | -2.5 |
| HUA HONG SEMICONDUCTOR LTD-H | 8.4 |
| CHINA LIFE INSURANCE CO-H | 0.2 |
| AKESO INC | -3.1 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| SEMICONDUCTOR MANUFACTURIN-A | 17.4 |
| CHINA NORTHERN RARE EARTH -A | 4 |
| CAMBRICON TECHNOLOGIES-A | 7.1 |
| EOPTOLINK TECHNOLOGY INC L-A | 7 |
| VICTORY GIANT TECHNOLOGY -A | 3.4 |
| EAST MONEY INFORMATION CO-A | 0.3 |
| ZHONGJI INNOLIGHT CO LTD-A | 6.5 |
| ZTE CORP-A | 4.7 |
| FOXCONN INDUSTRIAL INTERNE-A | 7 |
| HYGON INFORMATION TECHNOLO-A | 3.3 |
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.13 versus 7.16 yesterday
- CNY per EUR 8.31 versus 8.29 yesterday
- Yield on 10-Year Government Bond 1.85% versus 1.80% yesterday
- Yield on 10-Year China Development Bank Bond 1.89% versus 1.86% yesterday
- Copper Price -0.67%
- Steel Price +0.13%
