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Market Update

The IPO market showed a trend of differentiation in November

The total number of listings in November remained stable in comparison to the eight initial public offerings (IPOs) in October. This month, seven new stocks were listed on HKEX, but the overall performance of the IPO market was divided. As of November 30th, GUOFUHEE (2582.HK) and MOKINGRAN (2585.HK) saw a 43% and 8% incline in share price, respectively, whereas JIUYUAN GENE (2566.HK) and AUGROUP (2519.HK) saw a 36% and 26% decrease in share price since listing.

 

Phillip Hong Kong Newly Listed Equities Index ETF (2835.HK)

The ETF aims to fully replicate the Solactive Hong Kong Newly Listed Equities Index, a rules-based equity benchmark designed to track the performance of securities that had a recent initial public offering or new listing on the main board of HKEX. The index is rebalanced quarterly, incorporating securities with IPOs or new listings within the last 756 business days, aiming for a total of 50 securities based on free-float market capitalization. The index also undergoes monthly IPO reviews to include recent IPOs, subject to liquidity and market capitalisation criteria.

 

November Monthly Review

This month, 2 new stocks, Midea Group (300.HK) and Carote (2549.HK), were added to the Solactive HK Newly Listed Equities Index through the monthly fast-track mechanism. The current number of constituent stocks has increased from 35 to 37.

Midea Group (300.HK) is a leading technology-driven global provider of Smart Home Solutions and Commercial & Industrial Solutions. The company’s product and service offerings cover a wide range of home appliances for consumers and solutions for enterprise customers spanning across Energy Solutions & Industrial Technology, Intelligent Building Technology, Robotics & Automation, and Other Businesses. The company is the world’s largest home appliance company in terms of both sales volume and revenue in 2023, capturing a market share of 7.9%.

As of December 31st, 2023, the company’s revenue in 2023 was 373.71 billion yuan (RMB, the same below), a year-on-year increase of 8.1%. Gross profit was 98.39 billion yuan, a year-on-year increase of 18.0%; the gross profit margin in 2023 increased from 24.1% in 2022 to 26.3%. The profit for the year attributable to the company’s equity holders was 33.72 billion yuan, a year-on-year increase of 14.1%. The increase in the company’s gross profit comes from the growth in revenue from smart home business, commercial, and industrial solutions. However, the company’s effective control of operating costs and production costs has led to an increase in the gross profit margin, highlighting the economies of scale effect.

 

Top 10 Holdings

This month, the Solactive Hong Kong Newly Listed Equities Index’s top ten holdings do not change. The following industries are currently the focus of the index: consumer discretionary (including Li Auto, Trip, and HAIRE SMARTHOME), communication services (including KUAISHOU, BAIDU, and BILIBILI-W), and real estate (including BEKE-W, CHINA RES MIXC, and ONEWO). The following figures show the top 10 holdings and sector breakdown of the Phillip HK Newly Listed Equities Index:

          

 

Key Components Update

  • KUAISHOU (1024.HK): Kuaishou released its third-quarter results for 2024. The company’s total revenue increased by 11.4% year-on-year to 31.1 billion yuan (RMB, the same below), including core commercial revenue including online marketing services and other e-commerce-based services. The year-on-year growth in the third quarter of 2024 was nearly 20.0%. The adjusted net profit was 3.9 billion yuan, a year-on-year increase of 24.4%, and profitability continued to improve. In terms of user scale, Kuaishou ushered in the milestone of DAU exceeding 400 million in the third quarter, with average daily active users of 408 million, a year-on-year increase of 5.4%, and average monthly active users of 714 million, a year-on-year increase of 4.3%, both of which hit record highs.
  • TRIP.COM (9961.HK): Trip announced its financial report for the third fiscal quarter of fiscal year 2024. Q3 operating revenue was 15.9 billion yuan (RMB, the same below), a year-on-year increase of 16%, mainly due to increasingly strong tourism demand. Net operating income increased by 24% month-on-month, mainly due to seasonal factors. Net profit was 6.8 billion yuan, compared with 4.6 billion yuan in the same period in 2023, a year-on-year increase of 48%. In the third quarter of 2024, various international business sectors showed rapid growth, and outbound hotel and air ticket bookings have fully recovered to 120% of the level in the same period before the epidemic in 2019.
  • BAIDU (9888.HK): Baidu recently released its third quarter 2024 results. In 2024 Q3, the company’s operating income was 33.6 billion yuan (RMB, the same below), down 3% year-on-year; net profit attributable to Baidu increased 14% year-on-year to 7.632 billion yuan, but non-GAAP net profit was 5.9 billion yuan, down 19% year-on-year. In the third quarter, the company’s online marketing revenue was 18.8 billion yuan, a year-on-year decrease of 4%; Baidu’s core revenue dropped slightly, mainly because the weak environment put certain pressure on the advertising business. The company’s online marketing business continued to be weak but was offset by the growth of the intelligent cloud business.
  • LI AUTO (2015.HK): According to the November delivery data released by Li Auto, the company delivered 48,740 new vehicles this month, achieving an 18.8% year-over-year increase. As of the end of November 2024, Li Auto delivered a total of 441,995 vehicles this year and a total of 1,075,359 vehicles to date. Li Auto maintained its best-selling position among Chinese automotive brands in the 200,000 yuan (RMB, the same below) and above passenger vehicle market for eight straight months. Li L6 achieved over 160,000 cumulative deliveries, retaining its position as the sales champion among Chinese brand models priced above 200,000 yuan since June.
  • BEKE-W (2423.HK): BEKE announced its financial report for the third fiscal quarter of fiscal year 2024. Net income in the third quarter of 2024 increased by 26.8% to 22.6 billion yuan from 17.8 billion yuan (RMB, the same below) in the same period of 2023, mainly due to the increase in net income from the new home business and the expansion of home improvement and home rental businesses. The gross profit margin was 22.7%, and the net profit was 1,168 million yuan. The total transaction volume in the third quarter of 2024 increased from 655.2 billion yuan in the same period of 2023 to 736.8 billion yuan, a year-on-year increase of 12.5%.

 

Top constituent movers in November:

Bottom constituent movers in November:

 

The Phillip HK Newly Listed Index ETF (2835.HK) monthly performance for November

The Phillip HK Newly Listed Index ETF (2835.HK) recorded a 5.48% monthly decrease in November, underperforming the Hang Seng Index’s (HSI) 4.40% monthly decrease and underperforming the Hang Seng Tech Index’s (HSTI) 3.24% monthly decrease. As of November 30th, this ETF had fallen 8.72% since its listing, underperforming the HSI’s rose of 7.95% and the HSTI’s rose of 16.32%.

The IPO market performed not well in October

The total number of listings in October rose dramatically in comparison to the two initial public offerings (IPOs) in September. This month, eight new stocks were listed on HKEX; however, the IPO market has largely underperformed. As of October 31st, QINIU (2567.HK) and TAIMEI TECH (2576.HK) saw a 57% and 53% decline in share price, respectively, whereas BIOSTAR PHARM-B (2563.HK) and HORIZONROBOT-W (9660.HK) saw a 30% and 20% increase in share price since listing.

 

Phillip Hong Kong Newly Listed Equities Index ETF (2835.HK)

The ETF aims to fully replicate the Solactive Hong Kong Newly Listed Equities Index, a rules-based equity benchmark designed to track the performance of securities that had a recent initial public offering or new listing on the main board of HKEX. The index is rebalanced quarterly, incorporating securities with IPOs or new listings within the last 756 business days, aiming for a total of 50 securities based on free-float market capitalization. The index also undergoes monthly IPO reviews to include recent IPOs, subject to liquidity and market capitalisation criteria.

 

October Monthly Review

This month, there has been no change in the Solactive HK Newly listed Equities Index’s holdings; there are currently 35 member stocks.

 

Top 10 Holdings

This month, the Solactive Hong Kong IPO’s top ten holdings experienced a change. The share price decline in October caused SENSETIME (20.HK) to drop out of the top ten holdings during this time, while POP MART (9992.HK) rose to the top ten. The following industries are currently the focus of the index: consumer discretionary (including Li Auto, Trip, and HAIRE SMARTHOME), communication services (including KUAISHOU, BAIDU, and BILIBILI-W), and real estate (including BEKE-W, CHINA RES MIXC, and ONEWO). The following figures show the top 10 holdings and sector breakdown of the Phillip HK Newly Listed Equities Index:

                               

 

 

Key Components Update

  • TRIP.COM (9961.HK): According to Trip Business Travel’s most recent data, China’s cross-border business travel market has experienced “explosive growth” since 2024. The number of cross-border business travellers rose by 34% from January to mid-October of this year, a 72% increase YoY, surpassing 2019 and setting a new record high. Simultaneously, the number of Chinese companies placing outbound business trip orders rose 61% year over year, and the number of Chinese companies conducting outbound business travel rose 38% year over year. This indicates that an increasing number of Chinese companies are actively pursuing internationalisation.
  • LI AUTO (2015.HK): According to the October delivery data released by Li Auto, the company delivered 51,443 new vehicles this month, achieving a 27.3% year-over-year increase. As of the end of October 2024, Li Auto delivered a total of 393,255 vehicles this year and a total of 1,026,619 vehicles to date. With five models on sale, Li Auto has won the title of sales champion of Chinese new energy vehicles with a sales volume of more than 200,000 RMB for seven consecutive months. In October, Li Auto became the first Chinese luxury car brand to reach the one million delivery milestone with its cumulative delivery.
  • BEKE-W (2423.HK): Following National Day, the market has greatly increased as a result of the new property market policies that have been progressively taking effect. Data from a related organisation indicates that last week saw a MoM increase in the volume of first- and second-hand home transactions in major cities. According to UBS, BEKE will continue to profit from the favourable regulatory environment and low base effect, which will be fuelled by growing sales. The company is also expected to have clear profit upside potential in the fourth quarter. UBS also believes that BEKE is still the top option in the real estate sector and is probably going to be added to the Shanghai Stock Connect in March of next year.
  • BAIDU (9888.HK): On October 21st, the National Information Centre and Baidu engaged in a ceremony to formalize their strategic partnership. The two organizations will collaborate extensively in the realm of artificial intelligence, working together to enhance the digitalization and automation of government operations, business processes, and service frameworks. Both parties will combine their respective strengths to undertake thorough collaboration in areas such as large-scale government models, case studies, search services, and industry research, adhering to principles of mutual benefit and synergy. They will also strive to foster the innovative growth of artificial intelligence technology and its industrial applications.
  • KUAISHOU (1024.HK): On the opening day of Kuaishou’s Double 11 Shopping Festival, the top three categories for total paying users were women’s apparel, home goods, and fresh produce. Additionally, the halfway report from Kuaishou E-commerce regarding the Double 11 promotion indicates that from October 12th to 28th, there was a significant surge in e-commerce content globally. More than 1,300 live streaming sessions generated e-commerce transactions exceeding one million orders each, and over 50,000 sellers saw their transactions increase by more than 200% compared to the previous year. The count of well-known products achieving a GMV of over one million rose by 1,390% year-on-year. More than 250 brands reached turnovers exceeding 10 million, and 2,800 individual products recorded sales over one million.

 

Top constituent movers in October:

Bottom constituent movers in October:

 

The Phillip HK Newly Listed Index ETF (2835.HK) monthly performance for October

The Phillip HK Newly Listed Index ETF (2835.HK) recorded an 8.67% monthly decrease in October, underperforming the Hang Seng Index’s (HSI) 3.86% monthly decrease and underperforming the Hang Seng Tech Index’s (HSTI) 5.32% monthly decrease. As of October 31st, this ETF had fallen 3.43% since its listing, underperforming the HSI’s rose of 12.92% and the HSTI’s rose of 20.21%.

The IPO market picked up in September

Compared with the 3 IPOs in August, the overall number of listings kept declining in September. There were only 2 new stocks listed on HKEX this month, but the IPO market is generally well performed. As of September 30st, the share price of MIDEA GROUP (0300.HK) and SYNTRUST GK (8629.HK) increased by 35.49% and 8.08% since listing, respectively.

 

Phillip Hong Kong Newly Listed Equities Index ETF (2835.HK)

The ETF aims to fully replicate the Solactive Hong Kong Newly Listed Equities Index, a rules-based equity benchmark designed to track the performance of securities that had a recent initial public offering or new listing on the main board of HKEX. The index is rebalanced quarterly, incorporating securities with IPOs or new listings within the last 756 business days, aiming for a total of 50 securities based on free-float market capitalization. The index also undergoes monthly IPO reviews to include recent IPOs, subject to liquidity and market capitalization criteria.

 

September Monthly Review

A total of 10 stocks were included in the Solactive HK Newly listed Equities Index in September through the quarterly rebalancing mechanism, including: KUAISHOU (1024.HK), BAIDU (9888.HK), TRIP.COM (9961.HK), HAIER SMARTHOME (6690.HK), BILIBILI-W (9626.HK), JD HEALTH (6618.HK), POP MART (9992.HK), CHINA RES MIXC (1209.HK), ROBOSENSE (2498.HK), and REMEGEN (9995.HK). In addition, 13 existing constituents were removed, including: MINISO (9896.HK), CLOUD MUSIC (9899.HK), ANE (9956.HK), CHICMAX (2145.HK), KINGSOFT CLOUD (3896.HK), CHERVON (2285.HK), SUPER HI (9658.HK), LEPU BIO-B (2157.HK), STARPLUS LEGEND (6683.HK), IMOTIONAUTOTECH (1274.HK), AINNOVATION (2121.HK), DINGDANG HEALTH (9886.HK), and EDIANYUN (2416.HK). The current number of constituent stocks has dropped from 38 to 35.

Bilibili-W (9626.HK) is the best-performing and relatively heavy-weighted new component stock in September. The company is an iconic brand and a leading video community for young generations in China. It has become the welcoming home of diverse cultures and interests, as well as a destination for discovering cultural trends and phenomena of young generations in China. The community offers a wide array of content serving young generations’ diverse interests. The content categories include many fields, from lifestyle, games, entertainment, anime, technology, and knowledge to many more. Users and content creators can discover and interact with diverse content based on different interests. The company’s revenue is mainly generated from mobile games, value-added services, advertising, e-commerce, and others.

As of June 30th, 2024, revenue for the company in the first half of the year was 11,791.7 million yuan (RMB, the same below), representing an increase of 13.7% year over year. Gross profit was 3,438.6 million yuan, achieved a 47.5% year-over-year increase; gross profit margin rose to 29.2%, compared with 22.5% of the same period last year. The loss for the year attributable to the company’s equity holders was 1,357.2 million yuan, decreased by 37.6% year over year. In the first half of this year, the company accelerated monetisation by enhancing commercial and operational efficiency, accelerating topline growth while also improving revenue quality, successfully expanding gross profit margin, and significantly narrowing losses.

 

Top 10 Holdings

The top 10 holdings of the Solactive Hong Kong IPO changed this month. In September, MINISO (9896.HK) was removed because of the quarterly rebalancing mechanism, while KUAISHOU (1024.HK), BAIDU (9888.HK), TRIP.COM (9961.HK), HAIER SMARTHOME (6690.HK), and BILIBILI-W (9626.HK) became the new top ten holdings. Currently, the index focuses on industries as follows: consumer discretionary (including Li Auto, Trip, and HAIRE SMARTHOME), communication services (including KUAISHOU, BAIDU, and BILIBILI-W), and industrials (including J&T Global Express, JD Logistics, and TUHU Car). The following figures show the top 10 holdings and sector breakdown of the Phillip HK Newly Listed Equities Index:

                

 

Key Components Update

  • LI AUTO (2015.HK): According to the September delivery data released by Li Auto, the company delivered 53,709 new vehicles this month, achieving a 48.9% year-over-year increase. Among them, the LI L series and LI MEGA had steadily grown orders, achieving a new record high delivery in September. As of the end of September 2024, Li Auto had delivered a total of 152,831 vehicles in the third quarter, a year-over-year increase of 45.4%. Li Auto delivered a total of 341,812 vehicles this year and a total of 975,176 vehicles to date.
  • KUAISHOU (1024.HK): Recently, at an investor day event, Cheng Yixiao (founder, chairman, and CEO of Kuaishou) expressed that the platform strategy of the company will be “technology-based, user-first.” This year, the company has made it clearer that it will be user-orientated and optimise the content, products, and traffic system in order to achieve healthy and high-quality growth through good content, good products, and a reasonable traffic mechanism. As of the second quarter of 2024, average daily active users (DAU) and average monthly active users of the company reached 395 million and 692 million, respectively. Cheng Yixiao also expressed confidence in achieving the goal of exceeding 400 million DAU in a single quarter in the second half of the year.
  • BAIDU (9888.HK): At the recent Baidu Cloud Intelligence Conference, the company stated that daily calls of its Wenxin large model were more than 700 million times on average, and it had helped users fine-tune 30,000 large models and developed more than 700,000 enterprise-level applications. In the past year, the price of Wenxin’s flagship large model has dropped by more than 90%. In addition, Baidu Smart Cloud mentioned that after its customer service AI product “Ke Yue” was upgraded based on the Wenxin large model, the problem-independent resolution rate increased to 92%, which is higher than the industry average of 80%. It has helped corporate customers serve more than 150 million times and interact more than 500 million times.
  • Trip (9961.HK): During this year’s National Day holiday, as the tourism market returns to normal, the supply of flights, hotels, etc. has recovered, driving the average price of air tickets and hotels back up, further stimulating tourists’ willingness to travel. According to the tourism consumption report released by Trip, the average daily orders for outbound and inbound travel on its platform during the National Day holiday exceeded those in 2019 and hit a record high. The report showed that this holiday has driven continued growth in tourism consumption. Compared with the previous speedy tourism, tourists this holiday prefer the relaxing and healing “slow-charging tourism,” thus accelerating the development of new tourism consumption habits such as car rental and self-driving, temporary reservations, and off-peak travel.
  • HAIER SMARTHOME (6690.HK): The 2024 interim report released by Haier Smart Home showed that the company achieved revenue of 135,621 million yuan in the first half of this year, a year-over-year increase of 3.0%; the gross profit margin reached 30.1%, increased by 0.3% year over year. Profit attributable to shareholders of the company was 10,420 million yuan, a year-over-year increase of 16.3%. In addition, the company has been responding to the policy since this year and has been intensively and continuously promoting the replacement of old home appliances with new ones. This time, Haier Smart Home has doubled down on the “state subsidy + enterprise subsidy, with no cap on subsidies.” All brands have subsidies, and both online and offline can participate, comprehensively promoting the trade-in process.

 

Top constituent movers in September:

Bottom constituent movers in September:

 

The Phillip HK Newly Listed Index ETF (2835.HK) monthly performance for September

The Phillip HK Newly Listed Index ETF (2835.HK) recorded a 38.01% monthly increase in September, outperforming the Hang Seng Index’s (HSI) 17.48% monthly increase and outperforming the Hang Seng Tech Index’s (HSTI) 33.45% monthly increase. As of September 30th, this ETF had rose 5.74% since its listing, outperforming the HSI’s rose of 17.46% and the HSTI’s rose of 26.96%.