In-Depth Analysis of Hong Kong Retail Research – November 15, 2024

Broker: CGS International

Date: November 15, 2024

Introduction

Welcome to our detailed analysis of the latest Hong Kong Retail Research report issued by CGS International. This report delves into the performance and prospects of several key companies, providing strategic insights and recommendations for investors. Let’s explore each company covered in the report in detail.

China Hongqiao Group Ltd (1378) – Bearish Reversal Gaining Strength

China Hongqiao Group Ltd, renowned for its aluminum products, has recently shown signs of a bearish reversal. Despite previous bullish calls in late October, current technical indicators suggest a downward trend.

• The stock has experienced a break below a smaller rising wedge, emphasized by a significant bearish breakaway gap.
• There is potential for a more extensive bearish reversal, with the larger wedge showing signs of breakdown since January 2024.
• A brief breakout above HK\$13.56 has plunged into what appears to be a bull trap.
• Two out of three bearish crossovers are indicated by the Ichimoku cloud, while the Stochastic Oscillator has crossed over from an overbought condition.
• A 23-period Rate of Change (ROC) has dipped below the zero line, forming a bearish divergence, accompanied by a volume rise above the 20-period average during the gap down.

Recommendation: The report suggests a technical sell, with target prices set at HK\$9.30, HK\$7.54, and HK\$6.30, with entry points at HK\$11.52, HK\$12.50, and HK\$13.98. Stop loss is placed at HK\$15.54, with resistance levels at HK\$13.56 and HK\$15.72.

Riverstone Holdings – Better Prospects in FY25F

Riverstone Holdings has shown promising performance with a net profit of RM72 million in 3Q24, a slight decrease quarter-on-quarter but a substantial 22% increase year-on-year. The company has outperformed expectations, with strong volume growth mitigating FX-driven margin pressures.

• The impending US tariff hike on Chinese gloves is anticipated to boost Riverstone’s generic gloves sales in FY25F.
• FX risks are seen to dissipate following the Trump win.
• The report upgrades the stock to “Add” with a target price raised to S\$1.10, forecasting a year-end special dividend, bringing the FY24F dividend yield to 9.3%.

Luzhou Laojiao – Awaiting Baijiu Demand Recovery

Luzhou Laojiao is currently in a waiting period for signs of recovery in baijiu demand. The company continues to monitor market conditions and consumer behavior for potential growth opportunities.

China Sunsine Chemical Holdings – Firm Profit Spreads Anticipated in 4Q24F

China Sunsine Chemical Holdings is expected to maintain firm profit spreads in the upcoming quarter. The company is strategically positioned to capitalize on market conditions, ensuring sustained profitability.

Thai Oil – The Dust Not Yet Settled at CFP

Thai Oil is navigating through a transitional phase at its Clean Fuel Project (CFP). While uncertainties remain, the company is committed to stabilizing operations and enhancing its market position.

Conclusion

This comprehensive analysis highlights the strategic insights and recommendations provided by CGS International in their latest Hong Kong Retail Research report. Investors are encouraged to consider these findings carefully as they navigate the current market landscape.