CN Apr Profit of Industries Above Designated Scale Swings into +4% YoY

The National Bureau of Statistics announced that from January to April, the total profits of industrial enterprises above the designated size reached RMB2.1 trillion, up by 4.3 YoY. The growth rate was the same as that in January to March, continuing the steady momentum. From January to April, 31 of the 41 major industrial sectors saw YoY growth in profits, that is 75.6% of all industries. In April, the total profits of industrial enterprises above the designated size increased by 4.0% YoY, up 7.5 ppts compared to a decrease of 3.5% in March. From January to April, among industrial enterprises above the designated size, state-holding enterprises realized a total profit of RMB740 billion, a YoY decrease of 2.8%; share based enterprises realized a total profit of RMB1.6 trillion, up by 0.9%; enterprises funded by foreign investors and investors from Hong Kong, Macao and Taiwan realized a total profit of RMB528 billion, up by 16.7%; private enterprises realized a total profit of RMB544 billion, up by 6.4%.

From January to April, the mining industry realized a total profit of RMB392 billion, a YoY decrease of 18.6%. The manufacturing industry realized a total profit of RMB1.4 trillion, up 8.0%. The production and supply of electricity, thermal power, gas and water realized a total profit of RMB258 million, up by 36.9%. In terms of the Hong Kong stock market, the Hang Seng Index experienced a short-term correction and may lack upward momentum in the near term. It is expected to fluctuate between 17,500-18,600 points.

As industrial inventories bottomed out, consumer electronics continued to recover. Benefiting from AI, computing power, and MR, the consumer electronics industry is expected to boom.

Lenovo (992.HK)’s net revenue in FY23 fell 8% YoY to US$56.86 billion, and net profit dropped 37% YoY to US$1 billion, primarily due to broad market weaknesses in H1. However, demand momentum accelerated in the latter half of the year. In the fourth fiscal quarter, the Group experienced a robust recovery and achieved several new milestones. In terms of business segments, the Intelligent Devices Group’s revenue fell by 10% to US$44.6 billion. Despite the sector-wide challenges experienced in the early part of the year, the business group charted a robust recovery path during the latter half of the year, buoyed by a rebound in commercial demand and resilient market share gains. In Q4 alone, IDG boosted its operating profit by 17% YoY, accompanied by a 7% revenue growth.

Infrastructure Solutions Group(ISG)’s full-year revenue reached US$9 billion, representing a 9% setback compared to its historic high achieved in FY22. Solutions & Services Group (SSG) posted double-digit revenue growth for the third consecutive year, with yearly revenue in FY23 advancing by 12% to a record US$7.5 billion. It is recommended to buy at HK$10.80, target at HK$12.30, and stop loss at HK$10.10.

Xiaomi(1810.HK)’s total revenue in 1Q24 amounted to RMB75.5 billion, up 27.0% YoY. GPM reached 22.3%, an increase of 2.8 ppts YoY. By segment, smartphone revenue reached RMB46.5 billion, up 32.9% YoY. Revenue from IoT and lifestyle products amounted to RMB20.4 billion, an increase of 21.0% YoY. Internet services revenue reached RMB8.0 billion, an increase of 14.5% YoY, hitting a record high. The adjusted net profit increased by 100.8% YoY to RMB6.5 billion, a record high as well, which included RMB2.3 billion in expenses related to the smart EV business and other new initiatives.

The company continued to advance its corporate strategy of “Human × Car × Home”. In 1Q24, the global smartphone shipments reached 40.6 million units, up 33.7% YoY. According to Canalys, in Q1, Xiaomi maintained the No. 3 global smartphone shipment ranking with a 13.8% market share. On March 28, 2024, Xiaomi officially launched its first smart EV product, the Xiaomi SU7 Series. As of April 30, 2024, the cumulative locked-in orders for the Xiaomi SU7 Series reached 88,063 vehicles. As of May 15, 2024, the cumulative delivery of the Xiaomi SU7 Series has reached 10,000 vehicles.
It is recommended to buy at HK$17.00, target at HK$19.20, and stop loss at HK$15.80.