Zhitong Hong Kong Stock Exchange Unravels | Tariffs once again wave the “millet economy” frequently out of the ring

[Anatomy Dashboard]

Due to strict supervision of the market, today's high standards in the A-share market have collectively fallen, which has had a great impact on sentiment. Hong Kong stocks were also affected in some ways, but overall performance was stable, with a closing increase of 0.04%.

US stocks will rise no matter how much. For example, nominating Bessent as finance minister, the market's view is that Trump may not “do his best” to implement the policies that have the greatest impact on inflation, including tariffs. Unexpectedly, Trump immediately waved the tariff stick.

US President-designate Trump posted a post on his social media account on November 25 local time, falsely claiming that an additional 10% tariff would be imposed on all imported goods from China. Additionally, a 25% tariff will be imposed on all products entering the US from Mexico and Canada. Sure enough, it's the same style as before; no matter who you are, you have to add tariffs. The Canadian Prime Minister originally wanted to please Trump and wanted to exclude Mexico from the North American Free Trade Agreement; now he is being treated equally.

Regarding the increase in tariffs, Trump's “instinct” is that the US has the biggest deficit, and China has the largest surplus. If a trade war clashes, the US must be in an advantageous position; the result is bound to be a big win. The simple understanding is true, but in practice, countries will inevitably also counteract and increase tariffs against the US. This causes domestic consumers to bear higher costs, and only the richest Americans can benefit from rising trade barriers.

Tariffs are in full swing. Naturally, countries are very nervous, especially those that have added tariffs for the first time, which is bound to bring a new round of shocks to the global economy. The exchange rate level fluctuates again. The offshore RMB changes in early trading broke through the 7.27 mark and fell to a four-month low. This kind of feedback is actually a bit excessive. China has already adapted to increased tariffs, and its immunity is already very high. Our strong supply chain and perfect industrial system are fully capable of passing on all kinds of risks. The main reason for the strong response was another piece of news.

There are internal differences in Europe over tariffs on electric vehicles in China. Senior European Parliament officials have just announced that “China and Europe are close to reaching an agreement,” and there are also conflicting voices from EU officials. On November 25, EU officials said that the statement that “China and Europe will reach an agreement” is incorrect. Some media also quoted sources on the same day as revealing that the progress of negotiations between China and Europe has been limited in recent weeks, there has not been much contact between the two sides, and EU member states have not received any major progress notifications. Does Europe deliberately do this to please Trump, hoping to be exempted from tariffs? This possibility does exist. Otherwise, lithium batteries that just started yesterday have returned to their original form. For example, Ganfeng Lithium (01772) has fallen by more than 5%. At the same time, popular varieties such as AI have also been collectively weakened recently. This is related to the regulation of A-shares. The varieties that have increased a lot have all been suppressed, and Nanjing Panda (00553) has experienced a big decline.

In this context, expectations for foreign trade exports will drop, and the market will naturally think of moving in the direction of internal recycling consumption. Various regions are also issuing policy incentives. On November 25, the Shandong Provincial Health Commission issued an opinion on publicly soliciting the “Regulations on Population and Family Planning of Shandong Province (Draft Amendment for Comments)”, which mentioned adding “citizens who register their marriage in accordance with the law enjoy 15 days of marriage leave; those who participate in pre-marital medical examinations will be increased by an additional 3 days of marriage leave.” Consumer products, such as Fosun Tourism Culture (01992) mentioned yesterday, and the beverage tea Baidao (02555), etc., have risen by more than 8% and 7.63% respectively today. Today, it has evolved into the restaurant Dase Co., Ltd. (01405), which makes Domino's pizza, and Helen's (09869), a bistro concept.

The “millet economy” has come out frequently in recent days. This is an economic phenomenon where emerging consumption mainly revolves around two-dimensional culture, especially peripheral products derived from intellectual property (IP) such as animation and games. Including but not limited to posters, badges, cards, ornaments, cards, figurines, dolls, etc. Judging from this definition, Bubble Mart (09992) is the most authentic millet economic concept. No wonder the trend is so aggressive. Another one is Dream World (01119). On November 22, its international service for the world's first two-dimensional anime competitive shooter game “Carapicchu” (English name: Strinova) was officially launched. 2 hours after opening, it quickly climbed to number one on Steam's new product list and number one popular free game. The IP giant has signed a partnership with Chaowan IP, launched a variety of game IP derivatives, and opened QQFamily offline trendy games stores, with an investment of over 100 million yuan. According to the “White Paper on China's Two-dimensional Content Industry”, the number of two-dimensional users reached 490 million in 2023, of which 120 million were core two-dimensional users. According to QuestMobile data, idle fish two-dimensional transactions increased 104% year-on-year in 2024. In the pan-quadratic market with a market size of more than 220 billion yuan, the “millet” economy is taking up more and more share. The room for future development is indeed quite impressive. Today's strongest varieties include Zhongxu Mirai (09890): The company's revenue mainly comes from online games developed by marketing and operating game developers, and online literature products and short videos developed by marketing content creators. It surged 19.72%. From an IP perspective, Starry Sky Chinese (06698) and Mingchuang Premium (09896) also count.

In fact, the popularity of the so-called “millet economy” is only a new type of consumption. The key reason why it is more dynamic is that its consumer groups are all young people. The consumption capacity of such groups is quite strong, so the increase brought about is even more impressive.

From this point of view, the sportswear category is also very popular among young people. Nike released new product plans: launch a new and simplified road running shoe product line (rebound cushioning Pegasus series, super cushioning Vomero series, support and cushioning structure series); release the new Nike Vomero 18 product leading to superior cushioning; release new basic models of running apparel, Nike Swift and Stride; release a new women's shoe model Air Max Muse. This release is the first new product line since the new CEO took office. The product idea is clear, consolidates Nike's advantages, focuses on professional running, and accurately meets the needs of runners. Professional agent Taobo (06110) is up 7.83% today.

Similarly, new sports formats are also being sought after. Recently, Keep (03650) collaborated with “Back to the Future: 1999” to launch a series of sports challenge activities, including online running with co-branded medals, exclusive custom-themed meditation classes, and special offline pop-up events. The joint event was officially launched at 10:00 on October 31, 2024. As of the publication on November 8, more than 70,000 users have signed up for the online running event.

Tencent (00700) and Intel join forces to launch the world's first naked eye 3D gaming handheld 3D One! Through real-time eye tracking sensors and TN LCD grating technology combined with real-time image interlacing algorithms, it can bring players stunning naked eye 3D visual effects without any auxiliary equipment.

Baidu (09888)'s autonomous online car-hailing platform “Radish Run” is scheduled to be put into trial operation in Hong Kong. The first phase of testing will be carried out at the airport as soon as the end of this year. Baidu said that it will be carried out in strict accordance with relevant Hong Kong laws and license conditions, and that autonomous vehicles will meet the safety mileage or length requirements of each stage of testing and obtain permission from the Transport Department before entering the next phase of testing. In terms of safety monitoring, the “Radish Run” test will be carried out during off-peak hours. There will be a backup operator on the bus, and they are Hong Kong locals with more than 10 years of driving experience in operating vehicles and sit in the main driving position, making it easy to monitor the autonomous vehicle driving situation throughout the process and take over immediately if necessary. Baidu's driverless car plus its AI model's repair of the advertising business plus the bottom, is up more than 4% today.

[Section Focus]

According to the website of the State Information Office, the Information Office of the State Council will hold a regular State Council policy briefing at 3 p.m. on November 28, 2024 (Thursday). Zhang Shixin, Deputy Secretary General of the National Development and Reform Commission, and relevant officials from the Ministry of Transport, Ministry of Commerce, and China Railway Group will introduce relevant policies and measures to effectively reduce logistics costs for the whole society and answer questions from reporters.

Additionally, SF Holdings (06936) announced that on November 23, 2024 (Saturday), the sale price was determined to be HK$34.30 per H share (excluding 1% brokerage commission, 0.0027% SFC transaction levy, 0.00565% SEHK transaction fee, and 0.00015% CFC transaction levy). The Company expects to announce on November 26, 2024 (Tuesday) the level of active international sales, the application level for the Hong Kong public offering, the allocation criteria for shares offered in Hong Kong, and the distribution results of the Hong Kong public offering. Assuming that the global sale becomes unconditional on or before 8 a.m. (Hong Kong time) on November 27, 2024 (Wednesday), it is expected that H shares will start trading on the main board of the Stock Exchange at 9:00 a.m. (Hong Kong time) on November 27, 2024 (Wednesday). H shares will be traded at 200 H shares per lot.

The logistics sector is expected to be stimulated. The main products are Kerry Logistics (00636), SF Tongcheng (09699), and Eneng Logistics (09956).

[Individual Stock Mining]

Samsonite (01910): Continued share buybacks are steadily increasing its market share

Recently, the company spent HK$21.7073 million to repurchase 1,140,600 shares at a repurchase price of HK$18.52-19.22 per share. Samsonite's net sales for the first 9 months were US$2,646 million, down 3.2% year on year; net profit was US$236 million, down 7.5% year on year. Among them, net sales for the third quarter were US$878 million, a year-on-year decrease of 8.3%; net profit of US$66.2 million, a year-on-year decrease of 39.1%.

Comment: The company operates its own brands such as Samsonite, Tumi, and American Tourist, covering consumers in the middle and lower end markets. Through a global layout, the company's market share has steadily increased. Last year, the company's market share in the global luggage market was 3.8%, second only to LV and Kering Group. Samsonite is expected to benefit from multi-brand collaborative development in the future, and its market share is expected to increase steadily. Samsonite has successively acquired French fashion luggage brand Lipault, America's second-largest phone case brand Speck, outdoor and adventure backpack brand Gregory, Italian luggage brand Chic Accent, high-end business luggage brand Tumi, and eBags, the largest luggage shopping site in the US. By brand and channel, net sales of the Tumi brand increased by 0.3% in the first half of 2024, while net sales of the American Tourist brand declined slightly by 0.9%; the company's net sales directly to consumers increased by 4.7%, accounting for 38.1% of total net sales in the first half of 2024, compared to 37.7% in the first half of 2023. In the first half of 2024, the company's gross margin rose to 60.2% from 58.8% in the same period last year, setting a record for the first half of the year, with improvements in all regions. Since August, Samsonite has been buying back frequently, and in October alone, it spent about HK$200 million on repurchases. The company continues to promote the US stock listing.

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