Daily Investment Strategy
Recommended Stock：China Mobile（941）
China Securities Regulatory Commission (CSRC), Beijing branch visited the three major Chinese telecoms. The authority started an in-depth exchange of views on issues such as governance structure, cash dividends, market cap management, social responsibility, market outlook and future strategies. In our view, China Mobile benefits from strong free cash flow (FCF). Since 2020, China Telecom and China Unicom’s FCF growth has been flat or slightly declining, while China Mobile saw significant growth after 2022. With stable capital expenditures, the company is well-positioned to distribute dividends. Its FCF is expected to remain superior to peers in 2024, aided by effective capital expenditure control. Since 2023, China Mobile's capex-to-operating cash flow ratio has been lower than its peers, and the market expects further improvement in 2025. Target price: $80.9.
Expansion of Consumer Subsidies
At the "China's High-Quality Economic Development Achievements" series press conference held by the National Development and Reform Commission (NDRC) at the State Council Information Office on January 3rd, in addition to reviewing the achievements of 2024, it was pointed out that this year the scale of ultra-long-term special government bonds will be significantly increased, and efforts will be made to expand the implementation of the "Two New" initiatives. NDRC mentioned that subsidies for the purchase of new digital products such as mobile phones will be implemented, providing subsidies to individual consumers for purchasing three types of digital products: mobile phones, tablets, and smartwatches/fitness bands. It is expected that related stocks will be favored.
On Friday, the Southbound Stock Connect saw a net inflow of 9.27 billion HKD, with the most inflow into the Tracker Fund of Hong Kong (2800), reaching 5.06 billion HKD, followed by the Hang Seng China Enterprises Index ETF (2828). Xiaomi Corporation (1810) recorded the most net outflow, amounting to 950 million HKD, followed by Alibaba (9988).
Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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