Daily Investment Strategy

Recommended Stock：Man Wah Holdings（1999）

CPC leadership held meeting on 2025 economic work, indicating that it will " strengthen unconventional counter-cyclical adjustments, intensify the coordination of various policies, and make the macro regulation more forward-looking, targeted and effective," and emphasized the need to "vigorously boost consumption and expand domestic demand on all fronts." Man Wah Holdings, primarily engaged in the manufacturing and sales of sofas, can potentially benefit from policy support.  To recap, the group benefited from actively expanding its channels, achieving good growth in North America and other export markets, while the mainland market continued to cool as expected amid consumer downgrading. Affected by the domestic market, revenue in 1H24 was approximately HKD8.3bn, down 7.1% yoy. In the face of weak demand, the group successfully strengthened cost and expense management, resulting in an increase in both GPM and NPM despite declining revenue. Specifically, gross margin increased by 0.4 ppts yoy to approx. 39.5%; NPM rose by 1 ppt to about 13.7%, driving profit growth of 0.3% to HKD1.14bn. Considering the operating environment during the period, overall performance exceeded market expectations. Looking ahead, management pointed out that the group has now completed its capacity layout overseas (in addition to the mainland, it has established a total of 12 major manufacturing bases in Northern Europe—Poland, Lithuania, Estonia, Ukraine—and Asia—Vietnam), effectively preventing adverse impacts from fluctuations in Sino-U.S. relations and thus gaining more customer orders. The North American market remains the primary consumption market for functional sofas, with currently good market demand. In Europe and other export markets, management believes there is still significant room for expansion; the group will strengthen its sales channels to increase its market share globally. Target price: $5.5.

The Fed is about to cut interest rates, and the outlook for 2025 is in focus

The Fed is widely expected to cut interest rates by 25 basis points at the end of its two-day meeting on Wednesday. Earlier this year, the Federal Reserve began an easing cycle. The move will see rates fall by a total of 100 basis points in 2024. But the focus this week will be entirely on the Fed's future easing plans, especially with sticky inflation and resilience in the labor market. Analysts generally expect China's central bank to signal a slowdown in interest rate cuts in the coming year. Hong Kong Stock Connect had a net outflow of HK0.38bn on Monday of which China Mobile (941) had the largest net inflow, reaching HK$0.84bn; followed by CNOOC (883). Tracker Fund (2800) recorded the largest net outflow at 2.57bn, followed by HSCEI ETF (2828).