Investment Daily

10 March 2021

Major Market Indicators Market Overview 9 Mar 8 Mar 5 Mar

Mkt. Turn.(mn) 276,000 276,800 240,400 New Economy Stock Rebound Today; HSI Resistance at 10 Day SMA Stock Advances 821 436 684 Media reported that Chinese fund increased buying to stabilize market. Hong Kong stock Stock Declines 997 1.461 1,148 market once rose more than 500 points. But positive effect did not last long. Hang Seng HSI 28,773 28,541 29,098 Index met resistance at 50 day moving average. Hang Seng Index gain narrowed to 232 Change +232 -557 -139 points and closed at 28,773. H-share Index fell 41 points to 10,973. Tech Index fell 18 HSI Turn.($bn) 121.70 123.95 92.51 points to 8,063. Market turnover was HK$276 billion . Techtronic(669) surged 6% which HSCEI 10,973 11,015 11,292 was the best performer among blue-chips. Gaming stocks rose. Galaxy Entertainment(27) Change -42 -277 -33 and Sands(1928) rose 3.3-4.9%. HSCEI Turn.($bn) 118.69 120.87 96.20 10 Year US Treasury Yield fell 5 basis points to 1.54% on Tuesday, triggered a strong rebound on the US technology stock. Of which, thanks to the strong sales in China in HSI Technical Indicators February, Tesla share price rose 19% on Tuesday. Together with strength of other major tech stocks, the Nasdaq index rebounded 3.7% on Tuesday. 10-days MA 29,285 50-days MA 28,973 On the other hand, the Dow index once rose to a intraday record high of 32,150, but just 250-days MA 25,610 closed 30 points higher at 31,833, due to profit taking pressure on energy and financial 14-days RSI 44.57 stock. Besides, US dollar index fell 0.3% to 91.96 on Tuesday, supporting gold price to Primary resistance 29,285 rebound. Looking ahead, the House will vote for the fiscal stimulus bill on Wednesday, its Primary support 28,500 impact on the financial market will be investors short term focus. HS CEI Technical Indicators Although Hong Kong Stock Connect recorded HK$8.8bn net outflow, HK stock market 10-days MA 11,356 still rebounded on Tuesday. The declining treasury yield and strong performance of Nasdaq, 50-days MA 11,397 will trigger further rebound of new economy stock today. Hang Seng Index resistance will 250-days MA 10,278 be at 10 Day SMA (29,285). However, since US treasury yield and exchange rate still at 14-days RSI 38.95 relative high level, local market is expected to remain volatile in the near term. Primary resistance 11,356 Primary support 10,500 (0700) and Meituan (3690) continued to suffer net sell off for the Hong Kong Stock Connect trading on Tuesday. It is expected that the two stocks will rebound with other new HSI Futures economy stocks today, while Tencent share price resistance is at 10 Day SMA(HK$681). On the other hand, (0728) 4Q20 results performed well, together with A

9 Mar 8 Mar 5 Mar share listing plan, it will provide support to its share price. Mar 28,775 28,478 28,892

Volume 172,251 161,697 143,381 HSI Chart Open interests 120,611 125,390 125,985 Apr 28,735 28,431 28,853 Volume 459 481 415 Open interests 2,013 1.920 1,912

HSCEI Futures

9 Mar 8 Mar 5 Mar

Mar 11,014 11.025 11,261 Volume 128,581 99,638 84,969 Sources ：Google Open interests 203,193 202,508 200,681 Apr 10,998 11,004 11,243 Volume 2,134 1,060 888 Open interests 6,417 5,095 4,245

Investment Daily Daily Focus

China Telecom (0728): Final Result Comment

 China Telecom (0728) FY20 service revenue rose 4.5% yoy to China Telecom (0728) Info Rmb373.8bn. EBITDA rose 1.4% yoy, all beat market expectation. Net Closed price 2.65 profit rose 1.6% yoy to Rmb20,850mn, but it included a Rmb5bn 3G asset write off. If excluding this one-off item, its operating profit rose 15.9% Expected P/E (X) 8 Expected Dividend yoy in FY20. DPS remained unchanged at HK$0.125. 4.99 yield (%)  4Q20 service revenue rose 7.9% yoy to Rmb92.9bn. Of which, mobile 52 week high 2.89 service revenue rose 4.8% yoy. Thanks to its 5G penetration rate rose to 52 week low 1.82 24.6% of its total mobile subscribers, its 4Q20 average monthly ARPU 14RSI 60 fell 0.3% yoy to RMB43.2 in 4Q20. Its 5G APRU was Rmb66. In fact, according to China Telecom, customers migrating to 5G will spend 10% more as compared with previous plan.  Fixed line revenue rose 11% yoy in 4Q20, thanks to its strong demand from fixed broadband, datacenter as well as cloud services. In fact, China Telecom industrial digitalization revenue rose 9.7% yoy to Rmb84.0bn in FY20 full year. Of which, data center revenue rose 10.1% yoy to Rmb28.0bn while cloud revenue rose 58.0% yoy to Rmb11.2bn.  China Telecom FY20 capex was Rmb84.8bn, which is inline with its guidance of Rmb85.0bn. For 2021, China Telecom capex is expected to increase 2.6% yoy to Rmb87.0bn which seems prudent. 5G related capex remained stable and will account or 45.6% of total capex in 2021. On the other hand, industrial digitalization capex will increase 67% yoy in 2021 and will account for 25.3% of total capex.  China Telecom plans to issue A share in the Shanghai Stock Exchange mainboard. It plans to issue 12bn new A shares or 13% of total enlarged shares. The proceeds will be used to fund 5G Industrial Internet, cloud-network integration and Sci-tech innovation. It will also placement to strategic investors. Since H share is trading at 0.5x P/B, the A share issue price is likely to obviously higher than current H share price.  China Telecom FY20 final result is good. Its high exposure to industrial digitalization will be its future earnings drivers. Together with proposed A share listing plan, it will provide boost to its share price. China Telecom current price is 8x FY21 prospective P/E, which is below 5 year average 11x prospective P/E. Suggest Accumulate, target price is HK$3.20.

Analyst: Samuel Chua, CFA

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Investment Daily

Shanghai /Shenzhen -Hong Kong Stock Connect Statistics SH Connect SZ Connect Combined Southbound Balance (RMB bn) 49.17 49.85 88.79 Balance as % of Quota Amount 94.6 95.9 105.7

Top 10 Most Actively Traded Stocks(SH-HK Connect Southbound) Stock Name Stock code Buy Trades (HKD) Sell Trades (HKD) Turnover (HKD) TENCENT 700 2,617,509,450 4,197,558,219 6,815,067,669 941 1,254,287,650 1,631,229,925 2,885,517,575 MEITUAN-W 3690 777,787,780 1,588,362,181 2,366,149,961 SMIC 981 604,074,000 918,818,950 1,522,892,950 XIAOMI-W 1810 821,902,940 645,494,440 1,467,397,380 CNOOC 883 267,321,210 571,460,335 838,781,545 SMOORE INTL 6969 558,518,000 233,633,363 792,151,363 CHINA TELECOM 728 250,393,020 471,738,800 722,131,820 GREATWALL MOTOR 2333 302,535,025 272,508,095 575,043,120 CCB 939 54,235,900 517,350,080 571,585,980 Sources: HKEx Top 10 Most Actively Traded Stocks(SZ-HK Connect Southbound) Stock Name Stock code Buy Trades (HKD) Sell Trades (HKD) Turnover (HKD) TENCENT 700 2,282,186,650 2,332,717,712 4,614,904,362 MEITUAN-W 3690 1,469,638,060 2,107,721,613 3,577,359,673 XIAOMI-W 1810 2,187,827,510 559,098,489 2,746,925,999 GCL-POLY ENERGY 3800 947,069,110 1,004,410,860 1,951,479,970 CHINA MOBILE 941 575,212,850 964,040,725 1,539,253,575 HKEX 388 64,393,460 847,699,078 912,092,538 SMOORE INTL 6969 515,759,850 311,080,645 826,840,495 SMIC 981 360,898,425 358,397,184 719,295,609 WEIMOB INC 2013 300,448,480 352,379,791 652,828,271 CNOOC 883 271,972,630 290,052,220 562,024,850 Sources: HKEx Other Statistics

Ten Most Actively Traded Stocks Stock Name Code Change Closed Price Turnover(Million) TENCENT 700 0.23% 644.00 247.37 MEITUAN-W 3690 -2.20% 302.00 164.21 XIAOMI-W 1810 -1.79% 21.95 95.04 BABA-SW 9988 1.54% 224.00 79.22 HKEX 388 -2.25% 440.80 61.85 CHINA MOBILE 941 -2.49% 54.85 55.73 CCB 939 -0.92% 6.50 43.75 PING AN 2318 0.61% 98.50 43.33 GCL-POLY ENERGY 3800 1.87% 2.18 40.04 BYD COMPANY 1211 0.80% 176.50 39.76

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Investment Daily Ten Short Sell Stocks

Stock Name Code Short Selling Turnover Short Selling Ratio Turnover TRACKER FUND 02800.HK 2.62B 3.94B 66.46% TENCENT 00700.HK 2.36B 24.74B 9.56% PING AN 02318.HK 2.17B 4.33B 50.06% HSCEI ETF 02828.HK 1.94B 3.69B 52.57% BABA-SW 09988.HK 1.54B 7.92B 19.45% AIA 01299.HK 875.91M 2.84B 30.88% HSBC HOLDINGS 00005.HK 794.08M 2.75B 28.87% CCB 00939.HK 724.42M 4.38B 16.56% CSOP HS TECH 03033.HK 685.43M 1.07B 64.00% HKEX 00388.HK 642.25M 6.19B 10.38% Source: AA Stocks Economic Calendars

Date Country Event Survey Prior Mon Hong Kong (788) Result Tue Euro Zone 4Q. GDP YoY -5.0% -5.0% Hong Kong China Telecom (728) Result Wed US Feb. CPI YoY 1.7% 1.4% Feb. CPI Ex Food and Energy YoY 1.4% 1.4% China Feb. CPI YoY -0.3% -0.3% Feb. PPI YoY 1.5% 0.3% Hong Kong Sunac Services (1516) Result Thu US Initial Jobless Claims (Till Mar 6) 745k Continuing Jobless Claims (Till Feb 27) 4,295k Euro Zone ECB Monetary Policy Meeting MTR (66), China Unicom (762), JD-SW (9618), GDS-SW Hong Kong (9698) Results Fri Hong Kong AIA (1299) Result

All the above named KGI analyst(s) is SFC licensed person accredited to KGI Asia Ltd to carry on the relevant regulated activities. Each of them and/or his/her associate(s) does not have any financial interest in the respectively covered stock, issuer and/or new listing applicant.

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