Zhitong Hong Kong Stock Analysis | Bloodletting effect combined with the weakness of small essay technology, funds focus on innovative drugs with multiple lines of outbreak

[Market Dissection]

The A-share market is currently too reliant on technology; as long as this line weakens, the trend will not be good. In contrast, the Hang Seng Index is not affected by technology and actually rose today, closing up 0.60%.

The situation in the Middle East is not peaceful. According to news from Israel on the 10th, Israel has expressed to the United States its willingness to participate in further military actions against Iran, and is currently waiting for President Trump to make a decision. Reports indicate that Israel believes a new round of military conflict between the U.S. and Iran may last for several more days. Currently, this has little impact on the market. Gold stocks showed strong performance today, likely related to the Federal Reserve's dovish stance, and also betting on the upcoming U.S. inflation data. For example, Lingbao Gold (03330) and WanGuo Gold International (03939) both rose over 5%.

As mentioned yesterday: everything is a cycle. Yesterday, the sentiment for technology stocks was very good, and Zhaoyi Innovation (03986) also announced impressive earnings forecasts, expecting a year-on-year increase of about 1099% in net profit attributable to the parent company for the first half of the year. However, the trend turned out to be a "death by exposure," with a drop of over 21% today, dragging technology stocks down. Additionally, there were negative reports, such as from Shenghong Technology (02476): the first batch of Rubin boards failed delivery, and currently, Xinxing is taking over the share. The company later issued a clarification, but still saw a nearly 13% drop today. From the source, the decline in technology is likely related to the funding situation. According to informed sources, the $26.5 billion U.S. issuance activity by SK Hynix saw the number of shares allocated to major investors fall short of initial expectations. It is reported that the subscription multiple for this transaction was about seven times, with over 500 institutional investors participating. Ten investors subscribed for 50% of the shares, while the top 25 investors subscribed for two-thirds of the shares. They also indicated that SK Hynix's management was deeply involved in the share allocation. In terms of cost-effectiveness, this subscription is more profitable, leading to a withdrawal of funds.

As technology stocks fell, funds returned to pharmaceuticals, catalyzed by the favorable news mentioned in yesterday's sector focus: "Notice on Printing and Distributing the National Essential Medicines List (2026 Edition)," which announced that the new version of the list will officially be implemented on September 1, 2026. The key favorable direction is innovative drugs, with several mentioned varieties such as Innovent Biologics (01801), Junshi Biosciences (01877), and China National Pharmaceutical Group (01177) all rising over 4% today, as these varieties are included in the new version of the list. However, the most elastic are the CXO types, as the fundamentals at all levels ultimately favor them. For example, Zhaoyan New Drug (06127) and Kanglong Chemical (03759) both rose over 11%, while Kailaiying (06821) rose over 5%.

The biopharmaceutical experimental underlying water company Baiaosaitu-B (02315) is also favored, with its core barrier being its RenMice humanized mouse, which is globally scarce. Only three companies globally have a complete human antibody mouse platform, covering nine of the top 10 pharmaceutical companies worldwide, with overseas revenue accounting for 70%, and strong order continuity. Coupled with its newly launched RenSuper platform, which accelerates antibody screening, the company recently reached a global cooperation with Whitehawk Therapeutics, where Baiaosaitu will receive an upfront payment and has the right to receive corresponding payments when related products reach specific development, regulatory, and commercialization milestones In addition, Baiaosaitu has the right to receive a low single-digit percentage of product net sales revenue sharing. This model is a win-win, and if promoted, there is significant potential for the future, with a rise of over 10% today. There is also an AI pharmaceutical theme company, Insilico Medicine (03696): The Pharma.AI platform sells to pharmaceutical companies for target and molecular screening, with a BD cooperation upfront payment + milestones. The world's first AI-designed drug Rentosertib has entered Phase III (for fibrosis), with 13 clinical pipelines. Future developments will depend on orders and clinical catalysts, with a rise of over 7% today.

Additionally, there are varieties in the pipeline that are likely to realize returns soon, such as Ying'en Biotechnology-B (09606): DB-1311 (B7H3 ADC) is one of the company's core late-stage pipelines with the most global potential, already showing differentiated efficacy. The Phase III global clinical trial has been launched, and the commercialization development in collaboration with BioNTech is ready. Institutions expect BioNTech to submit a BLA for the U.S. indication of endometrial cancer to the FDA in 2026, which is expected to contribute revenue elasticity first. The stock rose over 10% today; another company, Kelun-Biotech (06990): Its LuKangSatuzumab (sac-TMT, the first domestic TROP2 ADC) and PD-L1 monoclonal antibody have entered medical insurance, covering over 2,400 hospitals nationwide. The self-developed OptiDC full-chain ADC platform has two ADCs that have been commercialized (TROP2, HER2), with the number of domestic pipelines and clinical progress in the first tier; a $9.5 billion epic ADC collaboration with Merck, with Merck's global layout of 17 Phase III clinical trials to validate the clinical value of the product; the latest Phase III data from ASCO exceeded expectations, with a rise of over 8% today.

Aerospace has positive news today. At 12:15 PM on July 10, the Long March 10 B rocket was launched from the Hainan commercial space launch site. About 6 minutes after the separation of the first and second stages, a booster stage returned vertically and was successfully recovered on a sea recovery platform. This validated China's pioneering offshore network recovery technology, taking a completely different technical route for rocket recovery compared to the United States. The significance of reusable technology in reducing launch costs is enormous. The main beneficiary is JunDa Holdings (02865): Recently, the company has reserved 3 satellites for launch, including the G60 100-kilogram commercial meteorological satellite "YL-01," the multi-band intelligent infrared meteorological remote sensing satellite "Zhonghang Infrared No. 1," and the "SanTi Light Boat - YunJian MuXi No. 1" satellite from the Zhijiang Laboratory. The company is the operator and leading enterprise of the Star Hub Plan (guided by the Shanghai Economic and Information Commission), with a total of 1,000 AI satellites planned, and the next step is to expect the release of the Star Hub No. 1 plan. The stock surged over 24% today; another company, Goldwind Technology (02208), rose over 8% due to its stake in Landspace, while other stocks like Asia-Pacific Satellite (01045) saw a rise and then a pullback.

In the past two years, CK Hutchison Holdings (00001) has sold off its UK power grid, railway leasing, 49% stake in UK Telecom, and London office buildings, cashing out over HKD 350 billion in total. The latest sale action has begun, with CK Hutchison Holdings (00001) recently stating that it is negotiating the sale of its European perfume and cosmetics company Marionnaud. The reason is that Marionnaud has been experiencing EBITDA losses for many years. The logic behind the acquisition was to fill the high-end beauty gap for Watsons, but 20 years of operation has proven that high and low positioning cannot be coordinated The purchase cost in 2005 was €534 million, and selling the stock would result in a discounted sale, making this investment overall a loss. However, today the stock price has risen over 7%, as the company has shed a losing burden and is now entering more profitable industries.

【Sector Focus】

On July 10, the State Council gave principle approval to the "15th Five-Year Plan for the Revitalization and Development of Traditional Chinese Medicine," urging serious organization and implementation. The plan emphasizes the equal importance of traditional Chinese and Western medicine, adheres to innovation while maintaining integrity, follows the laws and characteristics of traditional Chinese medicine, improves the inheritance and innovation development mechanism of traditional Chinese medicine, accelerates the modernization of traditional Chinese medicine, and promotes its global reach, providing strong support for achieving decisive progress in building a healthy China during the 15th Five-Year period.

Traditional Chinese medicine has also been quiet for a long time, and this policy mainly benefits: authentic medicinal material bases + formula granules/pieces, classic prescriptions + innovative traditional Chinese medicine, and chain traditional Chinese medical services.

Related stocks in the Hong Kong market: China Traditional Chinese Medicine (00570), Baiyunshan (00874), Tongrentang Technology (01666), Shenwei Pharmaceutical (02877); chain traditional Chinese medical service Guishengtang (02273).

【Stock Picking】

Aston (02715): Acquisition of embodied intelligence target continues to catalyze, overseas business achieves high growth

Yushu Technology's IPO was rapidly approved. Aston previously announced plans to acquire 100% equity of Aston Coolzhu through its wholly-owned subsidiary in cash, intending to absorb and merge its wholly-owned subsidiary Nanjing Aston Automatic Control Technology. The company's total operating revenue in Q1 2026 was 1.217 billion yuan, a year-on-year decrease of 2.22%, while net profit attributable to the parent company was 97.8367 million yuan, a year-on-year increase of 674.64%.

Commentary: This acquisition is expected to strengthen Aston's layout in humanoid robots and embodied intelligence. The company's industrial robot shipments ranked first in the domestic market in Q1, with rising profitability, and net profit for the quarter exceeded the total for 2025, with a year-on-year increase in gross margin of 7.52%. Overseas business saw significant growth, with Europe as the core engine. By 2025, overseas revenue accounted for 29.4%, a year-on-year increase of 50%; European revenue growth exceeded 50%. In Q3 2025, overseas orders increased by 68.5% year-on-year; early 2026 saw continued high growth in Europe and Southeast Asia. The overseas gross margin is over 30%, significantly higher than domestic levels, and is expected to be the main source of profit growth in the next 2-3 years. The company's market share in industrial robots continues to rise, with production maintaining high growth. In 2025, shipments are expected to reach 33,400 units, capturing 10.6% of the market, surpassing the four major foreign families (such as Fanuc/Yaskawa) for the first time, maintaining the top position among domestic brands for eight consecutive years, with leading customer resources (CATL, BYD, LONGi, Geely, etc.), entering the list of global top automotive parts suppliers.

With sufficient orders on hand, the latest order data (February-March 2026) shows that orders on hand are approximately 8.5 billion yuan, a year-on-year increase of 67%, with robot orders increasing by about 50% year-on-year, maintaining high prosperity. Contract liabilities (advance payments): at the end of 2025, 586 million yuan (+16.1%), at the end of Q1 2026, 557 million yuan, with stable order quality. The order structure and delivery, downstream: automotive (including new energy), 3C, photovoltaic/lithium battery >70%; large orders: BYD's contract for 12,000 robots (to be delivered by Q1 2026); overseas Salis single project over 80 million, with an expected order of 150 million in 2026 Production scheduling: Capacity utilization rate over 90%; orders on hand scheduled until Q2-Q3 2026, with longer scheduling for heavy-duty models, full orders, and tight deliveries.

Global layout taking shape, A+H listing (Hong Kong stock listing in March 2026), the first domestic industrial robot company to achieve A+H listing. Acquired Germany's Cloos (welding) and UK's TRIO (motion control); established factories in Europe/Poland, serving 75 countries. The company has a fully self-developed industrial chain, with 95% of core components independently controllable, self-developed iER.OS intelligent ecosystem, Juliet robot language, and collaborative robots (CoolZhu) rapidly scaling, covering over 107 scenarios, with fast expansion in electronics/lithium batteries/medical sectors. The core components of the 1200kg heavy-duty robot are 100% domestically produced, with national-level first set certification. The company's collaborative robots' share is increasing, overseas business is growing rapidly, orders are overflowing, and gross margins are significantly higher than domestic (about 10 percentage points difference), which is the core of future profit elasticity. The Ministry of Industry and Information Technology supports the domestic substitution of core components for industrial robots, with multiple favorable factors continuing to ferment