Zhitong Hong Kong Stock Analysis | AI Application End Sees New Opportunities as Consumer Stocks Continue to Spread

【Anatomy of the Market】

South Korea has actively cooled down the bubble, with the Bank of Korea raising interest rates by 25 basis points to 2.75% today, marking the first rate hike since January 2023. Additionally, measures to reduce leverage have been introduced, raising the threshold for individual investors to purchase leveraged ETFs from 10 million KRW to 50 million KRW. The South Korean stock market, along with SK Hynix, is naturally set to decline. Technology continues to be under pressure, and the A-shares are also weakening. The Hong Kong stock market remains robust, jumping 1.33% today, with the Hang Seng Index breaking through 25,000 points.

AI hardware continues to face setbacks, but the AI application side sees a silver lining. The "full-stack Token factory" concept of MARKETINGFORCE (02556) has issued a positive profit warning, expecting a mid-term profit attributable to shareholders of approximately 182 million to 222 million yuan, a year-on-year increase of 386% to 494%. This means that in just six months, the growth has nearly reached five times, completing a critical transition from "burning money for scale" to "platform profitability." Its unique "scenario Token" charging model is a highlight: instead of charging a fixed "headcount fee" based on software accounts, it charges based on the actual work done by AI. In scenarios like marketing, sales, and operational analysis, the more AI can directly help clients find leads, improve conversion, and assist in decision-making, the more clients are willing to pay; internally, self-developed AI empowers cost reduction and efficiency improvement, directly lowering expenses and releasing profits. The company's moat is serving over 210,000 enterprises, covering 721 sub-industries, with accumulated business logic and process data all deposited into its KnowForce AI knowledge platform. Then, through the Agentforce platform, these "experienced masters' experiences" are packaged into standardized AI Agents. Today, it surged over 30%. Compared to the relatively "Token-first stock" ZhiCe (03317), its core competitiveness is stronger. Other well-performing application-side stocks include Meitu (01357), which rose over 6%.

On July 15, the National Internet Information Office released the first batch of mobile-side generative artificial intelligence services that have been filed, with seven mobile-side generative AI service products passing the filing simultaneously. The complete list of the seven approved products includes Apple Smart, Huawei Xiao Yi AI, OPPO AndesGPT, vivo Blue Heart, Xiaomi Surge AI, Samsung Galaxy AI, and Nubia Doubao mobile large model. Benefiting from this, Xiaomi (01810) rose over 6%, and ZTE Corporation (00763) rose over 3%. Meige Intelligent (03268): The company has taken the lead in defining the AI Module 4.0 standard, possessing core competitiveness in communication, perception, and reasoning, covering 0.5-700 TOPS AI computing power, and can flexibly adapt to the computing power deployment needs of different terminals. Its AI module products serve as a key foundation for the implementation of edge AI, building a core advantage of "computing power + algorithms + security," rising over 11% today.

The fruit chain direction overall rebounded, with notable performance from AAC Technologies (02018): entering AI fields such as liquid cooling, XR, and robotics, with long-term growth potential, including its subsidiary Yuandi Technology's CDU (Cooling Liquid Distribution Unit), cold plates, manifolds, and UQD quick connectors, as well as VC cooling solutions for optical modules/SSDs The expansion of domestic and overseas customers is progressing smoothly; the supply of motors and microphones for OpenAI and Apple AI edge devices has a significantly higher value and profit margin compared to mobile phone business; Google's and Samsung's AI glasses optical waveguide products are being released in multiple models; the humanoid robot business has already received early customer orders from Xiaomi and Lingxi Robotics. Today it rose over 6%.

In the consumer sector, the State Council issued the "14th Five-Year Plan for Expanding Consumption," clearly proposing to expand the supply of parenting products and services and increase the effective supply of new generation smart terminal products. In the assisted reproduction sector, Jinxin Fertility (01951) rose over 7%; the leading parenting product company Different Group (06090): the company will upgrade its core products (i.e., baby strollers, car safety seats, cribs, and high chairs) with AI, and gradually extend to AI feeding scenario products, AI smart toys, and more intelligent products related to family life scenarios. Recently, it formally signed a strategic cooperation framework agreement with CaoCao Mobility (02643). They will jointly develop an integrated installation solution for adult seats and child safety seats around the Robotaxi smart cabin scenario. Today it rose over 11%.

In the film and television sector, Maoyan Entertainment (01896) and China Ruoyi (00136), mentioned yesterday, performed well, both rising over 5%, indicating that the market has confidence in the subsequent box office of "Kung Fu Girls." The latest box office has surpassed 900 million, with the total box office forecast in a neutral range of 2.5 billion, which has been raised, corresponding to an increase in the returns of the aforementioned products.

On July 16, Apple CEO Tim Cook posted on Weibo welcoming the Pop Mart (09992) team to visit Apple Park and shared photos of him communicating with Apple's incoming CEO John Ternus and Pop Mart founder Wang Ning. The two sides had in-depth discussions on creative design, digital ecology, and global consumption trends. If a collaboration with Apple can be achieved, the potential is worth looking forward to. On July 10, Duan Yongping increased his holdings in Pop Mart again, raising the number of shares from 91.2728 million to 102 million, with the shareholding ratio increasing from 6.85% to 7.65%. Today it rose nearly 7%.

E-commerce company Dongfang Zhenxuan (01797) has not been significantly impacted despite key anchors leaving the company to start their own businesses. The key is its core competitiveness: 1. The self-operated categories continue to expand, opening up a second growth curve, adding blue hat health products (glucosamine, coenzyme Q10, DHA, etc.), standardizing self-owned agricultural products, and forming a matrix of prepared dishes and snacks, with C2M reverse customization reducing intermediaries and continuously improving profit margins. 2. The phenomenon of the store model has been validated: after the first offline store opened in Beijing in May, foot traffic and conversion exceeded expectations, with the latest first store in Northwest Xi'an opening on July 15 and the first store in Central Zhengzhou opening simultaneously on July 16, marking the establishment of the third offline experience store nationwide. The market recognizes the dual-channel closed loop of online live streaming and offline retail. In terms of performance, the flow data is warming up: the overall GMV in July continues to rise year-on-year. E-commerce ultimately competes on comprehensive strength, not just live streaming sales. Today it surged over 14% Since July, the national prices of live pigs and pork have risen for two consecutive weeks. On July 12, the wholesale price of white strip pigs at the Xinfadi market in Beijing was 14.4 yuan per kilogram, an increase of 15% compared to July 1, marking the highest price since the Spring Festival. The complete cost of commodity pigs for Dekang Agriculture and Animal Husbandry (02419) in June was 11.83 yuan/kg, with cost control levels consistently ranking among the industry leaders. As long as costs are above the current price, profits can be made, and today it rose by 6%. Other varieties such as Muyuan Foods (02714) and COFCO Joycome (01610) both rose by over 3%.

According to information disclosed by the Shenzhen Stock Exchange, the IPO of Yuejiang (02432) on the ChiNext board will be reviewed by the listing committee on July 22. This will be the first H-share return to A-share project in the Guangdong-Hong Kong-Macao Greater Bay Area after the implementation of the Shenzhen Comprehensive Reform Pilot. It took only 86 days from the acceptance of the application to the upcoming meeting, showcasing the impressive "Shenzhen speed" in capital market services for innovative enterprises. In terms of performance, it is expected that the revenue for the first half of the year will be in the range of 300-330 million yuan, with a year-on-year growth rate of 94.65%-114.12%; the expected gross profit will be 140-170 million yuan, a year-on-year increase of 84.73%-124.31%, achieving nearly double-digit high-speed growth in both revenue and gross profit. Today it rose nearly 8%.

【Sector Focus】

According to a research report by Guojin Securities: The automotive industry continues to experience high growth overseas + improvement in domestic demand + a turning point in intelligence. Domestic sales are expected to continue improving in the second half of the year: The recovery mainly comes from: 1. The peak season for car purchases entering the second half of the year; 2. Subsidies being more balanced compared to the same period in 2025; 3. Fuel price adjustments restoring fuel vehicles; 4. Many new models with strong product capabilities being launched (such as Xiaomi, etc.); 5. Continuous destocking in June, with potential for restocking. Combined with the lower base pressure in the same period of 2025 compared to the first half of the year, domestic sales are expected to marginally improve in the second half of the year, with a year-on-year positive turnaround expected in the fourth quarter. Early July data has preliminarily verified this, as per the retail data from the China Passenger Car Association, the year-on-year decline in domestic retail from July 1-12 narrowed to 15% (down 23% year-on-year for the entire month of June), only declining by 1% compared to the same period in June.

High growth continues overseas: In June, passenger car/new energy vehicle exports increased by 82%/152% year-on-year, continuing to exceed expectations, with a significant optimization in structure—the proportion of more profitable new energy vehicles increased (the penetration rate of exported new energy vehicles reached 55%), and the proportion of exports to high-potential markets such as Europe increased, with accelerated exports of high-end vehicles. From the June data, exports accounted for over 37% of passenger car sales, showing significant elasticity. Looking ahead to the second half of the year, high growth trends in overseas markets are expected to continue.

Main Hong Kong stock varieties: BYD (01211), Geely Automobile (00175), Leapmotor (09863), XPeng (09868), Nio (09866), Li Auto (02015).

【Stock Picking】

BYD (01211): Accelerating internationalization process with giant energy storage orders bringing guaranteed revenue

Former Hungarian Foreign Minister Peter Szijjarto announced his resignation from parliament to join BYD Group, where he will serve as an executive responsible for the group's external relations and new business line expansion. The company's revenue for the first quarter of 2026 is expected to be 150.225 billion yuan, a year-on-year decline of 11.8%; Net profit attributable to shareholders is 4.085 billion yuan, under short-term pressure, but gross margin has rebounded to 18.81%.

Commentary: This important personnel appointment is seen as a significant move by BYD to enhance its global expansion and public relations capabilities, indicating that the company's internationalization process is accelerating. The global penetration rate of new energy continues to rise, and energy storage is a trillion-level incremental track, with the company occupying leading positions in two high-growth sectors. Revenue from BYD's new energy passenger vehicles accounts for over 80%, covering all price ranges with the Dynasty, Ocean, Tengshi, Fangchengbao, and Yangwang models, operating in both hybrid and pure electric lines, making it the global sales champion in new energy. The energy storage system is the company's second growth curve, with Haohan energy storage, integrated solar and storage solutions for grid-side and household applications. High gross profit overseas is exploding, with the company's overseas vehicle gross margin significantly higher than that in the domestic market. By 2026, overseas business is expected to contribute nearly 80% of the net profit from complete vehicles, becoming the core incremental profit. Energy storage is simultaneously landing globally in the Middle East, Europe, and Latin America, with a clear exclusive advantage in integrated solar and storage solutions.

The order book is full. Energy storage orders: 1) A major overseas order for 2026, with the strongest certainty, includes the UAE Masdar 11.275GWh energy storage system, set to land in July 2026, the largest single energy storage procurement contract globally, supporting a 5.2GW photovoltaic power station, with industry estimates of the contract scale between 4.4 billion to 10.9 billion yuan, to be delivered in 2027-2028; the battery capacity is equivalent to 186,000 new energy vehicle batteries. 2) A 600MW/2.4GWh energy storage project in Poland, the largest lithium battery energy storage station in Poland's history, set to commence in Q3 2026 and connect to the grid by the end of 2027, a benchmark order in Europe, opening up market space for energy storage in the EU. 3) A 12.5GWh grid-side energy storage project in Saudi Arabia, previously landing a giant energy storage project in the Middle East, establishing a leading position in the Middle Eastern market.

Complete vehicle orders: 1) Domestic: Orders for the Dynasty, Ocean, Fangchengbao, and Tengshi models are full, with significant recovery in customer traffic for second-generation fast-charging models, and domestic market share is expected to rebound to 23%-27% by the end of the year. 2) Overseas complete vehicles: In the first half of 2026, overseas deliveries are expected to reach 792,200 units (up 71% year-on-year), with institutions forecasting annual overseas sales of 1.5 to 1.8 million units, aiming for 2.5 million units in 2027; long-term orders from overseas dealers are locked in, with production capacity ramping up in Hungary and Thailand to meet delivery demands. 3) Battery supply: Long-term supply agreements with Tesla, Toyota, and Renault, with stable annual framework agreements with overseas automakers, continuously increasing external supply. The company's sales forecast for 2026 is for new energy vehicles to reach 5 million units, with 1.7 million units overseas. BYD's overseas market is growing rapidly, having already achieved a leading position in markets such as the UK, demonstrating strong long-term competitiveness, with giant energy storage orders bringing guaranteed revenue