Market Insights

Chow Tai Fook (01929.HK) announced the annual results for the fiscal year ending March 31, 2024. In the 2024 fiscal year, the group's turnover increased by 14.8% to 108.713 billion Hong Kong dollars. Due to rigorous cost management, the main operating profit grew by 28.9% to 12.163 billion Hong Kong dollars, with the main operating profit margin reaching 11.2%, setting new highs for both turnover and main operating profit. The profit attributable to shareholders increased by 20.7% to 6.499 billion Hong Kong dollars, with earnings per share at 0.65 Hong Kong dollars. The board of directors proposed a final dividend of 0.30 Hong Kong dollars per share, with a total annual dividend of 0.55 Hong Kong dollars per share. The total dividend payout ratio for the 2024 fiscal year is about 84.6%. In the 2024 fiscal year, driven by strong holiday demand and the steady improvement of the benefits of newly opened stores in the past two to four years, the turnover in Mainland China grew by 9.9%. The relevant growth calculated at the same exchange rate for the 2024 fiscal year was 14.1%. In the 2024 fiscal year, the Mainland business accounted for 82.5% of the group's turnover. In Hong Kong, Macau, and other markets, the turnover increased by 45.6% in the 2024 fiscal year, benefiting from the continuous recovery of inbound tourism. In Hong Kong and Macau, the influx of Mainland tourists and the Lunar New Year holiday drove a sustained growth momentum. During the year, the average daily customer flow in stores in Hong Kong and Macau saw a significant year-on-year increase, mainly driven by visits from Mainland tourists. The group's retail value in Hong Kong and Macau grew by 36.7% in the 2024 fiscal year. In the 2024 fiscal year, we opened a net of 2 retail points in Hong Kong and Macau. As of March 31, 2024, we had a total of 87 retail points in Hong Kong and Macau, sufficient to support us in driving high-value growth. We will continue to closely analyze store performance, lease terms, and other data, and reassess new opportunities in the market that are conducive to opening stores. More importantly, we will maintain our competitiveness through product portfolio innovation and customer service. Strong domestic demand and the rise of the middle class continue to support the economic recovery in Southeast Asia, and the return of Mainland tourists has further driven the recovery of the retail industry in the region. The World Bank said in its semi-annual economic outlook that the gross domestic product of developing countries in the Asia-Pacific region is expected to grow by 4.6% in 2024. According to statistics from the Haikou Customs, the duty-free sales in the Hainan Offshore Duty-Free Zone in 2023 saw significant growth, with the number of shoppers growing by 59.9% year-on-year and total sales increasing by 25.4% year-on-year. Measures introduced at the beginning of 2024, such as simplified purchase procedures and the issuance of duty-free consumption coupons, are expected to help the recovery of duty-free consumption in Hainan.

1. Overview of Chinese companies going to the US in April According to the statistics from uSmart Capital, a total of 8 Chinese stocks completed IPO in the US market as of April 30, 2024, and 3 new shares were listed on HKEX during that same period: Tianjin Construction and Development (2515.HK), Tea Baidao (2555.HK) and Chu Men Wen Wen (2438.HK). This brings the number of Chinese stocks listed in the US market this year to 20 (excluding SPAC), and the total IPO fundraising scale exceeding $2.7 billion, except Yamafen (Amer Sports Inc., code:AS.NYSE), while all other Chinese enterprises chose Nasdaq listing. It is worth noting that after entering mid-late April, the listing rate of Chinese companies has been greatly improved. From April 16 to 19, 5 Chinese enterprises completed the listing on NASDAQ in just four days, becoming the largest listing of Chinese companies since 2024, with the total amount of funds raised exceeding 30 million US dollars, a promising trend. This reflects the high interest of the capital markets on Chinese companies and the considerable improvement in investor confidence compared with the first quarter. Listing of Chinese Concept Stocks in 2024 (As of April 30,2024) No. Stock Code Name in Chinese IPO Date Exchange First Day Perform. Offer Amount 1 ROMA 罗马绿色金融 2024-01-09 Nasdaq -27.50% 12.3 million 2 CCTG 承创科技 2024-01-18 Nasdaq 92.50% 5.6 million 3 JL 即亮 2024-01-24 Nasdaq 48.80% 7 million 4 SUGP 荣志集团 2024-01-24 Nasdaq 0.00% 5 million 5 YIBO 星图国际 2024-01-25 Nasdaq -30.25% 5 million 6 HAO 浩希数字科技 2024-01-26 Nasdaq 32% 9.6 million 7 AS 亚玛芬 2024-02-01 NYSE 3.08% 1.365 billion 8 WETH 伟大奇科技 2024-02-21 Nasdaq -59.33% 11 million 9 LGCL 罗科仕 2024-03-05 Nasdaq -9.75% 6 million 10 INTJ 慧悦财经 2024-03-20 Nasdaq 25% 7.5 million 11 LOBO 萝贝电动车 2024-03-21 Nasdaq -13.25% 5.5 million 12 UBXG 有家保险 2024-03-28 Nasdaq -18% 10 million 13 ZBAO 致保科技 2024-04-02 Nasdaq -7.50% 6 million 14 TWG 富原集团 2024-04-16 Nasdaq -51.50% 8 million 15 JUNE 奥斯室内设计 2024-04-17 Nasdaq 1.50% 8 million 16 CDTG 城道通环保 2024-04-18 Nasdaq -17.50% 6 million 17 MTEN 铭腾模具 2024-04-18 Nasdaq -12.50% 5.1 million 18 TRSG 同日科技 2024-04-19 Nasdaq 48.75% 5 million 19 MFI 移动财经 2024-04-22 Nasdaq 173.11% 7.5 million 20 NCl 思宏国际 2024-04-23 Nasdaq 137.50% 9.28 million Under change with overall market environment and macro-economic factors, Chinese companies raised about US$1.5B in the first quarter of 2024, a significant year-on-year increase of 150% in fundraising; entering April, the momentum of Chinese companies listed in the US has increased, both in terms of number of filings, the scale of fundraising and the market reaction. 2. Industry distribution of Chinese companies in the United States in April In terms of industry distribution, most of the Chinese companies listed in the United States in April came from consumer services and industrial sectors, which have been more active in the U.S. market in terms of IPO activity. The details are shown below: Dimension Consumer Services Industry Industrial industry Information Technology Industry No. of IPO 3 3 2 Offer Amount 25 million USD 16 million USD 13.5 million USD According to Deloitte's report, the industry structure of Chinese companies going public in the U.S. in the first quarter of 2024 was similar to that of the same period in 2023, with 46% of the companies coming from the technology, media and telecommunication industry, and 23% of the companies coming from the consumer industry. And the industries to which the listed companies belonged changed in April, with the number of Chinese IPOs from consumer services and industrials leading the way. 3. A key factor to promote Chinese companies' travel to the US in 2024 1. Market recognition recovery: According to Deloitte's report, the number of Chinese companies listed in the U.S. in the first quarter of 2024 was the same as last year, but the amount of financing rose sharply, from $553 million to $1.467 billion. This shows that the capital market for the Chinese stock sector recognized, especially Amalfin sports and other consumer sector companies, showing a bullish trend for China's subsequent economic growth. 2. High-tech rise: PwC believes that with the steady progress of the filing system, China's capital market has shown strong vitality, especially with key core technology of science and technology innovation enterprises have more listing opportunities. In addition, it is expected that the listing of Chinese stocks in the U.S. stock market will further pick up in 2024. This shows that Chinese companies choose to list in the U.S. because of the warming trend of the U.S. market and the support for technology and innovation companies. 3. Specialization of overseas architecture: In the process of Chinese enterprises going to the U.S. for listing, the construction of offshore structure is crucial. In addition to financing needs, Chinese companies listing in the U.S. also seek professional offshore structuring to adapt to and utilize the rules and advantages of the U.S. capital market. Professional teams have a deep understanding of Chinese law and the U.S. capital market and a wealth of practical experience, and through the construction of offshore structures, they are able to bring significant advantages to enterprises in terms of saving tax costs, building equity structures, reducing investment risks, and increasing the convenience of future financing, etc. With the aid of their process-oriented operations, the efficiency of Chinese enterprises going public in the U.S. is greatly enhanced. From a comprehensive perspective, from 2024 to the present, the main motivation for Chinese enterprises to list in the U.S. is to solve the financing needs and seize the trend of the U.S. market rebound; at the same time, further promoting the listing of enterprises through the construction of offshore structures by professional teams adapts to the institutional needs of the filing system. 4. More Chinese companies choose to go public in the United States As of April 30, 2024, around 60 U.S.-listed companies completed the SEC filing, and more companies are continuing to promote the process of listing in the United States. For Chinese stocks, listing in the U.S. can bring a series of positive impacts. This includes standardized market operation procedures and lower costs, while listing in the U.S. establishes an international capital operation platform for enterprises, providing a platform for subsequent mergers and acquisitions, financing, and exit. In addition, overseas listing can raise awareness, bring feedback to the main business expansion into a virtuous cycle. However, changes in US listing regulatory policies have also brought challenges to Chinese companies going public in the US. Higher listing thresholds and compliance costs mean that companies need to comply with stricter disclosure and financial reporting requirements. Such changes may lead to a short-term stagnations in the pace of companies going public in the US. Therefore, professional counseling organizations that address the relevant requirements are increasingly important in the listing process. According to uSmart Capital, US stocks have advantages in terms of liquidity and listing valuation, which will continue to support Chinese companies choosing to go to the US. In addition, U.S. stocks are more relaxed in terms of refinancing, as long as the listed company is recognized by the market, there will be opportunities and space for financing, and the scale and frequency of financing are basically not restricted. In terms of PE Ratio, the average P/E ratio of NASDAQ high-tech stocks is about 30~40 times, while the average P/E ratio of HKEX and SGX is about 8~10 times. For high-quality and high-growth companies, it is easier to gain market capitalization growth space by listing in the US. 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uSMART Group is a leading fintech company that provides intelligent, professional, and exceptional one-stop financial services and solutions. The group is dedicated to integrating technology deeply with finance, offering investment trading services through its all-in-one platform, the uSMART App. This platform covers a range of investment categories, including U.S. stocks, Hong Kong stocks, new stocks, options, futures, fractional shares, and foreign exchange. It also offers wealth management products such as funds, bonds, notes, and the Follow-Easy platform. With a client-centered approach, the group aims to deliver a secure, professional, intelligent, and efficient investment experience. The investment research and asset management teams focus on asset management, wealth management, securities brokerage, and investment banking services, serving ultra-high-net-worth individuals, families, and corporations, and providing comprehensive asset management solutions. Currently, uSMART Group operates two main business areas: securities brokerage and fintech services. Securities brokerage is conducted through its subsidiaries uSMART HK and uSMART Singapore. Initially established in Hong Kong, uSMART Securities holds licenses for Type 1, Type 4, and Type 9 regulated activities issued by the Hong Kong Securities and Futures Commission. uSMART Singapore obtained a Capital Markets Services (CMS) license from the Monetary Authority of Singapore in December 2021. Fintech services are provided by FinSmart Solution, which not only supports the fintech needs of its sister companies uSMART Hong Kong and uSMART Singapore but also develops financial systems for external clients. Despite being less than six months old, the company has already gained industry recognition and partnerships. Since its establishment, uSMART Group has experienced rapid growth, securing investments from well-known Hong Kong consortiums and strategic investments from Chow Tai Fook. The group now has offices and operational centers in Hong Kong and Singapore, and a technology R&D center in Shenzhen, China. Team Introduction Brain ChengChairman of the Board, uSMART Securities Group [image]