Alpha Picks: Jun 21 Conviction Calls
Macro uncertainties drive shift to defensive bias.
May 21 transactions dragged by slower market supply.
Kingboard Laminates (1888 HK): Trading Buy Range: HK$17.14-17.16
PetroChina (857 HK): Trading Buy Range: HK$3.40-3.41
Take profit on Ganfeng Lithium (1772 HK) as we do not see further catalysts for upside in the near term.
Drop Haidilao (6862 HK), Powerlong (1238 HK) and Sany Heavy (600031 CH) from our BUY list. These three names have not performed as expected. Haidilao’s recent data shows that the improvement in table-turn has been below expectations. As for Sany Heavy, it has been weighed down by concerns over raw material price increases, and the property sector is facing potential policy headwinds with talk of a property tax resurfacing.
Replace Alibaba (BABA US) with JD.com (JD US), as JD is more defensive with a stable margin outlook and advantages in FMCG and logistics networks. We also see lower regulatory risk for JD as compared with Alibaba. Also, we are seeing slower user and GMV growth for Alibaba as compared with JD which prompted us to shift towards the secondary player.