{Market Preview}Nongfu Spring stock is not recommended

  The Hang Seng Index was at 17,776 in the morning session, up 37 points or 0.2%, with main board turnover of nearly HKD 46.8 billion. The Hang Seng China Enterprises Index was at 6307, up 9 points or 0.2%. The Hang Seng Tech Index reported at 3617, down 23 points or 0.7%.
  The three largest traded stocks in the Hang Seng Index were Tencent (00700), CNOOC (00883) and Meituan (03690); Tencent reported HKD 369.8, down HKD 2 or 0.5%, with a turnover of HKD 3.83 billion; CNOOC reported HKD 21.4, up HKD 0.25 or 1.2%, with a turnover of HKD 1.473 billion; Meituan was at HKD 119.5, up HKD 0.4 or 0.3%, with a turnover of HKD 1.268 billion. The three largest traded stocks on the Hang Seng China Enterprises Index are Tencent, CNOOC and Meituan. The three largest traded stocks on the Hang Seng Tech Index were Tencent, Meituan and Alibaba (09988); Alibaba reported HKD 75.8, down HKD 0.5 or 0.7%, with a turnover of HKD 1.136 billion.

"Cheung Chi Wai: there is support for the Hang Seng Index at 17,500"

  It was reported that the White House plans to further restrict chip exports to China. U.S. semiconductor stocks plummeted, and the "fear indicator" VIX index soared by about 10%. The Nasdaq closed down 512 points on Wednesday to 17,996 points. Semiconductor stocks fell significantly throughout the day, including NVIDIA, ASML, etc. Semiconductor-related stocks fell between 6.6% and 12.7%. After opening 86 points lower this morning, the Hang Seng Index performed repeatedly and once rose 70 points during the session. It seemed that it was not affected by the above rumours. Cheung Chi Wai, a joint managing director at Prudential Brokerage Ltd, told ET Net News Agency that yesterday there were traces of the United States' further tightening of chip exports to China. SMIC (00981) fell more than 5% yesterday, and Hua Hong Semi (01347) also fell by nearly 6%, which has been reflected to a certain extent.
  Today is the last day of the Third Plenary Session of the Central Committee of the Communist Party of China. Are there any good policies we can look forward to? Cheung Chi Wai pointed out that the market had earlier expected that the Third Plenary Session of the Central Committee of the Communist Party of China might introduce tax reform or measures to stimulate the economy, but today is the last day of the meeting, and the government earlier called on investors not to expect profits from the stock market. Therefore, we cannot expect much from the Third Plenary Session of the Central Committee of the Communist Party of China, which is also the reason why the stock market has been unable to rebound recently. In addition, since the Mainland China announced that the GDP growth in the second quarter has slowed to 4.7%, Hong Kong stocks have fallen repeatedly from around 18,300, and are expected to fall to the bottom of the Bollinger Band (about 17,500), which is also near the 250-day moving average. He predicts that the Hang Seng Index will fluctuate between 17,500 and 18,000 in the short term, with resistance at 18,000 points.

"Nongfu Spring falls due to fierce competition in bottled water market"

  Earlier, the 573rd issue of "Choice", a monthly publication of the Consumer Council, published an article about the bottled water test report, which caused Nongfu Spring (09633), a Mainland China bottled water leading company, to send a lawyer's letter to the Hong Kong Consumer Council, criticizing the Consumer Council's three major mistakes. Nongfu Spring said the publication has caused huge damage to its reputation and requires written clarification, apology and elimination of all negative impacts. After in-depth research, the Consumer Council announced today that it apologized for the misunderstanding caused by the discrepancy in sample classification in this test, and that the sample was reclassified as an independent category "drinking natural water" and re-scored. The overall performance of the sample was adjusted to 5 stars from 4.5 stars.
  Nongfu Spring's share price rose significantly today, temporarily ranking first among the Hang Seng Index constituent stocks. Cheung Chi Wai believes that Nongfu Spring's stock price has responded positively today, but the stock price has risen to more than HKD 34. He believes that the stock will have resistance at the 20-day moving average (approximately HKD 36), so the room for further rise is limited. He pointed out that the recent weakness in Nongfu Spring's stock price goes beyond the test report of Consumer Council . As early as early May, the stock reached a high of HKD 47.98. Due to the fierce competition in the Mainland China bottled water market, major companies had to cut prices in order to seize the market. Taking Nongfu Spring as an example, the total price of 12 bottles of 550ml bottled water was reduced to RMB 10, and the average price per bottle is only RMB 0.8. Nongfu Spring's current price-to-earnings ratio is as high as 29 times, and its dividend rate is only over 2%, which is not attractive to investors at all. Therefore, he does not recommend buying. If investors already hold the stock, it is recommended to pay attention to the low of HKD 32.2 the day before yesterday (16th). If it hits this low after this small rebound, it is recommended to stop the loss and sell it.