The performance of the A-share market is currently overly reliant on the technology sector, which leads to weakness whenever this sector falters. The Hang Seng Index, however, is unaffected by tech and actually rose today, closing up 0.60%. The situation in the Middle East remains tense, with Israeli media reporting on the 10th that Israel has expressed to the US its willingness to participate in further US military actions against Iran, pending a decision from President Trump. Reports suggest Israel believes a new round of military conflict between the US and Iran could last several more days. Currently, this appears to have limited impact on the broader market.
Gold stocks showed relative strength today, likely tied to the Federal Reserve's dovish tilt and also bets on upcoming US inflation data. For instance, Lingbao Gold Ltd (03330) and International Gold Corp (03939) both gained over 5%. As anticipated yesterday, everything is about sector rotation. While tech stock sentiment was strong yesterday, and even with GigaDevice Semiconductor (Beijing) Inc (03986) announcing impressive preliminary results expecting first-half net profit attributable to shareholders to surge around 1099% year-on-year, the stock price reaction was a classic 'sell the news' event, plunging over 21% today and dragging the entire tech sector down.
Simultaneously, negative rumors circulated, such as one regarding Shenghong Technology Co Ltd (02476) about a failed first batch delivery of Rubin boards, with Unimicron reportedly taking over the share. The company later denied the rumor, but its stock still fell nearly 13%. Fundamentally, the tech decline is likely related to capital flows. According to informed sources, major investors in SK Hynix's $26.5 billion US offering received fewer shares than initially expected. Sources indicate the deal was oversubscribed about seven times, with over 500 institutional investors participating. Ten investors subscribed to 50% of the shares, while the top 25 subscribed to two-thirds. They also noted that SK Hynix's management was deeply involved in the allocation. From a value-for-money perspective, subscribing to this offering is seen as more profitable, leading to capital being siphoned away.
With tech falling, capital flowed back into pharmaceuticals, catalyzed by the positive policy mentioned in yesterday's sector focus: the "Notice on Issuing the National Essential Medicines List (2026 Edition)", announcing the new list will be officially implemented from September 1, 2026. The key beneficiaries are innovative drugs. Several mentioned stocks like Innovent Biologics, Inc (01801), Junshi Biosciences Co Ltd (01877), and Sino Biopharmaceutical Limited (01177) all rose over 4% today, as they are included in the new list. However, CXO (Contract Research, Development and Manufacturing Organization) stocks showed greater elasticity, as the policy ultimately benefits them at every fundamental level. For example, JOINN Laboratories (China) Co Ltd (06127) and Pharmaron Beijing Co Ltd (03759) both surged over 11%, while Asymchem Laboratories (Tianjin) Co Ltd (06821) gained over 5%.
The foundational biotech research tools company BioMap (Beijing) Technology Co Ltd (02315) also attracted favor. Its core competitive edge lies in its globally scarce RenMice humanized mouse platform, one of only three worldwide with a complete fully human antibody mouse platform. Its clientele covers 9 of the global top 10 pharmaceutical companies, with overseas revenue accounting for 70% and order continuity being extremely strong. Coupled with its newly launched RenSuper platform to accelerate antibody screening, the company recently entered a global collaboration with Whitehawk Therapeutics. BioMap will receive an upfront payment and is eligible for milestone payments upon achieving specific development, regulatory, and commercial milestones. Additionally, BioMap is entitled to low single-digit percentage royalties on product net sales. This win-win model, if expanded, holds significant future potential. The stock rose over 10% today.
Another theme is AI-driven drug discovery, represented by Insilico Medicine Hong Kong Ltd (03696). Its Pharma.AI platform is sold to pharmaceutical companies for target and molecule screening, with a business development model of upfront payment plus milestones. Its globally first AI-designed drug, Rentosertib, has entered Phase III trials (for fibrosis), with 13 clinical pipelines. Future catalysts depend on orders and clinical progress. The stock rose over 7% today.
Furthermore, stocks with pipelines nearing commercialization also performed well. For example, Duality Biologics (Suzhou) Co Ltd (09606): DB-1311 (a B7H3 ADC), one of its core late-stage pipelines with global potential, has demonstrated differentiated efficacy. A first-line global Phase III trial has been initiated, and a commercial development collaboration with BioNTech is ready. Institutions expect BioNTech to submit a BLA to the FDA for the US endometrial cancer indication in 2026, potentially contributing revenue elasticity first. The stock rose over 10% today. Another is Kelun-Biotech Pharmaceutical Co Ltd (06990): Its sacituzumab tirumotecan (sac-TMT, China's first TROP2 ADC) and PD-L1 monoclonal antibody have been included in the national reimbursement drug list, with channel coverage exceeding 2,400 hospitals nationwide. It possesses a self-developed OptiDC full-chain ADC platform, with two ADCs (TROP2, HER2) commercially launched, placing it in the top tier domestically in terms of pipeline number and clinical progress. Its landmark $9.5 billion ADC collaboration with Merck involves Merck conducting 17 global Phase III trials, validating the product's clinical value overseas. Its latest ASCO Phase III data exceeded expectations. The stock rose over 8% today.
The aerospace sector saw positive news today. At 12:15 on July 10th, the Long March 10B carrier rocket was launched from the Hainan Commercial Space Launch Site. Approximately six minutes after stage separation, the first stage performed a vertical return and was successfully recovered on a sea-based platform. This validated China's pioneering sea-based net recovery technology, charting a completely different rocket recovery path from the US. Reusable technology is hugely significant for reducing launch costs. The primary beneficiary is Drinda Technology Co Ltd (02865). The company recently has three satellites ready for launch: the G60 100kg-class commercial meteorological satellite "YL-01", the multi-band intelligent infrared meteorological remote sensing satellite "Zhonghang Hongwai No.1", and the Zhijiang Laboratory computing power satellite "Three-Body Light Boat - Cloud Peak Muxi". The company is the operator and lead enterprise of the Starshuttle Plan (guided by the Shanghai Municipal Commission of Economy and Informatization), involving a scale of 1,000 AI satellites. The next step is awaiting the release of the Starshuttle-1 plan. The stock surged over 24% today. Another stock, Goldwind Science & Technology Co Ltd (02208), rose over 8% due to its stake in LandSpace. Other stocks like APT Satellite Holdings Ltd (01045) saw gains before retreating.
Over the past two years, CK Hutchison Holdings Ltd (00001) has conducted large-scale disposals including UK power grids, rail leasing, a 49% stake in UK telecoms, and London office buildings, cumulatively realizing over HK$350 billion. The latest disposal move is underway again, as CK Hutchison recently stated it is in talks to sell its European perfume and cosmetics retailer, Marionnaud. The reason is Marionnaud's consistent EBITDA losses. The original acquisition logic was to complement Watson's high-end beauty segment, but 20 years of operation proved synergy between high and low-end positioning was unachievable. The acquisition cost in 2005 was 534 million euros, and selling now would likely be at a discount, making the overall investment unprofitable. However, the stock rose over 7% today because shedding this loss-making burden allows the company to move forward more lightly and invest in more profitable industries.
Key Sector Developments
On July 10th, the State Council, in principle, approved the "15th Five-Year Plan for the Revitalization and Development of Traditional Chinese Medicine" and requested its earnest implementation. The plan adheres to equal emphasis on traditional Chinese and Western medicine, upholds integrity and innovation, follows the principles and characteristics of TCM, improves the mechanism for its inheritance and innovative development, accelerates TCM modernization, promotes TCM globally, and provides strong support for achieving decisive progress in building a Healthy China during the 15th Five-Year Plan period. The TCM sector has been quiet for a long time. This policy mainly benefits directions such as genuine regional medicinal material bases + formula granules/decoction pieces, classical famous formulas + innovative TCM drugs, and TCM clinic chains. Relevant Hong Kong stocks include: China Traditional Chinese Medicine Holdings Co Ltd (00570), Baiyunshan Pharmaceutical Holdings Company Limited (00874), Tong Ren Tang Technologies Co Ltd (01666), and Shineway Pharmaceutical Group Ltd (02877); for TCM clinic chains, Gushengtang Holdings Ltd (02273).
Stock Spotlight
Estun Automation Co Ltd (02715): The catalyst from acquiring an embodied intelligence target continues, with overseas business achieving high growth. Unitree Robotics' IPO was swiftly approved. Estun previously announced its intent to acquire 100% of Estun Cool through its wholly-owned subsidiary via cash and to absorb its wholly-owned subsidiary Nanjing Estun Automatic Control Technology. The company's Q1 2026 report showed operating revenue of 12.17 billion yuan, down 2.22% year-on-year, while net profit attributable to shareholders was 97.84 million yuan, up 674.64% year-on-year. Analysis: This acquisition is expected to strengthen Estun's layout in humanoid robotics and embodied intelligence. The company's industrial robot shipments ranked first domestically in Q1, with profitability rising. Quarterly net profit exceeded the full-year 2025 figure, and gross margin increased by 7.52 percentage points year-on-year. Overseas business grew significantly, with Europe as the core engine. Overseas revenue accounted for 29.4% in 2025, up 50% year-on-year; European revenue grew over 50%. Overseas orders in Q3 2025 increased 68.5% year-on-year; growth in Europe and Southeast Asia remained strong in early 2026. Overseas gross margin exceeds 30%, significantly higher than domestic, and is the main source of profit growth for the next 2-3 years.
The company's industrial robot market share continues to rise, with production maintaining high growth. Shipments in 2025 were 33,400 units, with a market share of 10.6%, surpassing the foreign 'Big Four' (Fanuc/Yaskawa, etc.) for the first time and ranking first domestically for eight consecutive years. Its client resources (CATL, BYD, LONGi, Geely, etc.) are leading, and it has entered the list of global top-tier automotive parts suppliers. Order backlog is sufficient. The latest order data (as of Feb-Mar 2026) shows orders on hand of approximately 8.5 billion yuan, up 67% year-on-year, with robot orders up about 50%, indicating sustained high景气度. Contract liabilities (advance receipts) were 586 million yuan at the end of 2025 (+16.1%) and 557 million yuan at the end of Q1 2026, indicating stable order quality.
Order structure and delivery: Downstream sectors include automotive (including new energy), 3C, and photovoltaic/lithium battery, accounting for over 70%. Major orders include a BYD contract for 12,000 robots (delivery through Q1 2026) and an overseas Salis single project exceeding 80 million yuan, with orders expected to reach 150 million yuan in 2026. Production scheduling: Capacity utilization exceeds 90%; orders on hand are scheduled through Q2-Q3 2026, with longer schedules for heavy-duty models, indicating full order books and tight delivery.
Global layout is taking shape with A+H listing (listed in Hong Kong in March 2026), making it the first domestic industrial robot company with an A+H listing. Acquisitions include Germany's Cloos (welding) and the UK's TRIO (motion control); European/Polish factories are operational, with service coverage in 75 countries. The company is self-sufficient across the full industry chain, with 95% of core components independently controllable. It has self-developed the iER.OS intelligent ecosystem and Juliet robot language. Collaborative robots (Cool) are ramping up quickly, covering over 107 scenarios, with rapid expansion in electronics/lithium battery/medical fields. Core components for its 1200kg heavy-duty robot are 100% domestically sourced, with national-level certification for first-of-its-kind equipment. The proportion of collaborative robots is increasing, overseas business is growing rapidly, order books are full, and gross margins are significantly higher than domestic (by about 10 percentage points), making this the core driver of future profit elasticity. Support from the Ministry of Industry and Information Technology for domestic substitution of industrial robot core components provides multiple ongoing tailwinds.
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