Hong Kong stocks displayed resilience today, with the Hang Seng Index advancing 1.28%. Despite a pullback in the tech sector, major heavyweights provided stability to the broader market.
The geopolitical landscape saw a significant escalation as the United States intensified its military actions. On the 21st local time, a U.S. B-1 long-range bomber conducted a strike on targets associated with Iran's Islamic Revolutionary Guard Corps. Sources indicate that the U.S. is currently deploying additional military assets to the Middle East, providing more options for potential expansion of conflict with Iran. Threats from former U.S. President Trump to target Iranian infrastructure and the Houthi rebels' vow to block key Red Sea passages added to the tension.
In this environment, SITC International (01308) surged over 3%, reaching a new all-time high. With shipping disruptions persisting, the supply situation for electrolytic aluminum continues to deteriorate. Aluminum Corporation of China (02600) and China Hongqiao (01378) both gained more than 4%.
The technology sector underperformed again today following the release of Google's earnings report. The company reported second-quarter total revenue of $119.8 billion, a 24% year-over-year increase, with operating profit reaching $40.8 billion, up 30%. In the race to dominate AI, quarterly capital expenditure surged to $44.9 billion, leading to a rare negative free cash flow of -$5.9 billion. The company further raised its capital expenditure guidance for 2026 to approximately $200 billion. While the spending appears substantial, the core issue is the immense burn rate of AI investments, where earnings are not yet covering the outlays. The question arises: where will the funds for continued investment come from? The likely answer is various financing rounds. However, if expenditures consistently outpace income, backers may become hesitant to invest blindly. This capital expenditure plan thus carries an element of overpromising, and the market will be watching the earnings reports of other tech giants closely. Additionally, the upcoming IPO of Changxin next week is adding further pressure on liquidity.
Domestically, support for AI is intensifying. Recently, the Beijing Municipal Development and Reform Commission and other departments jointly issued "Several Measures of Beijing Municipality on Accelerating the Leading Development of Intelligent Agents." The document encourages the development of Token (Token) economies and increases support through measures like computing power vouchers. It also encourages qualified districts to collaborate with innovation entities to explore the issuance of Token vouchers and intelligent agent service vouchers to accelerate the adoption of intelligent agents. Xunce (03317), often referred to as the "first Token stock," directly benefited from this news, soaring over 13%.
A breakthrough in semiconductor materials emerged as Binhu Shares (06745) announced that its high-purity hydrogen fluoride product for semiconductors has reached the 6N grade (99.9999%), achieving world-class standards and potentially breaking an 80% overseas monopoly. However, current 6N hydrogen fluoride capacity is relatively low at only 50 tons. At an estimated price of 2 million yuan per ton, this translates to an annual revenue of around 100 million yuan. True import substitution will still require a certification period. The current rally is largely sentiment-driven, with future performance hinging on its core chemicals business. The stock surged over 23% today.
The battery industry is entering a new era, moving away from universal tax exemptions into a period of refined tax regulation characterized by "supporting the superior, eliminating the inferior, and guiding innovation." Significant adjustments have been made to the battery consumption tax. On the taxation side: starting September 1, 2026, lithium-ion batteries, lithium primary batteries, nickel-metal hydride batteries, and all-vanadium redox flow batteries will be subject to a 2% consumption tax rate; this rate will increase to 4% starting September 1, 2027. On the exemption side: from September 1, 2026, to December 31, 2028, sodium-ion batteries, solid-state batteries, fuel cells, and perovskite, tandem, and gallium arsenide cells within photovoltaic batteries will be exempt from the consumption tax.
Beneficiaries of this policy include Zhongwei New Materials (02579), which has built an annual sodium battery material capacity of 8,000 tons, covering layered oxide precursors and polyanion precursors at pilot/small-scale production stages. It achieved thousand-ton level shipments in 2025, leading the industry in shipment scale. Its first-generation product is already in mass production, and the second generation has passed pilot certification.
The new 2%-4% tax burden is expected to erode the thin profits of small and medium-sized battery cell manufacturers, accelerating the淘汰 of low-end capacity. The industry is moving away from cutthroat low-price competition. Downstream battery manufacturers and energy storage companies are likely to stockpile battery cells in advance to avoid the new tax burden starting in September, driving阶段性 demand for lithium carbonate and lithium battery materials.
Production schedules are also optimistic. Institutions estimate China's total lithium battery (energy storage + power + consumer) production scheduling for August to be approximately 304 GWh, a month-on-month increase of 7.4%. Globally, power + energy storage + consumer battery production in August 2026 is estimated around 317 GWh, up 7.1% month-on-month. This growth rate exceeds the initial forecast range of 3%-5%, indicating the industry's previous expectations for a peak season are beginning to materialize.
On the supply side, several lithium mining companies recently announced production cuts for maintenance. Public information shows that Jiuling Lithium issued a notice on July 16, stating that its three lithium salt plants in Yifeng, Fengcheng, and Feiyu New Energy will undergo phased equipment maintenance and technical upgrades, expected to affect battery-grade lithium carbonate capacity by 4,000 tons.
Stimulated by these combined factors, the spot price for battery-grade lithium carbonate on July 23 was reported at 145,500 yuan per ton, up 3,500 yuan from the previous day. Leading player Ganfeng Lithium (01772) expects its first-half net profit to increase by 787.07% to 965.9%. BlackRock's long position in Ganfeng Lithium's H-shares increased from 8.26% to 9.26% on July 16. The stock surged over 10% today. Tianqi Lithium (09696) forecasts its first-half net profit attributable to shareholders to increase by up to 4934.91% year-over-year, rising nearly 7% today. CATL (03750) revised its August and September production schedules upwards by over 5 GWh each, from the original 110/120 to 115/125, receiving a positive market response with a gain of nearly 3%.
The National Development and Reform Commission and the National Energy Administration issued the "Renewable Energy Development '15th Five-Year' Plan," which mentions that during the "15th Five-Year Plan" period, the national new offshore wind power construction scale will reach around 100 million kilowatts, with cumulative installed capacity expected to exceed 100 million kilowatts by 2030. Beneficiaries Weisheng Holdings (03393) and Sige New Energy (06656) both rose over 5%.
On July 23, media reports indicated that China has resumed issuing access permits for autonomous driving taxis (Robotaxi). Some cities are gradually restarting license issuance, though specific city lists and timelines remain unclear. Caocao Inc (02643) and Pony.ai (02025) rose over 9% and 5%, respectively.
According to data from the First Commercial Vehicle Network, from January to June 2026, China's heavy truck industry累计 sales reached 660,900 units, a cumulative year-on-year increase of 23%. In June alone, the heavy truck market sold approximately 116,600 units, a year-on-year increase of about 19%. Sinotruk (03808) stated that its production and sales volume in the first half achieved significant growth compared to the same period last year. Management raised its export sales guidance for the 2026 fiscal year from the original 180,000-190,000 vehicles to 200,000-220,000 vehicles, expecting net profit per exported vehicle to improve year-over-year. The stock rose nearly 11% today.
Meituan-W (03690) released its trillion-parameter model LongCat-2.0. The model, launched and open-sourced at the end of June this year, is the industry's first trillion-parameter model to complete full-process training and inference on a domestic computing power cluster of 50,000 cards. With total parameters of 1.6 trillion, pre-training data规模 exceeding 30 trillion tokens, and native support for 1 million超长 context, this large model directly empowers vertical scenarios in local living commerce. It faces no direct competition across the industry, possessing a独家 moat, and rose over 4% today.
Sector in Focus
According to industry data, Macau's gross gaming revenue for the first 19 days of July is estimated at approximately MOP 12.05 billion. The latest week's average daily revenue was about MOP 679 million, about 9% higher than the previous week's MOP 621 million, indicating a recovery momentum. Disruptions from global football events have largely subsided. Media cited local hoteliers stating that benefiting from multiple central government policies favoring Macau, tourist arrivals continue to show good growth. During the July-August summer holiday period, overall hotel occupancy rates are expected to reach 90%, with room rates fluctuating steadily within a reasonable range. The summer season is a peak period, expected to刺激 Macau gaming stocks. Key品种 include: Sands China (01928), Wynn Macau (01128), MGM China (02282), Galaxy Entertainment (00027), and Melco International (00200).
Stock Spotlight
China Hongqiao (01378): Electrolytic Aluminum Market Share Continues to Rise, Impressive First-Half Profit Alert
Citigroup's latest research report suggests that aluminum prices are expected to bottom out within the next month, followed by a gradual recovery to a range of $3,300 to $3,500 per ton between September and December. The company issued a profit alert公告, expecting first-half net profit to increase by approximately 39% year-over-year.
Analysis: The company's first-half performance alert is impressive, primarily driven by rising sales prices for aluminum alloy products. Its超大 production capacity规模 combined with dual-region布局 is driving continuous market share gains. The company's compliant electrolytic aluminum capacity is 6.46 million tons (14.8% of China, 9.4% globally), with alumina capacity of 21 million tons and aluminum深加工 capacity of 970,000 tons, maintaining a capacity utilization rate consistently above 97%.
The company's joint venture mine in Guinea extracts 50-60 million tons of bauxite annually, supported by its own port and shipping logistics, achieving 100% self-sufficiency in bauxite. Its Indonesia布局 includes a 2 million-ton overseas alumina plant. Total domestic alumina capacity is 21 million tons, with a self-sufficiency rate exceeding 150%, allowing surplus alumina for global sales. Its Shandong base is配套 with captive coal power, while its Yunnan布局 focuses on hydropower aluminum (hydropower accounts for 31% of capacity),搭配 with self-built 2 GW photovoltaic capacity. Captive power reduces its per-ton aluminum电力成本 by over 800 yuan compared to peers.
New energy demand opens long-term growth空间. Aluminum usage per new energy vehicle is over 30% higher than in traditional fuel vehicles. Volumes for photovoltaic frames, energy storage battery foil, and ultra-high voltage cables are持续 increasing. The company is expanding production of battery aluminum foil and automotive aluminum sheets, with high-end processed products毛利率 10-15 percentage points higher than primary aluminum.
Overseas orders are持续 increasing, with annual long-term agreements signed with electrolytic aluminum plants in Southeast Asia and the Middle East. Overseas alumina sales volume for 2025 is projected at 6.4 million tons (up 16% year-on-year). For electrolytic aluminum, annual锁价 long-term contracts with major domestic traders and processing enterprises lock in over 70% of base sales volume, leaving only 30% for spot market sales.
High-end深加工 products are in供不应求: 1) Food-grade aluminum can stock: Long-term cooperation with all leading domestic packaging companies, with full capacity utilization and订单排期 of 3-6 months. 2) Automotive lightweight aluminum materials: Annual framework supply agreements with BYD and Tesla, with continuous capacity expansion for body panels and structural components. 3) Photovoltaic and energy storage aluminum materials: Framework orders with leading domestic module and energy storage companies, increasing annually with光伏装机. 4) Power battery aluminum foil: New capacity additions in 2025-2026 will be gradually released to meet long-term supply demands from lithium battery leaders.
The company has maintained consistent annual dividends since listing. Cumulative dividends from 2011 to 2025 reached 50.4 billion yuan, with an average annual payout ratio of 36%, reaching a high of 63% in 2025. Operating cash flow in 2025 was 39 billion yuan, with ample cash on hand,持续的 share buybacks, and stable shareholder returns.
With大宗原铝 supported by annual long-term contracts and high-value-added深加工 products in high demand, the company's new energy sector orders are increasing year by year, representing the core source of performance growth for the next three years.
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