Is the Hang Seng Tech Index Just Getting Started?

Phillip Nova高级投资分析师林知霖先生

Following Alibaba’s reported earnings on 29 August, where it revealed a jump in AI-related sales and a much-faster than anticipated rise in cloud unit revenue, the Hang Seng Tech (SGX: HST) surged by +13.99% since the earnings release.

Other major Chinese Tech firms are also undergoing major AI-related endeavours:

• In August, Baidu (SGX: K3SD) said it won a 1b yuan ($141m) contract to provide China Mobile Ltd with servers powered by its Kunlun chips
• In late August as well, Cambricon swung to a record profit in 1H

Crucially, regulators in the past month began pushing local firms to ditch Nvidia’s H20 chips which Trump allowed to be sold to China. In September, the Cyberspace Administration of China told companies to stop testing Nvidia’s RTX Pro 6000D, a semiconductor for workstations that can be repurposed for AI applications.

• Domestic chip manufacturers Hua Hong Semiconductor (SEHK: 1347) 和 SMIC (SGX: HSMD) have benefitted as China is expected to increase reliance on domestic chip production

In September, Huawei unveiled a 3-year roadmap for its chip development, revealing plans for “super clusters” and vastly faster AI chips that are intended to supplant Nvidia chips.

Horizon Robotics (SEHK: 9660) is a leading advanced driver assistance systems (ADAS) and autonomous driving (AD) solutions provider for passenger vehicles. By the end of 2024, Horizon captured over 40% of the Chinese ADAS market. Horizon has a strong customer base that includes BYD, Li Auto, Geely, and Volkswagen.

• Horizon Mono 和 Horizon SuperDrive (HSD) are 2 of Horizon’s flagship software + hardware stack for intelligent driving– which includes their Journey 6 series chips for autonomous driving. 
• HSD is capable of navigating the bustling downtown areas of China’s tier 1 cities with human-like precision.

Kuaishou Technology (SEHK: 1024): China’s #2 short-video platform after Douyin. ~55% of revenue comes from advertising, 30% from live streaming (takes a share of users’ in-app purchases or virtual gifts). The remainder from other services such as e-commerce (where it earns commissions on GMV).

• It’s in-house Kling AI can create videos from written prompts and images. 
• The company smashed 2Q estimates with record net income (+13% YoY revenue) and announced its first-ever special dividend of HK$0.46/share. CFO Jin Bing said full-year revenue from its Kling AI tool is set to double vs earlier targets, with AI revenue climbing to 250m yuan in 2Q (up from 150m in 1Q).

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