Market Overview Yesterday, the Hong Kong stocks market gained on the rise of tech names. China coal sector surged on the back of better-than-expected 1Q22 results, of which China Shenhua (1088 HK) 1Q22 net profit surged 67% YoY and China Coal (1898 HK) net profit was up 93% YoY. Smoore Intl (6969 HK) slumped 15% after the Department of Health carries out new enforcement measures, prohibiting the import, promotion, sale for commercial purpose of alternative smoking products. The ban covers electronic smoking products, heated tobacco products etc. The Hang Seng Index advanced 329pts to 20,276pts with a daily turnover of HKD105.7b. Today, several companies will release their 1Q22 results, including ABC (1288 HK), BOC (3988 HK), CCB (939 HK), CRG (390 HK), COSCO series. Sector News - China Airline - Four Headwinds Market believes Chinese airline companies are facing three challenges under current operating situation, including (1) uncertainty in domestic flights, market observed that there were more last-minute cancellations given another round of mass testing in Shanghai and a new outbreak in Beijing; (2) international flight remained weak, recording only low single digit of 2019 levels. Unless the strict inbound arrivals quarantine measure can be eased, no rebound in international passenger capacity can be observed in the near term; (3) RMB currency trend. RMB weaken is negative towards Chinese airline companies as they have relative high exposure on U.S. dollar denominated debt; (4) High oil price. Brent is trading above USD100 per barrel, given that Chinese airline didnt hedge oil movement and limited room for them to raise the domestic passenger fuel surcharge, higher oil price will add operational cost pressure. Company News - BYD Co. (1211 HK) BYD released its 1Q22 results with revenue of RMB66.8b (+63% YoY) and net profit of RMB808m (+240% YoY), which was in-line with its previous profit alert of 174% to 300% YoY growth. BYD generated RMB12b (+83x YoY) operating cash flow in 1Q22, supported by strong new energy vehicles sales. Its 1Q22 gross profit margin was at 10.7% (-0.8ppt YoY), caused by the rising costs of battery materials. In March, BYD has raised vehicle prices by RMB3k to RMB6k, which is expected to offset cost pressure in upcoming months. CNOOC (883 HK) CNOOC released beat 1Q22 results with special dividend arrangement. Its 1Q22 unaudited oil and gas sales revenue was up 70.4% YoY to RMB82.3b and net profit surged 132% YoY to RMB34.3b. The earnings growth was driven by higher international oil prices and increased sales volume. During the period, CNOOCs average realised oil price increased by 65% YoY to USD97.46 per barrel, while the average realised gas price was USD8.35 per tcb (24.4% YoY). In 1Q22, CNOOC made 4 new discoveries and drilled 13 successful appraisal wells. In addition, the company has declared a special dividend of HKD1.18 per share, implying 10% dividend yield. Its share price is expected to react positively to the beat results and special dividend declared. United Labs (3933 HK) United Labs announced that its clinical trial filing for its insulin degludec and insulin aspart injection has been accepted for review by China NMPA. The company becomes the second Chinese firm to apply for the clinical trial of insulin degludec and insulin aspart injection. Meanwhile, its biapenem for injection (0.3g) has passed GQCE. Insulin degludec and insulin aspart injection is a new-generation ultra-long-actingcombination of basal insulin analogue and mealtime insulin analogue. Sands China (1928 HK) Sands China recorded a widen 1Q22 EBITDA and net loss, which missed consensus forecast. In 1Q22, its 1Q22 total net revenue was USD547m (-29% YoY), meanwhile, its 1Q22 EBITDA loss was USD11m (vs. 1Q21 EBITDA gain of USD100m) and net loss was USD336m (vs. 1Q21 net loss of USD213m). The results were adversely affected by a rise in COVID-19 cases, related restrictions in China and visitation remained well below 2019 levels. Its management stated that (1) they expect to see a recovery in 2023E, possibly towards end-2022E, yet, depends on travel restrictions easing; (2) they are optimism driven by strong spending during unrestricted travel periods; (3) they expect gaming law to be approved by Aug and is expected to complete before end-2022E. DISCLAIMERS This Dim Sum Daily is prepared for general circulation and for information purposes only. It is not an investment research or a research recommendation, as it does not constitute substantive research or analysis. The material contained herein is intended as a general market commentary. 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