Sunday, June 26, 2022
Martin Hennecke

Earnings woes hit tech stocks
<p>Hong Kong stocks weakened yesterday as China&#39;s Covid situation weighed on sentiment, with tech firms particularly hit ahead of their financial result announcements including Alibaba (9988), Kuaishou (1024) and XPeng (9868).</p><p>The Hang Seng Index retreated 1.2 percent, with the tech gauge down 2.5 percent.</p><p>Alibaba fell 3.4 percent yesterday ahead of its announcement of its full-year earnings this Thursday.</p><p>Its full-year adjusted profit is expected to drop 22 percent year-on-year to nearly 133.7 billion yuan (HK$157.72 billion) for the year ended March 31 this year, an average estimate based on 13 brokerage firms&#39; projections.</p><p>Meanwhile, Chinese electric-vehicle maker XPeng also sank 6.5 percent ahead of its earnings release later in the day. After the market closed, the firm reported a wider-than-expected quarterly loss as supply-chain snarls and surging materials costs squeeze margins.</p><p>XPeng&#39;s net loss more than doubled to 1.7 billion yuan in the three months trough March.</p><p>That compared to analyst estimates of a 1.52 billion yuan shortfall. The firm&#39;s sales forecast for the current quarter also came in below analyst projections.</p><p>While XPeng more than doubled vehicle deliveries and revenue last quarter, the company and its peers have since been hit hard by Shanghai&#39;s Covid lockdown and supply chain snarls in China. Shipments plunged 42 percent in April from March, to just 9,002 vehicles.</p><p>Also, short-video giant Kuaishou, which will release its first-quarter result today, also slumped 7.4 percent yesterday.</p><p>Meanwhile, shares of four new blue-chip entrants rose, with China Hongqiao Group (1378) and Orient Overseas (International) (0316) seeing the biggest gains, jumping 7.9 and 6.3 percent, respectively.</p><p>AAC Technologies (2018), which will be removed from the HSI, lost 6.9 percent.</p>

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