Hong Kong-listed tech giants report disappointing results

In this February 26, 2021 photo, people walk past an electronic display showing the Hang Seng Index in the Central District of Hong Kong. ISAAC LAWRENCE AFP Hong Kong-listed technology companies said their businesses had been negatively affected by the COVID 19 resurgence since mid-March.

Mainland Internet giant Baidu Inc reported a net income loss of 885 million yuan $131.5 million for the first quarter, which ended on March 31, compared to a net income gain of 25.65 billion yuan from the same period a year ago. In the first quarter, revenues increased by 1 percent to 28.41 billion yuan, better than the market forecast of 27.85 billion yuan.

Baidu co-founder and CEO Robin Li Yanhong made a statement on Thursday.

The mainland e-commerce titan, Alibaba Group Holding, reported a net loss of 16.24 billion yuan and a net loss of 18.35 billion yuan for the fourth quarter, which ended on March 31. Revenue was 204 billion yuan, an increase of 9 percent year-over-year.

In the Thursday company statement, Daniel Zhang Yong, Chairman and Chief Executive Officer of Alibaba Group Holding, said that the company continued to focus on customer value proposition and building the capabilities to deliver value despite macro challenges that impacted supply chains and consumer sentiment. We saw tangible progress in our businesses, especially in operational improvements in key areas. ALSO READ: HK logs 251 new virus cases, 2 linked to kindergarten cluster.

On Thursday, Baidu's share price went up 0.17 percent to HK $115.7 $14.83, while the Alibaa Group holding fell 1.52 percent to HK $81.1 apiece.

Market analysts believe that Hong Kong-listed mainland technology companies should become more attractive again due to low valuations, large share buyback programs and a positive turn in regulatory policies, which support share prices after the rout in the first quarter of this year.

Since the beginning of 2022, the valuations of Hong Kong internet companies have fallen below the extreme values in mid-March, according to CSOP Asset Management.

The Hang Seng TECH Index has a price-to- earnings ratio of 9.64 times and a price-to-book ratio of 1.04 times, compared to the Nasdaq 100 Index with a P E ratio of 30.27 times and a P B ratio of 7.33 times, according to the company.

Chinese technology giants Tencent Holdings, Xiaomi Corporation and Alibaba Group Holding have taken the lead in launching large share buyback programs. The investment value of these companies is highlighted by a new wave of repurchase agreements, according to CSOP.

Strict supervision policies were the main factor behind the weak performance of Hong Kong-listed technology companies, but we now see a positive turn on the policy side, which improves market sentiment. More specific supporting policies are expected to be released in the near future, and we will keep our eyes on stock fundamentals, CSOP said.