《Ka's Perspective》Long-term bonds in Europe and the US are stirring again. The yield on US 10-year Treasury notes once rose to 5.35%, the highest since 2002; the 10-year German bond yield stood at around 3.49%, while France's 10-year bond yield briefly approached the 5% mark. The yield on UK 10-year government bonds once hit 5.68%, a record high since 2000; earlier, the UK's 30-year bond yield even broke above 6%. Rising oil prices have reignited inflation concerns, compounded by government bond supply and fiscal risks, prompting the market to reassess interest rate outlooks. As risk-free rates and corporate funding costs rise, the equity discount rate increases accordingly, hitting high-valuation tech and growth stocks hardest.
The risk appetite in Hong Kong stocks has simultaneously cooled. After the holiday, northbound funds flowed back and immediately reduced holdings in high-growth sectors such as pharmaceuticals and artificial intelligence (AI) hardware, reflecting a reduction in bets on high growth. Market risk aversion has intensified, and investment styles have clearly shifted, with capital moving toward stable, defensive sectors. Domestic consumer food stocks, characterized by inelastic demand, low cyclicality, and strong brand pricing power, have thus become defensive safe havens.
Defensive stock selection must pass three gates: strong cash flow, high dividends, and low valuation. Cash flow must deduct capital expenditures; dividends must distinguish between ordinary and special payouts; valuation must align with earnings resilience. Uni-President China Holdings (00220) primarily operates in beverages and instant noodles. In the first half of the year, revenue reached 17.321 billion yuan (RMB, same below), up 1.4%; net profit was 1.402 billion yuan, up 9%, with gross margin rising to 35%. Food revenue rose 4.7%, offsetting a 0.3% decline in beverages; operating cash flow was 930 million yuan, with cash holdings at 11.88 billion yuan, reflecting effectiveness in instant noodle upgrades and cost control. The stock's forecast P/E ratio is about 12.7x, with a forecast dividend yield of approximately 7.9%, and the 2025 fiscal year payout ratio is nearly 100%. Although no interim dividend is paid, strong cash reserves support the annual payout. The market generally expects the company to continue its generous policy in 2026 of returning nearly 100% of net profit to shareholders.
Tingyi (Cayman Islands) Holding Corp. (00322) operates mainly in instant noodles and beverages, with superior scale and distribution channels. In the first half of the year, revenue reached 40.545 billion yuan, up 1.1%; net profit was 2.433 billion yuan, up 7.1%, with gross margin rising to 35.8%. Instant noodle revenue rose 2%, with a 30.3% gross margin; beverage revenue rose 0.7%, with a 38.4% gross margin, showing more balanced profit improvement. Operating cash flow was 3.337 billion yuan, with cash and time deposits totaling 23.67 billion yuan. The stock's forecast P/E ratio is about 13.4x, with a forecast dividend yield of approximately 7.4%. The 2025 final and special dividends combined amount to HK$0.922, with a payout ratio close to 100%, and similarly no interim dividend is paid.
Both stocks pass the three safety gates, featuring ample cash, dividend yields exceeding 7%, and low P/E ratios in the teens. Investors who prioritize income and have lower tolerance for volatility should consider accumulating on pullbacks.
*The author is licensed by the SFC and holds no positions in the aforementioned stocks.
*Articles published in《Economic Intelligence》, whether signed or unsigned, represent the authors' personal opinions and do not reflect《Economic Intelligence》's stance.《Economic Intelligence》plays the role of providing a free speech platform.
The risk appetite in Hong Kong stocks has simultaneously cooled. After the holiday, northbound funds flowed back and immediately reduced holdings in high-growth sectors such as pharmaceuticals and artificial intelligence (AI) hardware, reflecting a reduction in bets on high growth. Market risk aversion has intensified, and investment styles have clearly shifted, with capital moving toward stable, defensive sectors. Domestic consumer food stocks, characterized by inelastic demand, low cyclicality, and strong brand pricing power, have thus become defensive safe havens.
Defensive stock selection must pass three gates: strong cash flow, high dividends, and low valuation. Cash flow must deduct capital expenditures; dividends must distinguish between ordinary and special payouts; valuation must align with earnings resilience. Uni-President China Holdings (00220) primarily operates in beverages and instant noodles. In the first half of the year, revenue reached 17.321 billion yuan (RMB, same below), up 1.4%; net profit was 1.402 billion yuan, up 9%, with gross margin rising to 35%. Food revenue rose 4.7%, offsetting a 0.3% decline in beverages; operating cash flow was 930 million yuan, with cash holdings at 11.88 billion yuan, reflecting effectiveness in instant noodle upgrades and cost control. The stock's forecast P/E ratio is about 12.7x, with a forecast dividend yield of approximately 7.9%, and the 2025 fiscal year payout ratio is nearly 100%. Although no interim dividend is paid, strong cash reserves support the annual payout. The market generally expects the company to continue its generous policy in 2026 of returning nearly 100% of net profit to shareholders.
Tingyi (Cayman Islands) Holding Corp. (00322) operates mainly in instant noodles and beverages, with superior scale and distribution channels. In the first half of the year, revenue reached 40.545 billion yuan, up 1.1%; net profit was 2.433 billion yuan, up 7.1%, with gross margin rising to 35.8%. Instant noodle revenue rose 2%, with a 30.3% gross margin; beverage revenue rose 0.7%, with a 38.4% gross margin, showing more balanced profit improvement. Operating cash flow was 3.337 billion yuan, with cash and time deposits totaling 23.67 billion yuan. The stock's forecast P/E ratio is about 13.4x, with a forecast dividend yield of approximately 7.4%. The 2025 final and special dividends combined amount to HK$0.922, with a payout ratio close to 100%, and similarly no interim dividend is paid.
Both stocks pass the three safety gates, featuring ample cash, dividend yields exceeding 7%, and low P/E ratios in the teens. Investors who prioritize income and have lower tolerance for volatility should consider accumulating on pullbacks.
*The author is licensed by the SFC and holds no positions in the aforementioned stocks.
*Articles published in《Economic Intelligence》, whether signed or unsigned, represent the authors' personal opinions and do not reflect《Economic Intelligence》's stance.《Economic Intelligence》plays the role of providing a free speech platform.
