Chinese stocks have been trending following China’s decision to cut stock trading taxes by 50%. One of the Chinese stocks that are worth watching over the coming weeks is AMTD Digital Inc. (NYSE: HKD) as it may soar substantially. In addition to China’s tax cut, the company recently witnessed a major catalyst in its agreement with its parent company AMTD IDEA Group (NYSE: AMTD) where the company will sell 193 thousand shares for $100 million. This agreement values HKD shares at $520 per share which is extremely promising for the company since AMTD appears to value it at more than $520. Considering the timing of the news, HKD stock may see a strong buying activity which could lead its PPS to increase substantially over the coming weeks.
HKD Fundamentals
On August 28th, HKD and AMTD jointly announced that both of their boards approved the sale of $100 million worth of class B ordinary shares priced at $520 for total proceeds of $100 million. Taking into consideration that the company’s ADR represents .4 of a full share, the deal means that HKD stock would be worth around $208 per ADR – significantly more than its current trading price of $6.11. This means that AMTD believes the stock should be worth more than $208 which is a promising sign that major news could be released.
That said, investors seeking to capitalize on this deal need not worry about dilution due to the fact that the deal has a 5-year lock-up agreement. This means that the shares issued due to this deal will not enter the market for another 5 years at least indicating that the stock may not witness strong selling pressure anytime soon.
The timing of this deal could not be less than perfect as it coincided with China’s decision to cut stock trading taxes by 50% to boost its stock market. According to analysts, China’s decision is likely to result in a boost to Chinese stocks in the short term as more investors would be inclined to invest in the stock market. Considering the company’s latest catalyst, HKD stock may witness a major wave of buyers which could help its PPS increase – making it one to watch closely over the coming weeks.
HKD Financials
According to the company’s 2023 annual report, its assets grew YoY from $410.5 million to $661.6 million due to the increase in its cash balance from $14.3 million to $152.9 million. This increase in cash is a result of the company generating $229.2 million from share issuances and its IPO last year. As for liabilities, the company reported an increase from $15 million to $140.5 million due to increases in bank borrowings and an amount due to a non-controlling shareholder.
When it comes to revenue, HKD experienced a YoY increase from $25.2 million to $33 million due to revenue from non-financial services increasing from $23 million to $28 million. On the other hand, its expenses increased from $14.8 million to $20 million mainly due to depreciation and amortization, as well as financing costs. As a result of the company’s drastically improved revenue and $15.3 million in changes regarding fair value, the company’s net income increased from $25.8 million to $40.1 million.
Technical Analysis
HKD stock is in a neutral trend with the stock trading in a sideways channel between $6.08, and $6.58. Looking at the indicators, the stock is currently trading below the 200 and 21 MAs which is a bearish sign, while trading above the 50 MA which is a bullish sign. Meanwhile, the RSI is neutral at 49 and the MACD is also neutral.
As for the fundamentals, HKD’s recent share sale to AMTD is a major catalyst since it prices its American shares at $208. At the same time, China’s decision to cut stock trading tax by 50% is also a catalyst since it may entice more investors to buy shares of Chinese companies. With the stock trading near support, investors could find the current PPS a good entry point ahead of a potential run in the coming weeks.
HKD Forecast
With several events playing in its favor, HKD stock may end up soaring in the coming weeks. First and foremost, China’s decision to cut stock trading taxes is a major catalyst for Chinese stocks as they may see strong buying activity. In addition, the recent deal with AMTD to sell its shares for $208 per American share could see the stock soaring given its current PPS near $6. For these reasons, HKD stock is one to watch closely over the coming weeks.
HKD Fundamentals
On August 28th, HKD and AMTD jointly announced that both of their boards approved the sale of $100 million worth of class B ordinary shares priced at $520 for total proceeds of $100 million. Taking into consideration that the company’s ADR represents .4 of a full share, the deal means that HKD stock would be worth around $208 per ADR – significantly more than its current trading price of $6.11. This means that AMTD believes the stock should be worth more than $208 which is a promising sign that major news could be released.
That said, investors seeking to capitalize on this deal need not worry about dilution due to the fact that the deal has a 5-year lock-up agreement. This means that the shares issued due to this deal will not enter the market for another 5 years at least indicating that the stock may not witness strong selling pressure anytime soon.
The timing of this deal could not be less than perfect as it coincided with China’s decision to cut stock trading taxes by 50% to boost its stock market. According to analysts, China’s decision is likely to result in a boost to Chinese stocks in the short term as more investors would be inclined to invest in the stock market. Considering the company’s latest catalyst, HKD stock may witness a major wave of buyers which could help its PPS increase – making it one to watch closely over the coming weeks.
HKD Financials
According to the company’s 2023 annual report, its assets grew YoY from $410.5 million to $661.6 million due to the increase in its cash balance from $14.3 million to $152.9 million. This increase in cash is a result of the company generating $229.2 million from share issuances and its IPO last year. As for liabilities, the company reported an increase from $15 million to $140.5 million due to increases in bank borrowings and an amount due to a non-controlling shareholder.
When it comes to revenue, HKD experienced a YoY increase from $25.2 million to $33 million due to revenue from non-financial services increasing from $23 million to $28 million. On the other hand, its expenses increased from $14.8 million to $20 million mainly due to depreciation and amortization, as well as financing costs. As a result of the company’s drastically improved revenue and $15.3 million in changes regarding fair value, the company’s net income increased from $25.8 million to $40.1 million.
Technical Analysis
HKD stock is in a neutral trend with the stock trading in a sideways channel between $6.08, and $6.58. Looking at the indicators, the stock is currently trading below the 200 and 21 MAs which is a bearish sign, while trading above the 50 MA which is a bullish sign. Meanwhile, the RSI is neutral at 49 and the MACD is also neutral.
As for the fundamentals, HKD’s recent share sale to AMTD is a major catalyst since it prices its American shares at $208. At the same time, China’s decision to cut stock trading tax by 50% is also a catalyst since it may entice more investors to buy shares of Chinese companies. With the stock trading near support, investors could find the current PPS a good entry point ahead of a potential run in the coming weeks.
HKD Forecast
With several events playing in its favor, HKD stock may end up soaring in the coming weeks. First and foremost, China’s decision to cut stock trading taxes is a major catalyst for Chinese stocks as they may see strong buying activity. In addition, the recent deal with AMTD to sell its shares for $208 per American share could see the stock soaring given its current PPS near $6. For these reasons, HKD stock is one to watch closely over the coming weeks.