Category: Money tips Release Date: 2006-02-11
Pilot transfer scarcity
Since the second half and policy aspect has been blowing warm air frequently, reflecting a policy determination to do more is very strong. However, the policy environment and optimistic divergence is that China's macro-economic entered a complex period of adjustment. Although economic growth continued to hold the world's high, but compared to 2004, GDP growth there has been an inevitable decline. Clearly, the successful landing of China's economy and macro-control before the end, A-share market does not have the basis for the bull market. While we strongly believe that with the gradual elimination of institutional barriers, the stock market will usher in an unprecedented development; but the short term, the policy aspect, and incompatible macroeconomic fundamentals make our environment for the development of the stock market neutral view.
Industry choice: steady growth and risk aversion
Steady growth is the primary criterion for selection for the industry. 2005 from January to May, the national total profits of industrial enterprises above designated size increased by 15.8% year on year sales growth of 27%, gross profit and sales revenue growth far below the growth rate, economic growth appears to slow down the momentum. Among them, less cyclical growth industry, consumer industry growth steady, the bottleneck industry supply and demand gap still exists. Therefore, we are still biased towards defensive sectors configuration, proposes a focus on bottlenecks in the industry and consumer services category industries; the same time, the value of creativity in the industry, based on the advantage of the stock market valuation changes in the context of industry, an important criterion for selection. Stable growth in these industries, we pay more attention to the valuation level has the advantages of trade with international standards.
We continue to maintain the transportation, commercial, financial, food and beverage, medicine, tourism and other sectors of the rating the same time increase the potential turning point of the industry's concern, such as electric power.
Three major investment themes
"Split share structure reform" theme
Split share structure reform in 2005 the core of the problem is China's capital market began to change in the beginning of the market mechanism in the protection of investors, especially public investors under the principle of legitimate rights and interests, and actively and steadily solution-tradable shares has become a management layer of the priorities of the coming period. Split share structure reform pilot enterprises to become the subject of chase outside the capital, for markets, including the right of the outstanding shares of its biggest lies its charm. We expect to pilot this topic in the company's investment opportunities will be more apparent in the second half.
Currently circulating shares of greater concern is that for price of the program the value of the outstanding shares of the Game of the impact, but we believe that valuation does not constitute a pilot program although the determinants of game, but it is we are concerned about the split share structure reform, the key issues under the effect of . We believe that the performance of growth is expected enterprise value under the key at the far right of the value of their game in circulation. Therefore, the choice of investment targets of the subject, first of all should be considered is whether the economic downturn can withstand the adverse impact on corporate performance; second is based on a reasonable valuation of the price to pay. Based on this understanding, the second batch of pilot programs in high-quality price of the company's game against the value of the outstanding shares of the impact of which deserves our attention and active participation.
"The industry turned the corner" theme
Began in early 2004, the macro-control, making a number of cyclical industry prosperity index began to fall from the peak, but with the iron and steel, cement, petrochemical product prices decline in the cost of a significant reduction in these industries, which laid its profits rise foundation. We judge, a part of a cyclical industry, the economy has now entered the valley, and because of the decline in operating costs, some industries there have been signs of recovery. While we can not predict the exact time out of the trough in these industries, but taking into account the sensitivity of share price performance expectations and early sex, especially after a fall more than a year after the panic, low industry stock prices of some listed companies have been very attractive, such as the power industry.
"Scarcity" theme
In our previous report, has been repeatedly recommended "scarcity" variety (that is, we usually refer to second-line blue-chip), recently suffered a decline over the non-rational, we believe that, down the opportunity to provide a Jiancang. "Scarcity" variety is often a core competitive advantage of Chinese enterprises, or have strong pricing power and stability of earnings growth of monopoly enterprises, as well as some national consumer brands. Long-term stability of these species due to the scarcity of fundamental support, and determined that its valuation of the market and may even produce scarcity premium.
Of course, long-term investment value, does not mean that can not be dropped, even though most of the blue-chip investment value will be adjusted periodically. Of these "scarcity" variety, investors should be in the current macro-economic context, a careful analysis of whether the fundamental change that these second-tier blue chip varieties, if there is no change in fundamentals, then the sharp decline is caused by a more a good time to intervene. The present depressed market, there is scarcity of a large number of varieties have been underestimated, these stocks even without considering the pairs of split share prices have already have long-term investment value. Therefore, from the perspective of long-term value investing in the market panic is a scarce variety of strategic Jiancang better time.
