Category: Money tips Release Date: 2006-10-30
October: stock price performance on the basics, the market focus on the trend is still downward
After the initial stock reform the performance of numerous Wuza stocks after the share reform on the price of the basic factors that have to be reflected in the early rising, investors focus on providing opportunities to return to profitable growth potential of industries and stocks up: airports, ports, highways and other traditional defensive species, because there is no short-term earnings surprises and the future rate of return on new assets decline in the construction and other reasons, which some investors have been temporarily abandoned, but because of the stability of the sustainability of future earnings growth, its good defensive, or will attract long-term rational investors.
Stock performance and fundamentals are consistent, the polarization of the trend to accelerate, future earnings growth stable, financially sound, high quality and reasonable valuation of the company's share price performance is better than bad company. Focus on the stock market continues to slow down to adapt to the trend of slower growth in overall profitability, the current valuation bubble in stocks there is further adjustment.
3 quarterly performance review and future prospects
Still maintained a rapid growth in the macroeconomic context of the first three quarters of domestic listed companies, the overall net profit has shown a negative growth rate, -2.7%, while the national growth rate of profits of industrial enterprises above designated size as high as 20%, and highlights the long-term "upstream overwhelm downstream, earnings tend to focus on "features, but the upstream industry, earnings growth has slowed down, middle and lower reaches the level of further deterioration of the profitability of the industry. The level of the overall profit margin and net return on assets continue to decline. A-share listed company's structural problems, making domestic investors unable to share the benefits of rapid economic growth.
Very recently we focus on companies in the gold stock in 2005 and 2006 profit forecasts for a more substantial adjustment of a decrease of 10.0%, respectively, and 3.6%. Expected full-year profit growth of only 1.4%, far below expectations when the mid-term; adjusted the low base effect of making a profit in 2006 grew by 8.5%, but next year's economic development still exist in a lot of uncertainty remains to be seen, does not rule out the future possibility of a further decline in profit forecasts.
Stock Prospects
Although the valuation of large blue chips are already near or below the international comparable companies, but there is no earnings surprises as short-term, combined with domestic investors to invest in relatively short period, its stock is still possible to continue to be underestimated; while for poor fundamentals or earnings the lack of sustainability of future high-growth stocks, high-valuation risk will gradually appear. Stock polarization trend will continue.
In this context, our investment focus remained on the search for future earnings growth is more clear, a better defensive industry and its leading stocks: (1) a sharp drop in demand is not the case, banks, food and beverage, retail, real estate , medicine and other consumer industries, as well as major ports, airports, toll roads and other industry leading companies to maintain earnings growth will remain relatively stable; (2) reversal of the opportunity to profit next year, likely to be in: cement, electrolytic aluminum, semiconductors, oil refining, urban public transport and other industries leading enterprises, they will benefit from the gradual digestion of excess capacity, the relevant state price policy adjustments, as well as a reduction in raw material cost pressures and other factors.
