Puzzle Of Growth Enterprise Market: When Will Growth Be Reflected?

A shares investors as "China NASDAQ"

Market needs GEM companies

Status quo: performance changes too fast

According to publicly available data, 32 of the 209 GEM companies in the 2010 year fell in the proportion of over 15%. In addition, many GEM companies were unable to guarantee their high growth momentum. For example, in the 28 GEM companies listed in the first batch of Listed Companies in 2009, there were 25 annual reports, and the net profit increased by more than 50%. Only three enterprises with high growth rate were achieved: the net profit of robots (300024) grew by 63.09%, and that of Huaxing started (300025) grew year by year, and Huayi Brothers (300025) grew year by year, while net home technology (H), Zhongyuan Huadian (H) and Bao de (2010) net profit decreased year by year, with a decline of up to, respectively.

Even in the early days of listing, the listed companies wearing high growth aura showed weak growth. For example, Jinlong electromechanical (300032) listed in December 2009, the issue price earnings ratio exceeded 100 times, and the net profit increased by 115% in that year. But in the 2010 year, the company's revenues and net profit decreased by 23.82% and 30.11% respectively.

It is worrying that, with a quarterly report coming out, more GEM companies' performance has changed, and net profit has fallen to 46 companies.

Among the 56 GEM companies listed only in this year, there were 12 quarterly net profit declines, Anju Bao (300155) fell 77.2% compared to the same period last year, and Sifang Da (300179) fell 56.78% over the same period.

What is worth mentioning is that in December 29th last year, the control of Technology (300152), its net profit as of December 31st of that year dropped by 0.43% compared with the same period last year.

"If fuel control technology meets in early 2011, then its 2010 year-on-year decline will obviously not meet the requirements for listing," a market analyst commented.

Obviously, if we rely solely on the first quarter's performance to judge the growth of GEM companies, we have already been questioned by many market participants.

Some market participants pointed out that although small companies in gem have seasonal differences in performance confirmation, many companies also attribute the decline in performance to rising costs, which has caused panic in the market.

Typical example, Huayi Ka Xin (300071), whose main business is offline marketing, shows whether the 2010 annual report or the 2011 quarterly report shows that the main revenue growth rate is much higher than that of net profit growth. The reason is that the promoters' wages, production costs and pportation costs have all been improved during the reporting period, and the cost of these improvements can not be pferred to customers, resulting in a reduction in gross margin.

Prospects: how to keep growing is the key.

Shao Qing, a long-term strategy analyst for Ping An Securities of the growth enterprise market, said that in the medium and long term, the GEM market does exist unfavorable factors of overvaluation and continuous expansion, but it is not without merit.

Besides the achievements, the growth of GEM companies is also manifested in the emerging industries which are mostly supported by the state, benefiting from economic pformation. Some GEM companies have begun to release their capacity, contribute to revenues and profits by fundraising projects; many small cap stocks are new shares or sub shares, and cash is ten plentiful, and in a tight credit environment, capital advantages are obvious.

The most typical examples are GEM companies, network technology and Jifeng agricultural machinery (300022).

Internet technology as a listed company at the beginning of the market has been questioned by the GEM companies, to this day, has not yet been fully recognized by the market for its growth.

Before the listing, the company's net profit growth rates in 2007 and 2008 were 56.89% and 45.51% respectively.

However, after 2009, the net profit growth rate was only 4.78%, and then to 2010, the "growth rate" dropped to 1.48%.

According to a quarterly report released by network technology in 2011, the main business of Internet Co was CDN accelerated business. The company's gross profit margin decreased from 34.93% in the first quarter of 2010 to 29.23% in the first quarter of 2011. The main reason for this decline is that the sales price of the main product CDN industry has dropped sharply.

Jifeng agricultural machinery is on the contrary. At the beginning of the listing, the company, which was known as the "first gem stock market" by the market for a long time of rising, has responded with a good performance answer in the quarterly report in 2011. It has responded to the previous questioning reports in the market, and realized operating income of 850 million yuan, an increase of 170.27% over the same period. The net profit of the shareholders belonging to the listed company was 11 million 869 thousand yuan, an increase of 51.23% compared with the same period last year, and the realization of basic earnings per share was 0.0664 yuan.

Zhu Leting, an analyst with the securities company of the League of nations, said that the investment logic of Jifeng agricultural machinery is along the track of "high growth and high valuation" to "decline in the growth rate and decrease in valuation", and it is reasonable to enjoy a higher valuation at the present stage of rapid growth.

Xu Guangfu, chief strategist of Xiangcai securities, said that since 1962, 75 GEM companies have been listed on the global growth enterprise market, but the number of them has been as high as 34. In conclusion, the overseas gem market can find that the shortage of technology companies is the main factor of their less successful operation. Therefore, it also needs reference from the domestic gem market. After all, the entry threshold is too low, and even fraud and counterfeiting issuance occur.

The gem has a high price earnings ratio and many companies are not growing very well, which makes the current overvalued market likely to cause serious internal structural differentiation in the future.

Opportunity: "emerging leader" companies deserve attention

How can we position a real gem company?

It is considered that the factors such as the industry outlook and the company's profit pattern are the main reasons for whether these companies can grow fast for a long time.

In the future, enterprises that directly or indirectly serve the needs of improving people's livelihood and meeting the needs of residents for cultural media, health care and living conditions will develop rapidly.

The potential growth ability is mainly reflected in the business income, net profit and market value growth. In this regard, Ji Feng farm machinery, special agent (300001) and Pathfinder (300005) all have such potential.

In addition, emerging industries are the best conditions to give gem the "high valuation" and "high growth".

In fact, the market has doubts about the development potential of the gem, while GEM companies have also encountered collective selling of funds in the two tier market.

In this regard, guihao Ming, director of Market Research of Shenyang Wanguo Securities Research Institute, said: "the recent setback of GEM market is more suggestive of the industry risk.

For the mature industries in traditional industries, the stability of their industries is relatively high, and they generally have relatively stable industry status.

Such enterprises, the ability to resist risks is relatively strong.

In the absence of systemic risk, performance is basically guaranteed.

This is the reason why it is easy to emerge in mature enterprises in traditional industries.

The GEM listed companies are different, they are mainly distributed in the emerging industries, perhaps themselves are the leading industry, but this position is often not so stable, the leading position in its industry, most of them have not yet been fully tested over a long period of time.

Such enterprises can be listed on the basis of their past performance, indeed can get a higher valuation, the so-called "three high" phenomenon is also formed.

If the industries in which the enterprises are located are really new and fast developing, and the enterprises themselves have various conditions to continue to consolidate the leading position in the industry, that should be sought after in the stock market, and the P / E ratio and the market rate are higher.

Because as time goes by, growth will resolve all this.

However, if the industry is very general, or is going downhill, or the position of the company in the industry has been challenged by the latecomers, the situation will probably change.