A Share Listed Company Value Trend Report Released: "Bad Money" Clearing "Hard Core" Breakthrough

Dong Peng, researcher of Capital Research Institute, twenty-first Century

The core value of the listed company lies in the enterprise itself, which derives and determines the investment value of the enterprise. This is the core logic that the stock market has established since the beginning of its establishment.

In December 5th, the southern Finance International Forum was held. In twenty-first Century, the Capital Research Institute released the "2019 A share listed company value trend report", namely, from the core value logic of listed companies, analyzed and judged the evolution of A share value trend. In 2019, the overall value of A listed 3706 listed companies (excluding longevity and retirement) remained steadily rising, but it was also affected by the slowdown in macroeconomic growth.

First, the macroeconomic slowdown "shock wave".

According to statistics of the twenty-first Century Capital Research Institute, the total revenue of these companies increased by 35 trillion and 724 billion yuan in 1-9 months, up 9.5% from 32 trillion and 615 billion yuan in the same period last year. In terms of profits, the total net profit of these companies amounted to 3 trillion and 190 billion yuan in 1-9 months, up 7.3% from the 2 trillion and 970 billion yuan in the same period last year.

However, the implementation of the micro enterprise level can be found that this year, A share listed companies are facing a lot of continuing business pressure. The share of listed companies, such as revenue growth, dropped from 75.83% in 2018 to 64.79%, and the proportion of listed companies with net profit growth increased from 63.2% to 57.1%. (see chart 1)

1, the pressure of revenue growth is highlighted.

In the first three quarters of this year, the number of enterprises listed in the effective sample was 3706, the number of growth enterprises was 2401, the number of enterprises falling was 1304, and the 64.79% enterprises' revenue grew year-on-year.

This proportion declined significantly compared with the same period in 2018. According to statistics, in the three quarterly reports of 3583 listed companies in 2018, the proportion of listed companies that grew year by year was 75.83%.

However, the majority of the companies in the first quarter of the three quarter of the A share's median revenue increased from 1 billion 379 million yuan in the same period in 2018 to 1 billion 429 million yuan.

By comparing the data, we can see that in the 1-9 months, the top 50 listed companies in A shares were only SAIC, China Unicom, Baosteel and China Shenhua. The other 46 super weight companies all grew year by year, with an average increase of 11.44%.

In addition, in 2018, the total number of listed companies with A shares in excess of 100 billion was 51, with the threshold of Air China (102 billion 880 million yuan).

In the same period this year, the number of listed companies with revenue exceeding 100 billion increased to 57. The 6 newly listed companies were Baoli real estate (111 billion 794 million yuan), COSCO sea control (111 billion 617 million yuan), conch cement (110 billion 756 million yuan), Zijin Mining Industry (101 billion 600 million), Ping An Bank (102 billion 858 million yuan) and Everbright Bank (100 billion 221 million yuan).

From the perspective of growth rate, the income growth of conch cement in the first three quarters was the most obvious, reaching 55.46%; the banking industry grew slower, while Ping An Bank's revenue grew by 8.56% during the same period, but the Everbright Bank reached 18.26%.

The reason is the prosperity and characteristics of the industry.

Taking the cement industry as an example, this year, the results of resolving excess capacity were further consolidated, and the price of products increased slightly compared with the same period last year, which led to an increase of 14.3% in the whole industry. The conch cement, as a well deserved industry leader, fully benefited from the increase in product prices and market share, and the scale of revenue increased rapidly.

In twenty-first Century, the Capital Research Institute held that under the background of macroeconomic slowdown, the domestic demand side is relatively low, which is not enough to support the significant changes in the revenue of the listed companies at the micro level. Only a few enterprises benefit from the upgrading of the industry boom, which will generate structural revenue growth, but the driving force is limited.

2, the overall gross profit margin slipped and profits further concentrated on the head company.

In the first three quarters of 2018, the total number of samples of listed companies with comparable data totaled 3584, of which 2265 of the total realized profit was 2265, accounting for 63.2%.

In the first three quarters of this year, the A share listed companies with a year-on-year increase in profits fell to 2116, with the impact of the launch of the "Chuang Chuang" and the listing of new shares. The total number of listed companies increased to 3706, driving the proportion of Growth Company to 57.1%.

As a result, the gross profit margin of these companies declined slightly compared to the same period last year. The median gross profit margin in the first three quarters of this year was 27.29%, compared with 27.92% in the same period last year.

The factors leading to the decline of the overall profitability of listed companies are more complicated, including the lack of macro demand, the adjustment of the mesoscopic industry cycle and the internal operation of enterprises.

From the data level changes, the overall financial costs of listed companies increased significantly in the first three quarters of this year.

According to statistics, the total financial expenses of the 3706 listed companies in the current period totaled 450 billion 844 million yuan, up 11.89% from the 402 billion 938 million yuan in the same period last year.

However, the profitability of enterprises in various industries has shown a trend of further improvement. In the first three quarters of 2019, the number of listed companies with a profit scale of tens of billions increased to 43, compared with 36 in the same period last year.

These 43 listed companies have contributed more than 6 of A shares' net profit. According to statistics, in 1-9 months, the total profits of 43 listed companies with over 10 billion profits were 1 trillion and 944 billion yuan, accounting for 60.92% of the total profits of A shares, a percentage increase of 4.23 percentage points over the same period last year. (see chart two)

Among them, the banking industry has taken the lead. Among the top 10 listed companies, apart from China Life Insurance, they are all occupied by banks.

In addition, Sinopec, PetroChina, China Shenhua and other energy companies, as well as Guizhou Moutai, conch cement and GREE appliances, the United States and other industries leading.

The problem is also prominent. The former is a cyclical industry. The volatility of listed companies is huge. Although the latter is a consumer company, the overall profit scale is about 30 billion yuan or less, and the scale is not comparable with the dominant banking sector.

In twenty-first Century, the Capital Research Institute held that the current A share market was not significantly improved. The central enterprises and banks excluding the "prefix" were the only 4 private enterprises in the first three quarters of the year to break through 10 billion yuan, accounting for only 7.5%.

Under the background of the consolidation of industrial structure, it is difficult to grow into a Super Company by continuing to rely on traditional industries to do "addition". The next step is to bet on new technologies and new industries, and quickly grab the market through core technology and products, so as to produce a great public company.

3, survival of the fittest, speed up clearance

Compared with the business situation, the attitude of the capital market is relatively positive.

Data show that in September 30, 2018, the Shanghai Composite Index closed at 2821.35 points, and rebounded slightly to 2905.19 at the end of September this year. Although the overall increase is limited, the total market capitalization of A shares has increased significantly.

As of September 30th, the total market capitalization of 3689 listed A shares was 59 trillion and 20 billion yuan, compared with 53 trillion and 250 billion yuan in the same period last year, an increase of 10.85% over the same period last year.

Excluding the impact of the rising share price of listed stocks, the contribution of "incremental" can not be ignored.

According to statistics, as of September 30th, 41 science and Technology Innovation Board companies contributed 587 billion 692 million yuan in total market value, and 147 main board and gem share contributed 2 trillion and 781 billion 9 million yuan in total market value.

The above two items totaled 33687 billion yuan, and after excluding the interference item, the total market capitalization of A shares in the statistical period increased by 4.52%.

Notable new changes are that the idea of value investing in 2019 has been further rooted in the hearts of the people, and has been increasingly concentrated on blue chips under the guidance of north capital.

According to statistics, from September 30, 2018 to September 30, 2019, the Shanghai and Shenzhen 300 index and Shenzhen stock index 100 index rose by 13.29% and 22.46% respectively, while the 1000 index of the Shanghai composite index was up 8.99%. (see chart three)

By contrast, the bad habits of A share market have been improved significantly.

In the above statistical cycle, the risk warning stocks overall fell 48.19%, 90 were included in the *ST stock market, 72 fell, the average decline of 41.75%, *ST Xinwei, *ST Huaye, *ST energy saving three stocks fell more than 80%.

The new idea of speculation was also concluded with the first day of the listing of Chongqing Agricultural commercial bank, and the listing of Qi Sheng Technology on the same day was also down the next day. Before this year, there were 10 new shares, such as Yuan Li technology, Baofeng energy, and so on.

Since the implementation of the credit application, the "new speculation" rule of continuous trading after the IPO has since been broken.

Although small cap stocks represented by gem, the stock price has risen significantly in the second half of the year, but most of them are based on the three quarter results of telecommunications, electronics and other sub sectors.

It can be said that this year, the main line of investment in the A share market is still in the big consumption sector led by Moutai, and the continuous rise and fall of the theme stocks continue to be marginalized. In late October, the block chain concept stocks 100% stock trading and rapid decline were typical.

In twenty-first Century, the Capital Research Institute held that, in the context of the continuous deepening of the opening up of the domestic capital market, the investment philosophy, logic and ecology of the A share market had been initially reconstructed, and gradually began to move closer to the developed overseas market.

For listed companies, the management method of major asset reorganization of listed companies revised during the year shows the attitude of regulators to optimize the assets of listed companies, and the new round of survival of the fittest of A share listed companies has also begun.

Two, new challenges for leading companies

The two most common ways of enterprise expansion are horizontal integration and vertical extension. However, no matter which way it is chosen, the market capacity will eventually be limited. How can we effectively break through the bottleneck?

Especially the leading companies in various industries, their market share has reached a high level, and the scale of profits is often tens of billions. The high base number will inevitably bring about a slowdown or even a negative growth. This is the objective law, and no great enterprise can evade it effectively.

GREE Electric is typical. As the leader of the absolute appliance industry in China, in recent two years, it has begun to seek external growth drivers, build cars, build mobile phones, make chips, and even prepare to enter the field of clean energy.

1, starting from GREE's crossover.

Cold year is a saying in the air conditioning industry. Because the selling season is basically finished in September, the most cold year is September from the previous year to the end of the following year.

The cold year of 2019 is obviously not friendly to several air-conditioning enterprises.

In the 2019 cold year, the retail sales volume and retail sales volume of air conditioner market reached 56 million 50 thousand and 192 billion 600 million yuan respectively, representing an increase of -7.0% and -9.0% respectively over the same period.

After the incremental market has become a reduced market, the price competition that has not seen for many years has come back. In June this year, since GREE publicly reported AUX, the two companies continued to smoke. (see chart four)

Behind the escalation of the "battle of words" between the two companies is that although GREE firmly controls the absolute share of the air conditioning market under the line, in recent years, AUX has opened up a new path to open up the online market. In 2018, it ranked the first place on the line of air conditioning line with 28.57% retail sales, which left GREE 11.57 percentage points.

After entering the 2019, the sales and selling prices of domestic air-conditioning market both declined, and the competition of head enterprises became more and more intense. They could only grab more market share from competitors.

GREE, a high-end brand in domestic brands, is no longer in the background of macroeconomic slowdown and consumer groups becoming "cost-effective".

In the first three quarters of this year, the company's revenue and profit growth rates were 4.42% and 4.73% respectively, compared with 33.94% and 36.59% in the same period in 2018. This decline began to appear in the first quarter of this year. From the single quarter operating data, GREE electric revenue grew 2.45% in the first quarter, up to 10.3% in the two quarter and sharply reduced to 0.5% in the three quarter.

In twenty-first Century, the Capital Research Institute believed that the key is that the air-conditioning market has not been able to meet the huge volume of GREE electric appliances.

The monitoring data also show that under the offline air-conditioning market, the share of TOP3 brand retail sales continued to grow from 73.2% in 2018 to 2019 in the cold year.

Such a high market share, the subsequent growth space is bound to be limited, only to compete for the share from the opponent, which is the key to the contradiction between GREE and AUX.

Seeking incremental overseas market is a solution. However, for GREE, the global market share has exceeded 20% last year, ranking 14 in the world for the first time in a row. It also faces the problem of market saturation.

In the first half of 2019, GREE Electric's overseas business income was 13 billion 869 million yuan, a slight increase of 119 million yuan compared with the same period in 2018, the growth rate was significantly lower than that from 2016 to 2018.

As a result, the news of cross-border GREE began to become more frequent, not only the injection of funds to set up an electric business company, this year, "double 11" again came out the United States, Haier and other opponents besieged news.

2, the "incremental" problem.

Growth bottleneck is by no means an urgent need for GREE electric appliance company to solve.

In 2019, the two tier market continued to chase white horse stocks, but also accompanied by a slowdown in the growth of some leading companies in the consumer industry.

However, in twenty-first Century, the Institute of economic capital believes that as long as we have a little understanding of the current operation of the industry, we should not simply regard it as an exploding thunder. The decline of growth rate is caused by many factors.

Excluding industries such as iron and steel, nonferrous metals and chemical industries, which are significantly affected by cyclical fluctuations, the industries with sustainable growth characteristics are mainly concentrated in the two major industries of food, beverage and household appliances.

According to statistics, the median profit growth rate of 18 liquor listed companies in the first three quarters of 2019 was 21.84%, compared with 37.03% in the same period last year. Among them, the total market capitalization of more than 50 billion yuan of the 6 leading liquor enterprises, the median profit is 32.74%.

In contrast, we can see that although the leading enterprises can still guarantee a higher growth rate during the period of rising industries, the growth rate is bound to slow down even though they are restrained by the high profit base in the past.

We choose high-grade and low-grade brands respectively for illustration. Guizhou Moutai, Q3's single quarter profit growth in 2019 was 17.11% year-on-year, after three quarters of growth were 20.29%, 31.91% and 47.56% respectively.

Shun Xin agriculture, Q3 single quarter profit growth in 2019 was -69.7%, the first quarter profit growth in the past six quarters is the lowest 17.17%, the highest value is 103.98%.

In twenty-first Century, the Capital Research Institute believed that since the bottom of the liquor industry boom in 2015, it has entered the fifth year. The profitability of the leading liquor companies has recovered to a high level after the resumption of growth and the outbreak stage, and the growth rate will probably slow down in 2020.

Similar to the household electrical appliance industry, it is an optional consumption in itself. After the industry leader began to enter the era of "stock struggle", this year superimposed the factors of low consumption desire, such as the slowdown in macroeconomic growth, and the slowdown in profit growth is inevitable.

Data show that the 5 white power industry leaders included in the statistics, the United States group, SUPOR, GREE appliances in the first three quarters of 2019 profits fell, only Haier intelligent home appliances, boss electrical appliances grew year by year, and boss electrical appliances as early as 2017 has entered the performance shift period.

In twenty-first Century, the Capital Research Institute held that the key to the slowdown in the domestic appliance industry is that the domestic market is becoming more and more saturated, and the existing market capacity is insufficient to support the rapid growth of these head enterprises.

In addition, such enterprises have entered the mature stage, and the market position and competition structure have solidified, leading companies have entered the stage of "defending the city". In the future, if there is no obvious innovation in the company's products and technology, or the channel reform is not smooth enough, it may even face the risk of negative growth.

Three, new trend: Breakthrough of science and technology

As a representative of the micro economy, the quality of operation of listed companies is directly linked to the level of domestic economic development.

From the point of view of industry division, large domestic listed companies are mostly cyclical industries such as finance, real estate, automobile and nonferrous metals, which themselves possess the characteristics of high volatility, and the sustainability of growth is easily disturbed by industry supply and demand.

In other words, the domestic economy is also faced with the problem of finding revenue increments. In terms of the position of the central high level in 2019 and the direction of the development and support of the domestic capital market, it is undoubtedly the most clear theme.

1, do a good job in increments and revitalize the stock.

On November 5, 2018, at the opening ceremony of the first China International Import fair, President Xi Jinping formally announced the establishment of the "science creation board" and carried out a pilot registration system in the sector.

In January 30, 2019, the China Securities Regulatory Commission (CSRC) publicly solicited opinions on the measures for the continuous supervision of the listed companies of the science and technology board (Trial Implementation) and the administrative measures for the registration of the first public offering of the cPCB (Trial Implementation).

In July 22, 2019, the science and technology board officially opened, and China's capital market ushered in a new plate.

In the evening of October 30, 2019, zhe pharmaceutical was in the lead when it was in a deficit state. It was also the first company to create the fifth set of market value and financial indicators using the rules of the Chuang Chuang board listing.

At this point, the 5 sets of listing standards of the science and technology board have been verified one by one.

Unlike other existing plates, the establishment of the science and technology board is to implement the strategy of innovation driven and powerful technology. By weakening the profitability of listed companies and other related indicators, we will help the innovative enterprises to accelerate growth as soon as possible with the help of the capital market.

It is for this reason that all companies in the company are concentrated in the new generation of information technology, high-end equipment manufacturing and other fields of science and technology. (see chart five)

The data show that, among the 176 science and technology innovation companies, including the issue and IPO termination, there are 75 industries in the new generation of information technology, 41 in the biological industry, 27 in the high-end equipment manufacturing industry, 18 in the new material industry, 10 in the energy saving and environmental protection industry, 3 in the new energy automobile industry, and 2 in the related service industries.

As of November 5th, the number of listed companies of the science and Technology Innovation Board reached 46, and the initial raised funds totaled 59 billion 324 million yuan, which undoubtedly provided strong support for the development of science and technology enterprises.

Compared with the increment brought by the A, the reform of the stock market in the A stock market is also in progress. The key supporting direction is also the emerging technology industry.

In October 18, 2019, the revised management method of major asset reorganization of listed companies officially came into operation. The revised contents include simplifying the standard of reorganization and listing, and eliminating the "net profit" index.

One of the most influential factors in the process of operation is to allow the relevant assets of high-tech industries and strategic emerging industries that meet the national strategy to be reorganized and listed on the gem, and other assets should not be restructured and listed on the gem.

In twenty-first Century, the Research Institute of economic capital held that the newly emerging industries with limited restructuring standards coincided with the listing themes of the science and innovation board. After the opening of the gem, the positioning of the gem will be similar to that of the Chuang Chuang board. All these are aimed at encouraging and supporting science and technology enterprises, expanding their own financing channels through the capital market, and then rapidly achieving endogenous growth or extension.

2, the tide of technology stocks has arrived?

In addition, the technology stock market came into sync with the Chuang Chuang board, and became one of the key parts of the A share market in 2019.

According to statistics, from the beginning of September 30th to the September 30th, the SW semiconductor industry rose 88.4%, ranking the first in all subdivision industries, and the SW electronic component industry rose by 67.66%.

Although the semiconductor industry has been surpassed by livestock breeding and feed industry in the four quarter, it still ranks the third in all two sectors during the year. (see chart six)

However, in terms of performance, the semiconductor industry is not a lottery. Of the 37 listed companies with comparable data, only 18 of the first three quarters of the year saw year-on-year growth in net profit. At the same time, the median profit growth rate dropped from 14.82% in 2018 to -2.66% this year.

Further subdivision, from the three quarter of 2015 to the three quarter of 2019, 258 SW electronic industry companies (excluding new shares) had only 17 profits in the 5 consecutive years of profit growth, accounting for only 6.6%.

The result of the lack of stable growth is that the A shares' investment in technology stocks is still limited to some conceptual hype rather than value recognition based on the improvement of the company's operational capability.

Correspondingly, the institutional ownership of long-term shareholding may not be stable enough to capture band trading opportunities.

Data show that the SW electronic industry fund holdings totaled 3 billion 940 million shares in the first quarter, rising sharply to 8 billion 180 million shares in the two quarter, and then reduced to 5 billion 730 million shares at the end of the three quarter. The SW communication industry is similar. In the first quarter, 1 billion 390 million shares of the fund were held, two shares rose to 2 billion 440 million shares in the two quarter, and three shares fell to 1 billion 140 million shares in the first quarter.

In summary, in twenty-first Century, the Capital Research Institute believed that the collective upward trend of medical technology stocks in the year came from the expected level of change.

For example, the launch of Ke Chuang plate and the increase in the support of the whole capital market to the science and technology enterprises have made the risk premium of the two level market to the technology stocks rise significantly, thus driving the valuation level of this part of the stock going higher.

However, the promotion of the two tier market does not have long-term sustainability. The upgrading of the internal value of technology stocks still depends on the continuous expansion of the scale of their own income and the steady improvement of their business capability through technological innovation and product upgrading.