A-Share Third Quarter Report Sprint: Real Estate Bleak, Medical Equipment High Value Company Faces Callback

From the three quarterly reports of leading companies, some typical industries, such as medical devices and cloud office, are still growing. The second outbreak of overseas epidemic situation has brought sustained performance growth for many medical device companies in the third quarter.

With the closing date of the third quarter report disclosure on October 31, the third quarter report disclosure of A-share listed companies has entered a sprint period.

According to wind data statistics, as of 19:30 on October 27, a total of 1603 of the 4060 listed companies in Shanghai and Shenzhen stock markets disclosed their third quarter reports, with a disclosure rate of 39.48%. Among them, 917 companies achieved positive growth in revenue compared with the same period last year, and 951 companies achieved positive growth in net profit compared with the same period last year.

From the three quarterly reports of leading companies, some typical industries, such as medical devices and cloud office, are still growing. The second outbreak of overseas epidemic situation has brought sustained performance growth for many medical device companies in the third quarter.

The manufacturing industry, film and television industry, which were seriously affected by the epidemic, have recovered in the third quarter, while the growth of real estate has slowed down.

However, even if the growth rate is bright, some industries, such as medical devices, have fallen in recent years. Market analysis, this is because its valuation is at a historical high. Some leading companies also ushered in a correction in the stock price after the performance was lower than expected.

With more innovative enterprises listed in the pharmaceutical sector, the valuation level will continue to improve. -Photo by Gan Jun

The real estate is dim and the medical equipment is bright

Only from the enterprises that have disclosed the performance of the third quarter at present, the industry prosperity has appeared more obvious differentiation.

The overall performance of Biopharmaceutical Enterprises is excellent: among the 164 enterprises that have disclosed the third quarter report, 94 have a year-on-year increase in revenue and 106 enterprises have a year-on-year increase in net profit.

Among them, many are medical device enterprises. For example, in the first three quarters of 2020, Kangtai Medical Co., Ltd. achieved a revenue of 1.111 billion yuan, a year-on-year increase of 350.59%, and a net profit of 515 million yuan, a sharp increase of 1208.92% year-on-year. Kangtai medical said that since the outbreak of new crown pneumonia, the company's demand for infrared thermometers, blood oxygen and other products has surged due to the needs of epidemic prevention and treatment.

Hu Boxin, chief analyst of Dongxing securities pharmaceutical industry, analyzed that Xinguan epidemic has short-term, medium-term and long-term impacts on the pharmaceutical industry, and the implementation of pharmaceutical investment needs comprehensive consideration.

"The short-term impact of the new crown pneumonia epidemic on the pharmaceutical industry has been basically reflected in the Chinese newspaper. The beneficial sub sectors, such as detection, protection and monitoring, are also important factors supporting the pharmaceutical market in the first half of 2020. The damaged sub sectors such as Stomatology, ophthalmology and other medical services recovered rapidly from the resumption of work in April." Hu Boxin said.

Data show that thanks to the explosive growth in the demand for new coronavirus detection reagents, the detection reagent manufacturers have made remarkable achievements in the first quarter and half a year.

While the overseas epidemic situation is still severe, overseas reagent export demand is strong, which continues to drive the performance growth of related companies.

In this context, Shengxiang biology, Huada gene and so on have recently raised their three quarterly results.

On the evening of October 11, Shengxiang bio released a correction announcement of its performance forecast. According to the financial department's re calculation, it is estimated that the operating revenue from January to September 2020 will be 3.605 billion yuan, an increase of 1381.47%; the net profit attributable to the owners of the parent company is expected to be 1.970 billion yuan-2.070 billion yuan, an increase of 10472.64% - 11009.32% over the same period of last year; the deduction attributable to the shareholders of the listed company is expected to be non-profit The net profit of regular profit and loss was 1.950-2.050 billion yuan, an increase of 15186.32% - 15970.24% over the same period of last year. Shengxiang biological is also a listed biomedical company that has forecast the largest increase in net profit in the third quarter of 2020.

According to the performance forecast data of the third quarter report, the top five listed companies with the largest increase in net profit in the biomedical industry on a year-on-year basis, including Shengxiang biological, Zhende medical, Daan gene, Kangtai medicine and Huada gene, all belong to the subdivision direction of medical devices. Among the reasons for the performance changes, they all mentioned the factors of increasing demand for epidemic prevention materials brought by the epidemic situation of new coronavirus.

A few families are happy and some are sad. Judging from the loss list, the top four loss lines of listed companies that disclose the third quarter report are all real estate enterprises, namely, Taihe Group, Yunnan Chengtou, * ST Xinguang and Jiakai City, with the loss amount of more than 1 billion yuan. Among the 34 listed real estate companies that have disclosed the third quarter report, only half of them have a year-on-year increase in revenue and 11 companies have a year-on-year increase in net profit.

Stock price correction of some leading companies

For market participants, performance is important, but valuation is also an indispensable dimension.

So, for the pharmaceutical industry with good performance, what is the current position of valuation and is it worth continuing to allocate?

Hu Boxin believes that with more innovative enterprises listed in the pharmaceutical sector, the valuation level will continue to improve. First, since this year, the improvement of the valuation of the pharmaceutical sector has the impact of the epidemic situation. In fact, the impact of the epidemic on the performance of some companies far exceeds the increase in the valuation. After the performance of some diagnostic reagents and protective equipment enterprises is raised by the end of 2020, the valuation will even drop sharply. After the medical valuation reached a new high since August, some adjustments have been made, which is related to the allocation of institutions The adjustment of medical allocation in the past six and a half months has declined.

In addition, the future trend of pharmaceutical sector valuation will continue to rise, because more Sci-tech Innovation Board enterprises are listed, their short-term profits are less or even losses, which will inevitably affect the overall valuation of the board. Moreover, more pharmaceutical enterprises invest in innovation, and their products in research need secondary valuation, which also drives the valuation premium to rise.

With the advent of the third quarter market, a striking phenomenon is that with the performance not up to expectations, such as Fuling mustard, Changchun hi tech, gibbet and other Baima stocks, the stock prices "flash collapse".

"After the heat of the first two quarters, the market generally has high expectations for the performance of the third quarter. As reflected in the stock price, the expected growth rate has been seriously overdrawn. When the performance is finally released, on the one hand, the performance is not as expected and there is a risk aversion mood; on the other hand, the dust of the performance is settled, and the profit plate withdraws quickly. And the economic trend in the fourth quarter will be mainly stable and ready to lay the foundation for next year. Therefore, after a moderate correction, funds will be easy to rearrange. " Shen Meng, executive director of Xiangsong capital, told the 21st century economic reporter.

"For the third quarter report, investors should not only pay attention to the performance explosion, but also pay attention to the actual data of performance. Although the book profit has increased rapidly, the cash flow is not synchronized in fact, which indicates that there are a lot of potential risks. For such stocks, we should pay attention to the cycle and rhythm of holding." Shen Meng said.

In addition, Guoxin Securities strategy analyst Yan Xiang believes that the high valuation is also an important factor in the recent correction of most leading companies' share prices.

"Most of the companies that have fallen by more than 10% since October and Baima, which has seen a recent stock price collapse, are concentrated in the pharmaceutical, electronic and computer industries. The biggest feature of these industries is that their valuations are at a very high level in history. Although these sectors have been adjusted back in the second half of the year, the latest Shenwan pharmaceutical, electronics and computer primary index is still 91% since 2010 The quantiles were 88% and 56%. On the one hand, the high valuation reflects that the market has played too much on the company's future growth, and once the performance does not meet the expectations, it will often bring Davis double play, causing a sharp correction in the stock price. On the other hand, high valuation may also lead to large shareholders to reduce their holdings at a high level. For example, Changchun hi tech and Fuling Zhacai have negative effects in reducing their holdings. "

He believes that compared with the first half of the year, the current period of the most loose liquidity has passed, and the economic recovery has become a more certain direction, undervalued, pro cyclical and other sectors have higher cost performance.

China's GDP growth rate in the third quarter continued to increase by 9% compared with the first three quarters. With the gradual recovery of the economy, the recent statement of the central bank also shows that monetary policy will return to normalization. In this context, the logic of the market will shift from the denominator to the numerator. In the second half of the year, the market valuation convergence will continue. In this process, we believe that undervalued, pro cyclical and other sectors will have higher cost performance Yan Xiang thinks.

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