core summary
seize the opportunity at the beginning of the year
The recent A-share adjustment, the differentiation of long-term and short-term interest rates and the narrowing of term interest rate spread more reflect the expectation of economic recession and concerns about the effect of credit easing policy. In this context, looking forward to the market situation in January this year, we believe that the A-share market is expected to pick up, the overall performance should be stronger than that in December last year, and the opportunity at the beginning of the year should be grasped. The main reason for the market recovery in January is that the risk appetite and liquidity at the beginning of the year will be improved.
However, for the duration and height of the market this spring, we believe that we should have reasonable expectations. If there is a large rise, we should consider cashing it in time. This is because compared with the beginning of 2021, both economic expectations and incremental funds are lower than last year. From the perspective of economic expectations, investors had recovery expectations for the economy at the beginning of last year, while the current economic data showed weak performance, and both supply and demand showed a downturn. From the perspective of incremental funds, the issuance of new funds reached nearly 500 billion in January last year, and the issuance scale of new funds this year is difficult to compare with that at the beginning of last year. Therefore, in the spring market over the years, we believe that this year's spring market should be weak. On the other hand, the strength of the steady growth policy remains to be seen. The release of financial data after the spring festival may be an important time point.
at present, we are mainly optimistic about three directions
First, we are optimistic about the opportunity of transformation and revaluation of traditional industries with undervalued value: the undervalued sector has higher cost performance and is first repaired in the early stage of the current wide credit. At present, China's external environment also requires a breakthrough from the transformation. Focus on: thermal power transformation, new energy operation, consumer electronics transformation, automotive electronics, computer media transformation, metauniverse, state-owned enterprise reform and transformation, etc.
Second, the opportunity to complete the adjustment of hard science and technology. Out of concern about performance fulfillment or sustainability, the hard technology industry has experienced a shock correction recently. In the long term, the configuration cost performance has gradually become prominent. If its high prosperity can be further confirmed after the beginning of the year, it is expected to end the adjustment and start a new round of market. Focus on: military industry, semiconductor materials, IGBT, photovoltaic, etc.
Third, focus on the direction of financial development. The national financial work video conference requires ten key tasks to be done well in 2022. It is proposed to moderately advance infrastructure investment. We believe that the key direction of fiscal policy at the beginning of next year is to focus on infrastructure (especially new infrastructure), green and low-carbon, agriculture (food security and seed industry, etc.).
wind risk tips : steady growth policy is lower than expected, inflation is higher than expected, and US stocks fluctuate.
1. Seize the opportunity at the beginning of the year
After the central economic work conference was held, the market showed the characteristics of weak stocks and strong debts. The yield of ten-year Treasury bonds continued to decline, and the main A-share index also fell. Since December 13 (the third week of December), the yield of ten-year Treasury bonds has decreased by 6.7bp in three weeks, but it has not boosted the performance of the stock market. Both the Shanghai and Shenzhen 300 index and the gem index fell by about 2.3%.
we believe that the recent A-share adjustment, the differentiation of long-term and short-term interest rates and the narrowing of term interest spread more reflect the expectation of economic recession and concerns about the effect of credit easing policy. from December 29, the yield of one-year treasury bond rose by 9.1bp, the yield of ten-year Treasury bond fell by 5.5bp, and the term spread (10y-1y) narrowed from 59.6bp to 45.0bp. Until the last two trading days of 2021, the short-term interest rate did not decline rapidly under the influence of market funds.
in this context, looking forward to the market in January this year, we believe that the A-share market is expected to pick up, the overall performance should be stronger than that in December last year, and the opportunity at the beginning of the year should be grasped. The main reason for the market recovery in January is that the risk appetite and liquidity at the beginning of the year will be improved.
From the perspective of risk preference, the market transaction was light at the end of the year. Due to ranking assessment or capital settlement, the risk preference of institutions decreased, the overvalued growth stocks weakened and the undervalued sector strengthened. In the new year, the organization began to layout the high prosperity track in the future, and the market risk appetite will be improved.
From the perspective of liquidity, market micro liquidity also shows marginal tightening. Since December last year, under the background of RMB appreciation, northward funds have continued to show a net inflow situation. However, since the highest net inflow of RMB 48.8 billion was achieved in the week of December 10, the rhythm of net capital inflow in the North slowed down significantly in the following three weeks, with net inflows of RMB 11.5 billion, - 1.2 billion and 14.7 billion respectively. Although the issuance scale of new funds in December rebounded compared with the previous two months, it was still at a low level in the year and failed to provide sufficient liquidity support to the market. At the end of December, the cross year marketing of the fund was gradually launched. A total of 98 funds in the whole month ended raising ahead of schedule, exceeding 76 in November and 59 in the same period last year. The issuance of new funds is expected to bring more incremental funds at the beginning of this year, improving micro liquidity.
however, for the duration and height of the market this spring, we think we should have reasonable expectations. If there is a large increase, we should consider cashing it in time. for a long time, due to the periodic improvement of market liquidity and risk appetite at the beginning of the year, the spring market has become an important seasonal effect (phenomenon) of a shares. However, the spring market can not be generalized, because the economic environment, liquidity and market position of the market are different every year, so the starting and ending time and rising height of the spring market are also different every year.
in the spring market over the years, we believe that this year's spring market should be a weak category . Specifically, compared with the beginning of 2021, both economic expectations and incremental funds are lower than last year, and the strength of steady growth policy remains to be observed.
first of all, from the perspective of economic expectations, investors had recovery expectations for the economy at the beginning of last year, while the current economic data was weak and the performance of both supply and demand was sluggish. on December 10, the central economic work conference set the tone that China's economy is facing the triple pressure of shrinking demand, supply shock and weakening expectation, and the external environment is becoming more complex, severe and uncertain. The economic data for November was released on December 15. From the supply side, the cumulative year-on-year compound growth rate of industrial added value continued the downward trend since the second half of 2021, from 7.0% in June to 6.1% in November; From the demand side, the investment performance in 2021 was weak, and the consumption recovery was less than expected. In particular, the recent social zero data exceeded expectations, benefiting from the alleviation of automobile core shortage to a certain extent. The year-on-year growth rate of the total social zero in November fell by 1 percentage point, while the year-on-year growth rate of social zero other than automobiles fell by 1.3 percentage points. The PMI data for December was released on December 31. The manufacturing PMI recorded 50.3, up 0.2 month on month. Although it returned to the expansion range for the second consecutive month, it was lower than the expected value of 50.5. From the perspective of sub items, the demand is still relatively low, and the production sub item 51.4 is still in the expansion range, but it fell by 0.6 month on month, indicating that the speed of production expansion has slowed down; New order sub item 49.7, up 0.3 month on month, but still in the contraction range; New export orders fell 0.4 to 48.1 month on month. From the perspective of inventory cycle, the economy at the beginning of last year was in the active replenishment cycle, while the economy at the beginning of this year was in the passive replenishment cycle.
secondly, from the perspective of incremental funds, the issuance of new funds reached nearly 500 billion in January last year. The huge scale of incremental funds and relevant expectations promoted the rapid rise of the market before the Spring Festival. From the end of December last year to January this year, although the incremental funds are expected to recover, the scale is difficult to compare with that at the beginning of last year.
finally, the market still has some concerns about the strength of the steady growth policy and the effect of the credit easing policy. The January financial data and relevant high-frequency economic data released after the Spring Festival will confirm or falsify the relevant expectations. In general, we believe that we should have reasonable expectations for the duration and height of the market this spring. If there is a large rise, we should consider cashing in in time and mainly grasp the three structural opportunities.
2, three directions of the opening layout: undervalued transformation, hard technology and financial development
2.1 undervalued value transformation with high boom wings
why focus on the undervalued sector? Since 2020, track investment has been popular. Many investors believe that the current valuation of high prosperity track has increased its future growth price in. From the perspective of investment cost performance, it is more necessary to dig gold in the undervalued sector. in 2020, the Ning portfolio index representing the high prosperity direction increased by 189%, the PE valuation almost doubled from 55x to 107x, and the valuation also reached the highest level since 2016; In 2021, Ning portfolio continued to rise by 41%. Under the background of performance realization, PE valuation fell back to 90x, but it is still 80% since 2016.
why focus on the transformation direction? From the internal environment, the economic downturn needs to find new growth points. reference 2013-2014 years of economic growth continued to the next step, the real estate infrastructure construction means downward, the state set the strategic significance of the Internet industry, Internet plus, mobile Internet direction led gem to take the lead in opening an independent bull market. Facing the transformation needs of the new era, we will gradually make up for the problem of unbalanced and insufficient development by driving economic development with scientific and technological innovation, and shift from investment driven to innovation driven development. from the external environment, structural transformation is the strategic trend. the starting point of each round of scientific and technological innovation cycle is an opportunity for late developing countries to catch up or even surpass. China US trade friction has further strengthened China's determination to develop hard science and technology and promote economic development and industrial upgrading with scientific and technological innovation. therefore, at the current time point, select the subdivided industries and companies in line with the emerging transformation direction in the undervalued sector, and insert the wings of high prosperity into the undervalued value, which is expected to achieve the goal of profit improvement and valuation repair.
look for transformation opportunities in undervalued traditional industries, focusing on the following directions:
the promotion of carbon neutralization strategy brings new energy operation transformation opportunities. as new energy enters the parity cycle, the voice of operators in the industrial chain is expected to be strengthened. Parity onshore wind power can still maintain a good return on investment by benefiting from the price reduction of upstream equipment. With the continuous promotion of carbon peak and carbon neutralization policy, the installed capacity of wind power and photovoltaic is expected to maintain rapid growth. With the superposition of favorable policies such as green power trading and carbon emission reduction support tools, we believe that the revaluation of new energy operation assets will be a high probability event, and we are optimistic about the relevant direction of thermal power transformation and new energy operation.
automotive electrification is followed by intellectualization, focusing on the transformation of consumer electronics to automotive electronics. in recent years, the penetration rate of L2 automatic driving in China has increased year by year, reaching 13% in 2020, an increase of 4.2pct compared with 2019. Under the trend of intellectualization, automatic driving is an important driving point of automobile intellectualization in the future, which is expected to increase significantly, and the automotive electronics involved in the whole industrial chain of "perception transmission decision execution" will be greatly driven by demand. Similar to the smart phone in the mobile Internet era from 2010 to 2020, it is expected that the automobile will become the core intelligent mobile terminal in the future and an important node for the interconnection of all things. The electric and intelligent industrial chain will usher in a golden period of development, and the automobile electronics business is also expected to become the second growth curve of traditional consumer electronics companies.
grasp the emerging Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) trend and transform computer media into the meta universe. metauniverse is supported by software and hardware technology and driven by user needs. 1) Application: the substitution of real-world functions by the meta universe requires the needs of users to drive application development. These applications constitute the ecology of the meta universe. 2) Technology: software technology is needed to support the application of communication, AI, virtual reality, blockchain and other technologies in order to realize the efficient and high-quality operation of the metauniverse. 3) Hardware: communication equipment, Internet of things, interactive equipment and other hardware equipment are required to support the access and operation of the virtual world. On this basis, eight elements of the meta universe are derived, which can be divided into individual attributes of the meta universe (identity and social interaction), creation of the meta universe world (four characteristics, immersion, anywhere, low delay and diversity), and social governance of the meta universe (economy and civilization).
the reform of state-owned enterprises is superimposed with the promotion of equity incentive, and the transformation of state-owned enterprises is worth looking forward to. First, the state-owned enterprises in the middle and upper reaches are highly profitable and currently hold a lot of cash. In the future, they are expected to help enterprises transform and fully participate in new directions such as new infrastructure and new energy. in recent years, the reform of state-owned enterprises especially emphasizes moving closer to high-quality development, which requires state-owned enterprises in traditional fields to strengthen scientific and technological innovation and make good use of the advantages of state-owned capital. The state-owned enterprises distributed in the middle and upper reaches are still valued in the market with the logic of "old economy" and "cyclical stocks". With the promotion of the reform of state-owned enterprises, enterprises strengthen capital management, improve dividend returns to shareholders or take advantage of capital advantages for transformation, it is expected to usher in the long-term reconstruction of the valuation system and realize double-click in the future. Secondly, since 2017, the equity incentive of state-owned enterprises has increased year by year, and some state-owned enterprises are expected to usher in the performance cashing period next year. Equity incentive is an important way to improve the governance structure of state-owned enterprises and motivate core management talents. From 2018 to 2020, the number of equity incentives was 55, 59 and 69 respectively, increasing year by year. Reviewing the A-share equity incentive events, we can see that the equity incentive events need to be selected to obtain excess returns (selected indicators of Wande index: analyst coverage + performance growth). Combing the equity incentive targets of state-owned enterprises next year, 52 state-owned enterprises have set profit targets, of which 33 state-owned enterprises have analyst coverage, 3 state-owned enterprises have target profits that exceed the consensus expectation of the market, and 12 state-owned enterprises have target profits to be completed, which are slightly lower than the consensus expectation of the market. We suggest to pay attention to: there are state-owned enterprises with the number of analysts covered, the target profit has certain support for next year's performance, and the long-term relative valuation is appropriate.
2.2 the configuration cost performance of hard technology gradually highlights
the market is worried about the fulfillment or sustainability of performance. The hard technology industry has suffered a shock correction recently. In the long term, the configuration cost performance has gradually become prominent. for a long time, the semiconductor industry entered a large upward cycle in 2019, during which there was a correction of about 20-30% for 2-3 months, but the short-term disturbance did not change the long-term upward trend. The semiconductor industry fluctuated greatly in the second half of 2021. From August to the first half of October 2021, it fell by about 25%, rebounded by 20% from the second half of October to December, and retreated by nearly 10% in December. At present, the PE valuation of the semiconductor industry index is only about 60x, at the low level of 16% since 2016, and the configuration cost performance is gradually highlighted. Concerns about the sustainability and uncertainty of the industry boom have become the main factors disturbing investor sentiment. After the high outlook of the industry is further confirmed in the future, the hard technology sector is expected to go out of adjustment and usher in a new round of market.
in 2022, the high prosperity of the semiconductor industry continued and the localization continued to advance. although there is some structural differentiation in the current demand for semiconductors, it is still in a state of high momentum and tight supply and demand. It is expected that the overall production capacity will remain tight in 2022, and there will still be structural shortage and price rise. On the other hand, the demand for chips in Chinese mainland market has nearly 1/3 of the world's total, but semiconductor revenue accounts for only about 5%, and the market share of each link is still low. In 2020, the localization rate of China's semiconductor industry chain is basically only about 10%, and there is still a large space for domestic substitution. In recent years, the periphery has been blocked, and the US technology export control to China has also accelerated the process of domestic substitution. As a representative of independent control, the semiconductor industry has broad growth and investment opportunities, and domestic substitution has become the main direction of the country.
it is expected that the volume and price of midstream tools in the photovoltaic industry will rise together, and attention will be paid to the investment opportunities of integrated components under the optimization of industry pattern. since November 2021, the correction of PV sector once exceeded 15%. At present, PE valuation has dropped to near 55x, which is in the quantile of 86% since 2016. In 2021, affected by the price rise of upstream raw materials, all links of silicon wafer, battery and module are facing certain cost pressure. At the same time, due to the rise in the price of the industrial chain, the yield of downstream power station projects has declined, and the investment enthusiasm of photovoltaic projects has been restrained. Some projects in China are expected to be postponed to grid connection in 2022. However, we also observed that this year, under the background that the profits of all links are constantly squeezed by upstream raw materials, the trend of increasing the share of head component enterprises is becoming more and more obvious, and the competition pattern of component links continues to be optimized. From the fourth quarter of 2021, China's new silicon material production capacity will be gradually put into operation, and the silicon material price is expected to enter the downward channel (but will remain at a historically high level), which will drive the price decline in all links of the industrial chain, the downstream installation demand of photovoltaic is expected to be fully released, and the shipment of components will be greatly increased. At the same time, considering that the concentration of component links is most obvious, and the layout of head enterprises in brand, channel and n-type battery technology is far ahead of second and third tier enterprises, the single watt profit of the leading component industry will be significantly improved in 2022.
the downstream sales volume of new energy vehicles is expected to increase, the midstream price increases and production expansion, and the upstream price increases. in December 2021, the new energy vehicle sector once retreated by 15%. At present, the PE valuation has dropped to near 100x, which is in the quantile of 66% since 2018. From the end of 2021 to 2022, a total of 30 new models will continue to be listed. Major automobile enterprises will further explore the mainstream market of RMB 100000-200000, which will further release consumer demand, and the downstream production and sales are expected to continue to maintain high growth. At present, the sales volume of Shanxi Guoxin Energy Corporation Limited(600617) vehicles in 2022 has been further increased; The price increase of midstream battery is expected to be implemented, and the profit will be improved in 2022; Upstream lithium cobalt is expected to rise further.
2.3 focus on new infrastructure, low carbon and agriculture
On December 27, the national financial work video conference was held in Beijing, focusing on the research and deployment of financial work in 2022. The conference required the following ten key tasks to be done in 2022. The meeting proposed to moderately advance infrastructure investment. We believe that the key direction of fiscal policy at the beginning of next year is to focus on infrastructure (especially new infrastructure), green and low-carbon, agriculture (food security and seed industry, etc.). at present, the pulling effect of traditional infrastructure on the economy is limited, and the new infrastructure conducive to economic transformation and upgrading and the development of strategic emerging industries is expected to be the focus of policy in the later stage. In addition, the meeting also stressed the support of fiscal policy for scientific and technological innovation R & D and specialized and special new enterprises, and further strengthen the main line of scientific and technological innovation to promote high-quality development in the long run.
(Chen Guo A-share strategy)
