Since the beginning of the year, growth stocks such as new energy, which increased significantly last year, have fallen, while undervalued sectors such as large finance, which stagnated last year, have risen. At the current time point, how to compare the strengths and weaknesses of these industries, and whether to adjust the configuration structure? In this weekly report, we make a comparative analysis of some key plates.
Horizontal comparison between 1 and : profitability, valuation and allocation
Since the beginning of the year, the assets with a high proportion of institutional positions have been significantly adjusted. During the period from 1 / 4 to 1 / 7, the Ning portfolio index decreased by nearly 10%, while the sectors with less institutional allocation, such as finance, real estate, building materials and household appliances, led the increase. Therefore, investors are struggling to make an appropriate balance in industry allocation. We found that the market is most concerned about four sectors: the first is the new energy related industrial chain, the second is financial real estate, the third is the counter cyclical policy related sector, and the fourth is the dilemma reversal related industries. Therefore, we analyze and compare these four industries one by one from the dimensions of profitability, valuation and institutional allocation.
new energy related sectors: high prosperity, high valuation and high proportion of institutional allocation. in the whole year of 2021, the new energy related sectors performed well, so the allocation strength of institutions was also high. As of 21q3, the market value of shares held by the overall new energy related sectors in active partial equity funds accounted for 26.1%, which was 13.3% over allocation compared with the CSI 300 component in the same period. Among them, the market value of shares held by the new energy vehicle industry chain accounted for 19.3% and 11.5% over allocation; The shareholding market value of photovoltaic wind power accounts for 6%, exceeding the allocation by 1.8 percentage points; The shareholding market value of power grid equipment accounted for 0.8%, which was basically the same as that of Shanghai and Shenzhen 300. The strong institutional allocation is due to the high prosperity of new energy related sectors in 21 years. However, referring to wind, it is unanimously expected that the profit growth of new energy related sectors this year may fall significantly compared with that in 21 years: the cumulative parent net profit of 21q3 / 21e / 22e new energy vehicle industry chain is 83.1% / 105.0% / 42.5%, that of photovoltaic wind power industry chain is 54.1% / 69.1% / 35.5%, and that of power grid equipment is 29.4% / 39.7% / 5.6%, For comparison, all A-Shares are 25% / 30% / 5%. From the perspective of valuation, although the new energy sector has been adjusted as a whole since December 21, the current valuation level is still at a historically high level. As of 2022 / 01 / 07, the PE (TTM, the same below) of the new energy vehicle industry chain is 45 times, which is at the historical quantile of 91% from low to high in the past 13 years, and the PE of the photovoltaic wind power industry chain is 44 times, which is at the historical quantile of 65%. The valuation of power grid equipment is acceptable, At present, it is 29 times, in the historical quantile of 39%.
At present, the market is worried that the new energy sector is overvalued, and it may recur in the future similar to the Baijiu market after 21 years in February. However, we pointed out in “looking at the evolution of new energy vehicle industry with reference to smart phones – 20210906”. The new energy vehicle industry chain in 2021 is similar to the apple industry chain in 2010. The high boom supports the overvalued value, and the needs of phased digestion and valuation. At present, it is difficult to show in the first quarter. In addition, some investors are worried that there is a contradiction between the implementation of the steady growth policy and the “double carbon” goal, or it will have an impact on the prosperity of the new energy sector. We believe that steady growth does not conflict with the “double carbon” goal. Promoting carbon peak and carbon neutralization is the internal requirement to promote China’s high-quality development. On January 6, the Environmental Resources Department of the national development and Reform Commission held a special meeting to study the carbon peak and carbon neutralization work. The meeting called for “putting carbon peak and carbon neutralization in a prominent position in the environmental resources work in 2022”, and “promoting breakthroughs in key work, adhering to the principle of building first and then breaking… Promoting green transformation in development and achieving greater development in transformation”.
financial real estate: underestimate the low distribution, but the prosperity is not low. compared with the new energy sector, the undervalued value of the large financial sector is low, but the prosperity is not low. From the perspective of valuation level, at present (as of January 7, 2022), the valuation of financial real estate is at a very low historical level. For example, the Pb (LF, the same below) of real estate is only 1.01 times, which is at the historical quantile of 5.8% from low to high in the past 13 years, the Pb of banks is 0.62 times, which is at the historical quantile of 1.4%, and the Pb of non bank finance is 1.50 times, which is at the historical quantile of 2.2%. Among them, the Pb of securities companies is slightly higher, which is 1.70 times, It is in the historical quantile of 34.5%. From the perspective of fund position, taking CSI 300 as the benchmark, as of 21q3, the overall low allocation of financial real estate for public funds, including 8.7 percentage points for banks, 0.7 percentage points for real estate and 5.8 percentage points for brokers. From a fundamental point of view, the current profit growth of financial real estate is acceptable, in which the growth rate of net profit attributable to parent of real estate is low, but it is expected to improve significantly in 22 years. According to wind’s unanimous expectation, the cumulative net profit attributable to parent of 21q3 / 21e / 22e real estate is – 32.7% / – 12.3% / 37.7% year-on-year, the cumulative net profit attributable to parent of banks is 13.6% / 11.4% / 8.7% year-on-year, and that of securities companies is 24.2% / 20.9% / 7.2% year-on-year.
For financial real estate, some investors worry that even if the industry recovers, the overall rising space is still limited. However, referring to the history, the valuation of the financial real estate sector will also rise significantly when it ushers in the repair. For example, in 14q4, with the catalysis of RRR and interest rate reduction and financial innovation, the banking sector with weak early performance increased from 0.86 times of 14 / 10 to 1.31 times of 15 / 01, the real estate Pb increased from 1.75 times to 2.37 times, and the non bank financial Pb increased from 1.80 times to 3.59 times. For example, during 12 / 12-13 / 02, bank Pb increased from 0.99 times to 1.50 times, real estate increased from 1.68 times to 2.24 times, and non bank finance increased from 1.63 times to 2.45 times; During 17 / 11-18 / 02, bank Pb increased from 0.93 times to 1.13 times, real estate increased from 1.88 times to 2.25 times, and non bank finance increased from 2.07 times to 2.25 times.
counter cyclical policy related sectors: they have increased greatly since November 21, but the overall valuation is not high. the sectors related to the counter cyclical policy actually include industries whose fundamentals are expected to improve under the force of the counter cyclical policy, such as infrastructure and real estate chain, which can hedge against the economic downturn. Since November 21, the counter cyclical policy related sectors have ushered in a more obvious rise, including 13% for construction, 15% for building materials, 11% for household appliances, and about 2% for Wande a in the same period. However, from the perspective of valuation, the overall valuation level of the relevant sectors of the counter cyclical policy is still in a historically low position: the current construction PE is 10.0 times, which is in the historical quantile of 25% from low to high in the past 13 years, the building material PE is 15.2 times, which is in the historical quantile of 35%, and the valuation of home appliances is relatively high, which is 18.8 times, which is in the historical quantile of 75%.
As of 21q3, the overall low allocation and countercyclical policy of active partial equity funds was related to the sector, in which the low allocation proportion of buildings relative to Shanghai and Shenzhen 300 was 1.2 percentage points, the low allocation proportion of building materials was 0.2 percentage points, and the low allocation proportion of household appliances was 2.0 percentage points. In terms of profitability, according to wind’s unanimous expectation, the cumulative parent net profit of 21q3 / 21e / 22e construction was 23.3% / 20.4% / 12.2%, that of building materials was 11.0% / 25.9% / 13.0%, and that of household appliances was 16.5% / 25.3% / 14.1%.
At present, the increasing downward pressure on the economy has basically become a consensus, but some investors are still worried that the follow-up policies to stabilize growth are not enough. We believe that the policy signal of “steady growth” after the central economic work conference in December 21 has also been quite clear. At the same time, overseas, we believe that we need to be vigilant about the Fed’s interest rate increase in the second quarter. At that time, there may be some upward pressure on China US bond interest rates, and the disturbance of overseas policies is not obvious at this stage. Looking back, we believe that the market’s concerns about the strength of the steady growth policy will eventually dissipate. See the next section for specific analysis.
dilemma reversal related industries: the fundamentals have been greatly damaged in 21 years and are expected to reverse in 22 years. At present, the institutional allocation is not high. In the year of 21, the industry fundamentals in two directions have been significantly damaged, one is the pig industry chain dragged down by the continuous decline of pig prices, and the other is the airport tourism industry continuously disturbed by the epidemic. The fundamentals of such industries are expected to usher in an obvious turning point in 22 years, namely “dilemma reversal”. From the perspective of profitability, as of 21q3, the net profit attributable to the parent of livestock and poultry breeding and feed sector was still negative, while the cumulative year-on-year growth rate of the net profit attributable to the parent of animal vaccine was only – 41%. For the epidemic damaged sector, as of 21q3, the aviation and airport sector was also in a state of loss, and the biennial annualized net profit attributable to the parent of tourist attractions was – 61.9%. In 22 years, the fundamentals of these sectors are expected to be significantly improved. According to the prediction of Haitong agricultural group, the growth rate of net profit of animal vaccine in 22 years is expected to reach about 20%, and the losses of livestock and poultry breeding and feed will be reversed. Wind unanimously expects that the year-on-year growth rate of return net profit of aviation sector is expected to rise to 117.9%, that of airport sector is expected to reach 243.8% and that of tourism sector is expected to reach 160.3%. From the current valuation level, the valuation of pig industry chain is at the medium level, including 4.1 times of livestock and poultry breeding Pb, which is at the historical quantile of 50% from low to high in the past 13 years, 3.3 times of feed Pb, which is at the historical quantile of 62%, and 3.7 times of animal vaccine Pb, which is at the historical quantile of 50%; In consumer services, the valuation of air transport is high, Pb is 2.2 times, which is 93% from low to high in the past 13 years, while the airport Pb is 2.3 times, which is only 44%, and the tourism sector Pb is 2.5 times, which is 24%. From the perspective of institutional allocation, at present, the difficulty of public fund allocation is reversed, and the strength of relevant industries is low. Among the heavy positions of 21q3 fund, the market value of livestock and poultry breeding accounts for 0.7 percentage points lower than that of CSI 300, and the over allocation proportion of feed and animal vaccine industries is also lower than that of CSI 300, 0.2 and 0.1 percentage points respectively, The shareholding market value of the aviation and tourism sectors is basically the same as that of the Shanghai and Shenzhen 300, while the airport is 0.2 percentage points lower than that of the Shanghai and Shenzhen 300.
For the industries related to the dilemma reversal, there are great differences in the market on when the expectation can be fulfilled. For example, under the influence of the pig cycle this year, the recovery of pig prices can be expected, but there are still different opinions on the specific time node of the recovery of pig prices in the market. For example, when to repair the plates damaged by the disturbance of the epidemic depends on whether and when the epidemic can be controlled, and the progress of epidemic control is difficult to be answered in the short term. Therefore, there are still great differences in these industries in the short term.
2, cross year market is still available
In the previous article, we made a comparative analysis on the four areas that investors pay more attention to at the industry level, but the final absolute return performance of the industry is closely related to the market environment. Therefore, we further analyze and prospect the follow-up overall market in this section.
learn from history, the index showed a market in the first quarter after the decline in the beginning of the year. compared with the end of last year, in the first week of the year, the Shanghai Composite Index fell 1.6%, the Shanghai and Shenzhen 300 fell 2.4%, the wandequan a fell 2.6% and the gem index fell 6.8%. Some investors worry that the spring market may not be this year. However, after reviewing the history of A-Shares in the past 20 years, we found that A-Shares fell at the beginning of the year in 8 years, but the index will still have a market in the first quarter after each fall. We reviewed the six situations after the share reform in 2005:
① at the beginning of 2010: the Shanghai Composite Index fell at the beginning of the year, with a maximum decline of 12% on February 3, 2010, and then the index rose all the way to April 15, with a maximum increase of 10%. Throughout the year, the Shanghai Composite Index fell 14%.
② early 2011: the Shanghai composite index continued its decline at the end of 10 at the beginning of the year. From the beginning of the year to January 25, the maximum decline of the index range was 7% (if calculated from the index high in November 10, the maximum decline was 16%), and then the index rose all the way to April 18, with the maximum increase of 15%. Throughout the year, the Shanghai Composite Index fell 22%.
③ early 2012: Although the Shanghai composite index continued its decline for 11 years at the beginning of the year, it only fell for two trading days, and then rose all the way to February 27, with a maximum increase of 16%. The gem index fell all the way from the beginning of the year to January 19, with a maximum decline of 34% from the high point in November, 2011. Then the gem index also began to rise all the way, with a maximum increase of 30% on March 14. Throughout the year, the Shanghai Composite Index rose 3%.
④ at the beginning of 2014: the Shanghai composite index continued its decline at the end of 2013. From the beginning of the year to January 20, the maximum decline of the index range was 6% (if calculated from the index high in December 13, the maximum decline was 12%), and then the index rose to February 20, with the maximum increase of 10%. Throughout the year, the Shanghai Composite Index rose 53%.
⑤ at the beginning of 2016: the Shanghai Composite Index fell continuously at the beginning of the year, with the maximum decline of 25% on January 27, 2016, and then the index rose all the way to April 15, with the maximum increase of 17%. Throughout the year, the Shanghai Composite Index fell 12%.
⑥ early 2019: similar to 2012, the Shanghai Composite Index rose after falling for two trading days at the beginning of the year, and the maximum increase of the index was 35% on April 8. Throughout the year, the Shanghai Composite Index rose 22%.
similar to 12 / 19 years, market concerns about the strength of steady growth policies will eventually dissipate. the current macro environment is more similar to that in 2012 and early 2019: in the second half of 2011, the downward pressure on the economy increased and the inflationary pressure eased. In December 2011, the central bank lowered the deposit reserve ratio. Compared with the central bank raised the reserve requirement and raised interest rates several times in the first seven months of 2011, the reduction in the reserve requirement in December means that the macro policy has obviously turned loose, but the stock market still fell for more than a month, It did not rise until the beginning of December; The situation in the past 19 years was similar. After 18 years of economic downturn, on October 19, 18, vice premier Liu He and the leaders of his party and the two sessions were interviewed by reporters, which clearly released the positive signal of maintaining the stability of the financial market, and the relevant rescue policies for private enterprises were intensively introduced, which showed that the policy was clearly turned, but the market was still hesitant, It was not until the beginning of the 19th century that the stock market began to rise.
At the current time point, since the central economic work conference held in December last year, the intention of policy to stabilize growth has been very clear: 25 words of “stability” appeared in the press release of the central economic work conference, which proposed that the economic work in 2022 should be “stable” and “seek progress in stability”. The conference also proposed that all regions and departments should shoulder the responsibility of stabilizing the macro economy, All parties should actively introduce policies conducive to economic stability, and the policy force should be appropriately advanced. We believe that the signal of loose policy has been very clear. On January 4 this year, Han Wenxiu, deputy director of the China finance office, issued a document in outlook, pointing out that “stabilizing the macro economy is not only an economic issue, but also a political issue”. On January 5, Premier Li Keqiang pointed out at the Symposium on tax reduction and fee reduction that “we should pay close attention to the implementation of new and greater combined tax reduction and fee reduction to ensure a stable start of the economy and stabilize the macro-economic market in the first quarter.” At present, the steady growth policy is in the process of implementation. In terms of monetary policy, LPR fell by 5bp in one-year period on December 20, 2021; In terms of fiscal policy, the issuance of special bonds was accelerated in the second half of last year. On December 16, 2021, Vice Minister of Finance Xu Hongcai said that recently, the Ministry of finance has issued a new special debt limit of 1.46 trillion yuan to all localities in advance in 2022. At the same time, according to the infrastructure communication big data platform, the investment in major projects in December 21 was 830 billion yuan, an increase of more than 100 billion yuan year-on-year, It was significantly improved compared with November. According to China Securities News, on January 4 this year, the mobilization meeting for the centralized commencement of the first batch of major projects in Anhui Province in 2022 was held in Hefei, involving 731 major projects with a total investment of 376.06 billion yuan. On January 5, 358 major projects in Zhejiang Province were started, with a total investment of 638.6 billion yuan. On January 6, the first batch of major projects in five new towns in Shanghai were started intensively, with a total of 40 projects with a total investment of 132.82 billion yuan. On the same day, 142 projects were started intensively in Hainan with a total investment of 37.3 billion yuan. With the continuous development of policies, we think the spring market is still worth looking forward to.
3, coping strategies: appropriate balance
balanced allocation of large finance and new and old infrastructure in the first quarter. the end of the year and the beginning of the year are often the vacuum period of performance, but it is also the intensive release period of policies. The change of policies is the main catalyst of the spring market. Therefore, the focus of the spring market is the policy. We believe that with the continuous efforts of the counter cyclical policy, the A-share market in the first quarter is still expected, and the industry allocation can be appropriately balanced. Some investors believe that the current institutional allocation proportion of the new energy sector is relatively high, and the balanced allocation means that the funds allocated to the new energy sector will flow out significantly. It should be noted that the logic behind this is actually the stock market, ignoring the admission of incremental funds. We analyzed in the stock market under counter cyclical policy – 20211226 that in the early stage of policy easing, such as the introduction of RRR reduction, the market was still entangled in the struggle between fundamentals and policies. At this time, the market sentiment did not rise significantly. However, with the introduction of more powerful steady growth policies and the gradual emergence of policy effects, the market performed well, At this time, with the rise of market sentiment, incremental funds are expected to continue to enter. Looking forward to the first quarter, we think we can focus on the large finance and new and old infrastructure benefiting from the policy in terms of specific industry selection.
The first is the undervalued big finance. As we analyzed earlier, the current valuation of the large financial sector has been at the bottom in the past 13 years, and the fund positions are lower than those of the CSI 300. With the economic downward pressure hedged and the worries about real estate debt subsided, the large financial industry is expected to usher in repair. We believe that the most important thing in big finance is securities companies. The net profits of securities companies in 2019 and 2020 were 75% and 36% year-on-year respectively, corresponding to the largest increase of securities company index in the whole year of 56% and 55%, while the cumulative net profits of securities companies in the first three quarters of 21 years were 24% year-on-year, and the Shenwan securities company index fell by 4.2% in 21 years. On January 7 this year, the CSRC publicly solicited opinions on the pilot provisions on stock market making trading business on the science and Innovation Board of securities companies (Draft for comments). In the future, the introduction of the market maker mechanism on the science and innovation board is expected to further support the performance growth of securities companies. In addition, there have been positive changes in the current real estate policy, and credit risk concerns are expected to decline. At present, the domestic bond issuance policy of real estate enterprises has begun to loosen, the reasonable capital needs of real estate enterprises are being met, and personal housing loans have returned to normal. We believe that real estate is still expected to welcome the opportunity of valuation and repair. Historically, there is a high probability of bank real estate repair in the restless market in spring.
The second is the new and old infrastructure. As mentioned earlier, the current policy signal of steady growth has been very clear, and infrastructure construction is an important starting point for steady growth. The force of steady growth policy is expected to directly drive the growth of new and old infrastructure investment. Among them, “new infrastructure” is the best combination of stimulating effective demand in the short term and increasing effective supply in the long term. It is a major weapon for China’s economy to move towards high-quality development and innovative development. Specifically, new infrastructure mainly refers to hard technology industries such as new energy related sectors. As we analyzed earlier, the current prosperity of new energy related sectors is significantly high. At the same time, in the future, under the background of policy stimulus and increasing penetration, the high prosperity of the industry is still expected to continue. It is difficult to appear in the first quarter due to changes in market environment such as periodic digestion of valuation needs. In terms of old infrastructure, the current valuation of buildings and building materials is at a historically low level, and the matching degree of valuation profit is also good. The development of stable growth policy in the future is expected to drive the continuous growth of infrastructure investment.
after the first quarter, the plight of related industries is worth looking forward to. as we analyzed earlier, the fundamentals of pig industry chain and airport tourism sector have been seriously damaged in 21 years, and it is expected to usher in obvious repair this year. However, since the fundamental data are not clear before April, and the performance expectations are verified, it is necessary to wait for the annual report and the first quarterly report of the enterprise to be gradually disclosed after April. At that time, investors can make a clearer judgment on the market, that is, the so-called “April decision”. We believe that the main logic of the performance restoration of the pig industry chain this year is that the pig cycle is expected to rise. In the current round of pig price decline that began in July of 20 years, the loss range of farmers far exceeded that of the previous two rounds of pig cycles. Under the huge loss, the number of sows that can be bred may have ushered in an inflection point in July of 21 years and began the process of de conversion. Combined with the losses of farmers and the changes in the stock of fertile sows, we judge that the low point of pig price may appear near the second quarter of 21 years, thus driving the profit recovery of pig industry chain. With the reversal of fundamentals, the pig industry chain is expected to usher in opportunities, in which livestock and poultry breeding has a faster response. In addition, consumer services, which are seriously damaged, are also expected to become one of the structural highlights of this year. At the beginning of 2020, the covid-19 epidemic caused serious damage to the contact consumer service industry. We believe that the epidemic will eventually pass, and the epidemic prevention and control situation in the past 22 years will further improve. The degree of improvement depends on the progress of covid-19 vaccination and specific drug research and development. As the epidemic is gradually brought under control, the consumer service industry is also expected to usher in a broader recovery. At present, there is more room for the recovery of aviation, airport and tourism in the consumer service industry. If the growth level before the epidemic can be restored in 22 years, the air passenger volume in 22 years is expected to increase by 56.9% compared with 21 years, Shanghai International Airport Co.Ltd(600009) throughput is expected to increase by 86.4% compared with 21 years, and the tourism revenue is expected to increase by 97.3% compared with 21 years.
risk tip: inflation continues to rise sharply, and macro policies outside China are tightened.
(source: Xun ce of the stock market)
