[interpretation of industrial track Market: coal continues to be strong, with steady growth and outstanding performance in post epidemic repair] since April, coal, airport, food and beverage, steel, shipping port, real estate and railway construction have had positive absolute returns, respectively 6.00%, 5.74%, 5.47%, 4.01%, 3.15%, 1.91% and 1.58%; Led by new energy, such as photovoltaic, UHV, charging pile, wind power, IDC and artificial intelligence, the decline was relatively large, which were – 13.16%, – 11.76%, – 11.07%, – 10.77% and – 10.48% respectively.
[core factors of current industrial track configuration] at present, the core factors affecting the fundamentals of industrial track are epidemic situation and cost impact. At present, the core factor affecting the allocation of industrial track is policy. The expected role of policy is greater than the guidance of fundamentals. The characteristics of undervalued value + short duration + high winning rate are obvious, and the supporting role of certainty is the growth of near end profit. Recently, the local epidemic is still running at a high level, which has two main characteristics: (1) wide range of influence and large number of infected people: the severity of the national epidemic has increased significantly, and the transportation, logistics and consumption have cooled significantly; (2) The location of the epidemic coincides with China’s key industrial areas: the production start of the industrial chain represented by automobiles and semiconductors has been impacted. Meanwhile, the high price of upstream raw materials is still an important factor limiting the market of most manufacturing companies, and the cost impact is expected to last until the second half of this year.
[discussion on transaction logic] there are four main lines in the current market: steady growth, high prosperity, post epidemic repair and global inflation. As early as January 10 this year, we clearly put forward “mobile warfare: advancing and stabilizing growth”, It is proposed that “steady growth” is the main line of the stage, and based on this, it is proposed that first, steady growth cannot afford, and high prosperity is difficult to flourish; second, steady growth can be realized, and high prosperity will turn for the better. Return to this round of steady growth market (the old infrastructure market from December to February last year, the excess real estate market since mid March; the post epidemic repair market since April) The essence is that the market is focusing on policy expectations, and the transaction logic first completes the process of moving closer from reality to expectation, but eventually there will be a process of moving closer from expectation to reality. “Bold assumption and careful verification” has become the mentality of quite a few mainstream institutional investors. From the perspective of transaction logic: it is currently in the process of “realizing steady growth and turning the corner of high prosperity” (in the process of realizing steady growth, there will probably be a wave of excess market in real estate or consumer stocks, and then it will gradually transition to the direction of high prosperity), It is still in the process of approaching reality to expectation.
1) hypothesis 1: if China’s steady growth can be realized, a better steady growth target can be achieved, the mismatch of the global supply chain can be alleviated, and superimposed on the trend of U.S. economic recovery, the global inflation will fall, the RMB exchange rate will remain resilient, and the interest rates between China and the United States will widen, then the transaction logic of China’s steady growth and post epidemic repair will be very natural, and the follow-up will be more likely to usher in a “high boom turnaround”;
2) hypothesis 2: there is a time lag in the effect of China’s steady growth (not only affected by the outbreak of China’s epidemic, but also somewhat “restrained” under the constraints of “multiple objectives”), Exacerbate the mismatch contradiction in the global supply chain, making the United States unable to effectively curb inflation in the process of raising interest rates (from the far / recent changes in the US oil contract price difference, the inflation expectation has not been alleviated after the release of the interest rate discussion minutes on April 7). There is pressure on the devaluation of the RMB exchange rate, and the interest rate gap between China and the United States has been further narrowed. Then, the trading logic of steady growth and global inflation in the A-share market will coexist for a long time, and the characteristics of market, value and undervaluation will continue to dominate.
[market communication and feedback] in the process of communicating with various investors, the recognition of post epidemic repair transaction logic is increasing, and the pessimism about consumption is reversing; Maintain great doubts about the subsequent verification of fundamental data of real estate; Concerns about the realization of the fundamentals of the original high boom sector spread to the second half of this year. At present, photovoltaic consensus is the highest, followed by military industry, semiconductor, wind power and finally new energy vehicles. There is a strong consensus on lithium in new energy vehicles. The logical recognition of steady growth and global inflation is still high.
[evaluation of industrial track perspective in the next month] our proposed configuration is steady growth (real estate chain, infrastructure, banking, food and beverage) global inflation (coal, agriculture, animal husbandry and petrochemical) high prosperity (digital intelligence, photovoltaic, military industry, semiconductor, wind power and new energy vehicles) post epidemic rehabilitation (express, hotel, aviation, catering, tourism, etc.). Differentiated concerns include: seed industry, TOPCON and prefabricated vegetables.
[profit forecast: digital intelligence direction, energy, transportation and other profits have been significantly revised]
1) in April, the core industry track consistently predicted that the top changes in profit growth in 2022 are: LNG, express, non-ferrous metals, lithium batteries, general equipment, CRO, UHV, network security, smart grid and new energy vehicles.
2) in April, the core tertiary industries consistently predicted that the top changes in profit growth in 2022 are: trade, lithium, potassium fertilizer, phosphorus fertilizer and phosphorus chemical industry, gold, iron ore, power coal, pesticides, aluminum and power transmission and transformation equipment.
[valuation and cost performance: peg is generally less than 1 in high-end manufacturing and intelligent fields]
1) peg 1: online games, express delivery, general equipment, food and beverage, generic drugs, innovative drugs, national defense and military industry, IGBT, etc;
2) 1 peg 0.5: Water Conservancy and hydropower construction, cloud computing, smart grid, industrial Internet, cement, charging pile, IDC, CRO, photoresist, operating system, auto parts, Internet of vehicles, semiconductor, etc;
3) peg 0.5: network security, automobile, new energy automobile, basic chemical industry, LNG, wind power, new materials, medical beauty, photovoltaic, industrial machine, UHV, smart home, smart wear, lithium battery, intelligent transportation, steel, coal, hydrogen energy, 5g, shipping port, optical optoelectronics, etc
[focus on marginal increment of subdivision boom]
1) price rise: energy metals, photovoltaic glass, zinc, soda ash, shipping, etc;
2) orders rose sharply: antigen detection, IGBT, small household appliances, etc;
3) cost mitigation: meat products, cathode materials, etc;
4) simultaneous increase in volume and price: cultivate diamonds, potash fertilizer, cosmetics, sweeteners, etc;
5) expansion: lithium, nickel ore, pet food, digital cinema, software development, etc;
6) overseas exports: TDI, shipping, aluminum, railway freight cars and related parts.
[overall evaluation of the performance of the first quarterly report of a shares] facing the impact of cost (long-term factors) and epidemic (short-term factors), the first quarterly report of A-Shares is facing considerable downward pressure. Under the background of high bulk prices in the first quarter and the rebound of China’s epidemic situation, not only the profit of the service industry worsened, but also the manufacturing industry suffered “double attack”. Many enterprises clearly mentioned the severe negative impact on production and operation caused by epidemic prevention and control measures and supply chain disturbance in the performance forecast. Here, corresponding to the market focus “will the bottom of profit appear in Q2 in advance?” We believe that the current round of China’s epidemic needs to attach great importance to the negative impact on the fundamentals beyond expectations, and a high probability will also cause great pressure on the fundamentals of A-Shares in the second quarter. In the short term, if you see the accelerated de location of enterprise inventory or the stable recovery of asset liability ratio (representing the cash out of the steady growth policy), there is a certain probability that the bottom of profit will appear in Q2 in advance. Judging from the performance forecast of the first quarter report that has been disclosed at present, the growth rate of the performance forecast of the first quarter report is as follows: upstream resource products, new materials high-end manufacturing, medicine (CXO, covid-19 testing, API, traditional Chinese Medicine), digital intelligence industry consumption (essential consumer goods), banking securities companies, insurance and real estate.
[A-share quarterly report forecast performance breakdown and combing of boom sectors]
1) volume and price rise driven by demand: lithium, vanadium, cobalt, sweetener, cultivated diamond, polysilicon, etc. (mainly concentrated in the field of new materials);
2) demand drives sales upward: new energy industry chain (anode and cathode materials, electrolyte, lithium battery equipment, photovoltaic modules, etc.), aerospace equipment, CXO, covid-19 testing reagent, traditional Chinese medicine, IGBT, industrial software, industrial automation, etc. (mainly focus on high prosperity track and intelligent direction);
3) rising product prices: coal and corresponding chemicals, aluminum, pesticides, soda ash, phosphate fertilizer, nitrogen fertilizer, rare earth permanent magnet, shipping, etc. (mainly concentrated in upstream cycle products);
4) the optimization of product structure and the improvement of operational efficiency: Baijiu, dairy products, meat products, chemical pharmaceuticals, medical devices, etc.
5) new business development: software development, general equipment, digital cinema, special machinery, construction (transformation of new energy), etc.
[industrial policy concerns]
1) real estate chain: since this year, policies related to real estate in many places have been marginally relaxed. The National Bureau of statistics also pointed out that the downward trend of real estate sales will be alleviated by moderately liberalizing purchase and sales restrictions in many places. The preparation of shelter reserves all over the country also has a certain demand for the building materials sector under the real estate chain;
2) agriculture: since the past month, food security has been emphasized by the policy for many times, and the certainty of China’s stable production and supply to deal with the uncertainty of the external environment has become the core focus. Among them, the seed industry technology needs to be self-reliance and self-improvement, and the seed source needs to be independent and controllable.
Risk warning: the change of epidemic situation exceeds expectations; The policy promotion was less than expected
