Core view
The A-share index generally fell this week, and the ranking performance of the machinery industry was poor. We believe that in the first quarter of 2022, the pressure on China’s economy to maintain growth continued to increase, and the outlook of export-oriented manufacturing industry accelerated to decline month on month. Affected by the upstream price rise, the decline of export orders and the impact of China’s epidemic spread on demand and production, the operation of the manufacturing industry was under pressure in the second quarter.
From the perspective of fundamentals, it is necessary to pay close attention to digitization and intelligence, double carbon goal and greening, internal circulation construction and supply chain reconstruction in 2022. It is a clear three major trends at present and in the future. It focuses on the new infrastructure of China’s digital economy, advanced manufacturing special equipment such as new energy and semiconductors, the performance recovery exceeding expectations and the related targets of domestic alternative basic components that continue to be strengthened in the 14th five year plan.
In the week of February, the performance of banking, petrochemical and other sectors was the worst, while that of the week of February, 2024 was the worst. This week, the market focused on the relevant sectors benefiting from the depreciation of RMB and the listing of CNOOC, which led to the performance of the petroleum and petrochemical sector. Among the concept sectors, power, oil and gas exploitation, white appliances, cement manufacturing and other sectors performed best, while prefabricated vegetables, rural revitalization, intelligent speakers, biological breeding and photoresist and other sectors performed worst.
This week, the Shanghai Composite Index fell again, while the gem composite continued to fall. The Shanghai Composite Index and the gem composite still maintained a contraction, which belongs to the second bottom in the process of pumping back, but the amplitude and rhythm need to be observed. It may evolve into an interval shock trend in the future. From the perspective of structure, the market still shows a trend of hot spots, rapid rotation, excess rise to kill fall and excess fall to make up for rise. This trend is expected to continue. In the medium term, some leading stocks may still have room and time for adjustment. Contemporary Amperex Technology Co.Limited(300750) hit a recent low this week, but the adjustment range is not sufficient and may continue to explore.
Short term capital behavior does not change the medium-term trend. Investors should choose appropriate strategies and investment cycles according to the nature of funds. Next week has entered the end of the disclosure period of the annual report and the first quarterly report, and the lower than expected performance has become a potential risk factor. Moreover, the first quarter of 21 was mostly the high point of manufacturing performance, and the sectors with good year-on-year growth of manufacturing performance in the first quarter of 22 were limited. Affected by the expansion of the scope and depth of sanctions against Russia, localization is still the focus of the capital market, the relevant benefit tracks will still be the focus of capital allocation, and specialization and innovation are expected to become a hot spot in the near future.
We believe that the downward systemic risk of the market will be temporarily alleviated next week. If the sector rotation is too fast, we should still control the position to defend and counterattack. The fundamental principle is to participate in the new hot spots as soon as possible, continue to avoid the sectors with funds holding together and rising too high, and operate with band ideas. For fundamental investment, we still suggest to select those specialized special new sub industries with better performance than expected in 21 years and continuous prosperity in 22 years for medium-term or above allocation. Focus on allocating oversold stocks with good fundamentals, and pay attention to sectors with strong certainty and reasonable valuation. In the medium term, we will still focus on the growth technology manufacturing enterprises matching the growth and valuation and the new high-quality track sector under the dual carbon background. We will continue to optimize the investment logic related to the import substitution logic of relevant advanced manufacturing sectors such as aerospace military industry sector (civil military participation, missile), new energy (wind power, energy storage, hydrogen energy and nuclear energy) supported by performance or growth expectations. At the same time, Continue to moderately hold the targets of the science and technology sector (third-generation semiconductor, big data, automotive intelligence, miniled and VR) at the inflection point of prosperity.
The relevant marks are related to the following: Zhejiang Fenglong Electric Co.Ltd(002931) 197 etc.
Market performance
This week, the Shanghai stock index fell 3.87%, the Shanghai and Shenzhen 300 fell 4.19%, the gem composite fell 6.38%, and the China Securities 1000 fell 6.11%. The machinery industry of the wind tertiary industry index fell by 5.53%, ranking 45 / 62 in the industry growth week, outperforming the Shanghai Composite Index by 1.65 percentage points.
In the machinery industry of the wind tertiary industry index, the top five stocks in the week were Zhejiang Jindun Fans Co.Ltd(300411) , Shandong Daye Co.Ltd(603278) , Wuxi Smart Auto-Control Engineering Co.Ltd(002877) , Nanjing Baose Co.Ltd(300402) and Qinghai Huading Industrial Co.Ltd(600243) , with an increase of 26.25%, 18.92%, 13.28%, 12.98% and 11.33% respectively. The top five stocks with declines were Yuhuan Cnc Machine Tool Co.Ltd(002903) , Xuzhou Handler Special Vehicle Co.Ltd(300201) , Yantai Jereh Oilfield Services Group Co.Ltd(002353) , Nanfang Ventilator Co.Ltd(300004) and Weihai Huadong Automation Co.Ltd(002248) , with declines of – 26.23%, – 22.49%, – 19.34%, – 18.04% and – 17.65% respectively.
This week, the main indexes of the market index generally fell, and the performance of the machinery sector was poor. The top seven companies rose by more than 10%, and the top ten companies fell by more than 10%. Individual stocks in the industry rose less and fell more as a whole.
Industry dynamics
\u3000\u30001. China has approved six nuclear power units, involving a total investment of 120 billion yuan (First Finance)
\u3000\u30002. The newly signed contracts and orders of many listed companies are full, the annual report performance is facing high growth, and the smart coal mine is “windy”? (Financial Associated Press)
Risk tips
The promotion and implementation of industrial policies are lower than expected, the change of market style has brought down the valuation center of the machinery industry, the pressure on profitability caused by rising costs, and the systemic risk caused by the spread of epidemic abroad.
