Hello everyone, I'm Hairong-kun.
Just now, Jinglin Assets, a 100 billion private equity fund in China, sent an internal investment letter to their investors.
Jinglin first summarized the two main lines of the market in the first half of the year:
1. U.S. stocks are looking up at the stars and trying to explore artificial intelligence. The technology companies in the United States are full of confidence in artificial intelligence, and they are actively investing resources in the arms race, and they are afraid of falling behind this artificial intelligence revolution.
In the first quarter of last year, Greenwoods did significantly increase its positions in Microsoft and Nvidia, and at that time, I also wrote an article "Greenwood's U.S. Stock Positions in the First Quarter of 2023".
(Greenwoods' U.S. stock holdings in the first quarter of 2023 are not the current ones)
2. The Chinese market is a public sector with high dividends. The main logic is that in a market with a risk-free rate of return of 5%, investors can only invest in growth stocks and obtain investment returns. However, in a market with a risk-free rate of return of 2%, any company with a relatively high operational certainty and a dividend rate of more than 3% has room for valuation improvement.
Standing at the starting point of the second half of the year, Jinglin has been thinking, what opportunities will there be in the future?
They visited a lot of AI companies on the West Coast of the United States, and they wanted to understand the following three questions:
1. Is it true that a certain product will be monopolized by a company for a long time? (The subtext is Nvidia's GPU)
2. Now that the money is being thrown at the big bang, where is the obvious application of monetization in the future? (The subtext is that no good AI application can be found for the time being)
3. After the combination of Apple and ChatGPT, will every smartphone in the future be combined with artificial intelligence, but how much can the price be increased?
The conclusion is that the future is bright, but there is a lot of unknowability in the process. Will there be a certain inconsistency between the law of industrial development and investors' expectations in the future?
Now, they have decided to take a closer look at this type of company in the Chinese market, which has three main characteristics:
1. More prudent capital expenditure
2. Focus more on the development of the main business.
3. Better shareholder return plan.
If the water, electricity and coal grid is the infrastructure, then these companies can make life enjoyable, including entertainment, dining, socializing, shopping, travel, and life services. Such companies are valued at about 8 to 16 times PE, their profits are growing faster than their revenues, and most of their shares are bought back or dividends.
Some investors have questioned who will buy shares in these companies.
The answer is the companies themselves, and if these companies spend most of their free cash flow on stock buybacks, if they do it for several years in a row, which is equivalent to shrinking their share capital by 4%-5% per year, EPS will increase significantly. Now these opportunities are very similar to China Mobile, CNOOC, and China Shenhua in previous years.
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On March 26 this year, I wrote a special article "Suddenly, a white horse stock was robbed madly", in the environment where there is no incremental capital, it is better to invest in companies that can continue to repurchase.
Let's talk about the rest:
1. Ningde fell 5% intraday, and there was a small essay singing short "the industry's July production data generally declined", think about it carefully, this is not logical, the world and the ideal go hand in hand, after the Weilai BAAS plan, the sales volume has also come up, although the price war between car manufacturers is fierce, but it does not affect the sales of batteries. After the market, CATL, Guoxuan Hi-Tech and other manufacturers responded that "production scheduling is normal, and orders are growing".
2. Argentina's lithium mineral capacity has increased by nearly 80%, and these projects are located on salt lakes in the Andes Mountains, in the "lithium triangle" of South America, and belong to: Zijin Mining, Ganfeng Lithium, a company of South Korean steel giant Pohang Holdings, and China Tsingshan Holdings.
Domestic companies have gone overseas, three of the four are Chinese companies, and Zijin Mining, which has big eyebrows, has also begun to enter lithium mines. The mining cost of lithium salt lake is about 40,000 yuan/ton, and the cost of lithium extraction from ore is 80,000 yuan/ton, and it is estimated that the price of lithium ore will continue to fall. Yesterday's Zangge Mining rose 8.97%, mainly because of his investment in copper mine expansion, copper ore is an incremental market, lithium ore it also has a cost advantage.
3. The central bank reminded of a risk, in the previous paragraph, the governor of the central bank said to a group of bankers in Lujiazui that the interest rate on long-term treasury bonds is too low now, and the 30-year and 50-year treasury bonds should not be bought, and the ultra-long bonds are currently at 2.44%, and the 10-year treasury bonds are 2.25%, and be careful to become China's version of "Silicon Valley Bank".
The collapse of Silicon Valley Bank in the United States was due to the purchase of a lot of long-term Treasury bonds with low interest rates. As a result, as soon as the Fed raises interest rates, interest rates go up, and the longer the term, the more serious the loss.
However, the bank's bond analysts are still pessimistic about the future, believing that the RMB interest rate will fall to 0 in the future, and continue to engage in 30-year treasury bond ETFs.
Judging from the results, the bearish high-dividend company, Yangtze River Power dived directly in the afternoon. A very important reason why high dividends have risen so much is that the yield of RMB 10-year government bonds is constantly going down, and the interest rate of Yu'e Bao has fallen below 1.5%.
But can the "seeing hand" really change market expectations? The market is very smart, and if it can really change economic expectations, the high dividend and 30-year Treasury bond ETF will fall early, and there is no need to wait for the central bank to intervene.
4. There is a little light in the real estate data, in June, 30 large and medium-sized cities across the country, the transaction area of commercial housing was 9.29 million square meters, down 23.62% year-on-year and +17.40% month-on-month. In May, it was down 38% year-on-year and up 1% month-on-month.
Yesterday, 3,581 companies rose in the two cities, with a median increase of 0.78% and a turnover of 660 billion.