Net assets refer to the net assets per share of a listed company, and theoretically the stock price should not fall below the net assets of the company. Net assets per share refers to the ratio of shareholders' equity to the total number of shares. It is calculated as follows: net assets per share = total shareholders' equity and total number of shares in share capital.
This metric reflects the present value of assets owned per share**. The higher the net assets per share, the greater the value of assets per share owned by the shareholder;The lower the net assets per share, the less the value of the assets per share owned by the shareholder. Generally, the higher the net assets per share, the better. Among the various indicators of fundamental analysis, net assets per share is one of the most important reference indicators for judging the intrinsic value of an enterprise.
A company's net assets represent the property owned by the company itself and are also the interests of shareholders in the company. Therefore, it is also called shareholders' equity. In accounting terms, it is equivalent to the balance of total assets in the balance sheet minus all liabilities. The net assets of the company are divided by the total share capital issued, which gives the net assets per share. For example, a listed company has a net asset of 1.5 billion yuan and a total share capital of 1 billion shares, and its net asset value per share is 15 yuan (i.e. 1.5 billion yuan 1 billion shares).
The net asset value per share reflects the net asset value of the company represented by each share, which is an important foundation to support the market. The larger the net asset value per share, the greater the wealth represented by the company's per share**, and the greater the ability to generate profits and resist external factors.
Return on equity is the percentage ratio of a company's after-tax profit divided by owners' equity, which is a measure of how efficiently a company uses its own capital. Taking the above-mentioned company as an example, its after-tax profit is 200 million yuan, its net assets are 1.5 billion yuan, and the return on equity is 1333%。The higher the ROE, the more the shareholder received per unit of capital invested. Example 13 above33% indicate that for every $1 invested by shareholders, there is 0$13 return.
From the perspective of accounting statements, "net assets" refers to the net amount of total assets of an enterprise minus liabilities, also known as "shareholders' equity" or "owners' equity", that is, the share of investors in the total assets of an enterprise. "Net assets per share" is the average share of net assets that each share should enjoy.
The net assets per share of a listed company are mainly composed of share capital, capital reserve, surplus reserve and undistributed profits. According to the relevant provisions of the Company Law, the share capital, capital reserve and surplus reserve cannot be changed arbitrarily during the normal operation period of the company, so the adjustment of net assets per share is mainly to adjust the undistributed profits.
As we all know, the price-earnings ratio is a relatively common value indicator, which indicates the ratio of a market's earnings per share to a company's earnings per share. The higher the P/E ratio, the higher the expected return of investors. Conversely, the lower the P/E ratio, the lower the investors' expectations for the future growth of this **. In conclusion, the higher the P/E ratio, the lower the investment value of the company and the higher the stock price risk, and vice versa.
Wind big data shows that there are 42 A-share listed banks, with a total net profit of 109 trillion yuan, of which the total net profit of the four major banks was 594.4 billion yuan, close to 55% of the total profit. The total profit of A-shares in the first half of the year was 295 trillion yuan, and bank stocks account for about 37%. The average price-to-earnings ratio of listed banks is 51 times, with an average dividend yield of 533%。
On November 28, a total of 350** A-shares fell below the net assets per share, and all bank stocks were on the list, of which ST Shimao, Minsheng Bank, and Huaxia Bank had the lowest price-to-book ratios, respectively: 0265 times, 0319 times, 0334 times.
So, why do most bank stocks fall below their net value in A-shares?The author believes that it is mainly due to the following reasons:
First, the particularity of the financial industry
The financial industry has higher risks and uncertainties than other industries. Especially in times of recession or financial crisis, banks are exposed to increased risks and asset quality is under pressure to revalue, which affects their profitability and valuation levels.
The banking industry is already a very mature industry, and it is unlikely that it will be able to gain significant room for growth. In recent years, the profit growth rate and return on net assets of commercial banks have declined significantly. Therefore, for bank stocks that lack growth, a low P/E ratio does not necessarily mean that they are undervalued.
Second, the market is worried about the banking industry
Concerns about the banking sector are one of the reasons for the low stock price valuations. At present, A-shares are in the midst of a stock market crash, and real estate is also in the bubble stage, and the development of the property market is closely related to the banking industry, and the particularity of the financial industry will inevitably lead to fluctuations in the valuation of bank stocks.
In recent years, with the rapid development of financial technology, traditional banks are facing competitive pressure from Internet finance companies. New fintech companies have attracted a large number of customers with their efficient and convenient services, which has caused the market to worry about the development prospects of traditional banks.
Third, the anti-corruption campaign in the financial sector and the strengthening of management supervision of the banking sector have also had an impact on the valuation of bank stocks
The profit growth of the financial industry is greatly affected by the macroeconomy, and the changes and adjustments of financial regulatory policies will also have an impact on the profitability of the banking industry.
Recently, China has launched an anti-corruption campaign in the financial sector, in order to maintain financial stability and protect the interests of investors in Guangdong, regulators have increased the supervision of the banking industry, increasing regulatory requirements and costs. These regulatory policies have put pressure on the profitability of banks and have also had a negative impact on investors' valuations of bank stocks.
Fourth, the banking industry is facing the challenge of financial innovation and the impact of financial technology on traditional business models
With the rapid development of the new generation of information technology, financial innovation and fintech are profoundly impacting the traditional banking business model. In recent years, financial innovation has given birth to various financial innovations, including innovations in financial products, financial instruments, and financial services.
For example, the continuous introduction of bonds and derivatives, as well as the emergence of new financial businesses such as financial derivatives and Internet finance, are the embodiment of financial innovation.
Fintech covers mobile payment, blockchain, artificial intelligence, big data analysis and other fields. The rapid development of financial technology has provided more efficient, convenient and intelligent solutions for the financial industry, which has made traditional banking business face unprecedented challenges and pressure for change. All of these factors may lead to a relatively conservative valuation of bank stocks.
In addition, the net assets of bank stocks are higher than the stock price, which does not bring any benefit to investors, and even if the bank goes bankrupt, it is impossible to liquidate all the net assets and return them to investors. At the same time, the realization of a bank's net assets is a complex process, and although there are so many according to market valuations, if they are realized, it may be greatly discounted.
To sum up, the valuation of bank stocks cannot be judged simply based on the price-earnings ratio and net assets, but also needs to be comprehensively judged by taking into account various factors.