The first wave of decent money-making effect of A-shares in 2024 comes from the "Chinese prefix".
As of today (January 29, according to wind data, the same below), the Wind Zhongzitou Central Enterprises Index has risen 205%, significantly outperforming the major broad-based indices of A-shares in the same period.
The performance of major broad-based A-share indices since 2024.
Data**: Wind as of 20240129
Today, the "Zhongzitou" once again strengthened against the market, and in the top 10 list of Wind Concept Index gainers, the "Zhongzitou" occupies many seats; The Shanghai Composite Index fell below 2,900 points again today.
Wind Concept Index 20240129 top 10 list of gainers
Data**: wind
Why is the "Chinese prefix" so fierce?
1. Market value management is included in the assessment of the person in charge of central enterprises
The inclusion of market value management in the performance appraisal of the person in charge of the enterprise is an important booster for the recent deduction.
On January 24, the State-owned Assets Supervision and Administration Commission (SASAC) said at a press conference: "Focus on improving the quality of listed companies controlled by central enterprises and strengthening investor returns"."Further study the inclusion of market value management in the performance appraisal of the person in charge of the enterprise".It has aroused great concern in the market.
The market value of central enterprises accounts for about 34% of the total market value of A-shares, playing the role of "ballast" in the A-share market. This is the first time since the SASAC updated the assessment system for the heads of central enterprises to "one profit and five rates" at the beginning of 2023, and has clearly stated that "research will include market value management in the performance appraisal of the heads of ** enterprises", and use this as a baton to guide listed companies to "pass the application in a timely manner".Market-oriented means such as increasing holdings and repurchases convey confidence, stabilize expectations, and increase cash dividends."
On January 26, the China Securities Regulatory Commission (CSRC) also stated at the 2024 system work conference that it would "promote the inclusion of market value in the assessment and evaluation system of central and state-owned enterprises".
The market generally believes that the follow-up market value management into the performance appraisal of the person in charge of the central enterprise will help guide the person in charge of the central enterprise to pay more attention to the market performance of the listed companies controlled by them, and effectively improve the return to shareholders.
2. Dividends, increases, repurchases, and focus on investor returns
Since 2015, the number of dividends and the total amount of dividends of listed companies of central enterprises have increased year by year, and the median annual dividend ratio has stabilized between 30% and 31%, and the dividend yield has shifted upward. For capital markets,Sustained and stable high dividends will also become an important part of the investment income of listed companies of central enterprises.
Shenwan Hongyuan data shows that after excluding financial stocks, the overall dividend ratio of A-share central enterprises has increased from 29 in 20196% quickly climbed to 52 in 20224%, with an average annual increase of 76 percentage points.
According to the data of China Merchants**, from 2023 to January 28, 2024, a total of 18 A-share listed companies controlled by 12 central enterprise groups have implemented buybacks for the purpose of market value management, with a scale of about 6.5 billion yuan and a planned repurchase scale of about 13.8 billion yuan; A total of 34 A-share listed central state-owned enterprises have been increased by major shareholders, with an increase of about 10.7 billion yuan, and a planned increase in holdings between 11.8 billion yuan and 22.2 billion yuan.
3. Profitability is expected to continue to improve or be strong
According to China Merchants ** data, taking ROE (return on net assets) as a representative indicator, after excluding finance, the annualized ROE of A-share listed central state-owned enterprises in the first three quarters of 2023 will be 10%, which is not only a new high since 2020, but also 08%。
Previously, the SASAC held a meeting of the heads of enterprises, which clearly required "year-on-year improvement in the return on net assets" and "increasing the added value and increasing the contribution of the first enterprises to the national economic growth", which may mean that the ROE of central enterprises will continue to rebound with strong certainty, and also indicate that in the economic recovery stage, the profit growth rate of central enterprises is expected to continue to lead.
Moreover, the SASAC's emphasis on value creation "resolutely curbs blind investment impulses, reduces inefficient and ineffective capital occupation, and forms more profitable income and cash flow profits", which is highly consistent with the capital market's expectations for listed companies of central enterprises.
4. The value creation ability of central enterprises itself has emerged
Central state-owned enterprises account for a relatively large proportion of important sectors of the national economy such as financial real estate, upstream resources, public utilities, construction, high-end manufacturing, and frontier science and technology, and undertake important functions such as strategic transformation, economic stability, and people's livelihood security.
According to the data of China MerchantsIn 2023, the operating income and total profit of central enterprises will reach 398 trillion yuan, 26 trillion yuan, both of which achieved steady growth.
At the same time, various itemsThe "one profit and five rates" indicator is stable and improved compared with 2022The return on net assets of central enterprises reached 66%, shareholder returns remained at a good level, and the overall asset-liability ratio of central enterprises remained stable at 648%。
In 2023, the realization of "one profit and five rates" of central enterprises.
Source**: State-owned Assets Supervision and Administration Commission, Investment Promotion** Note: The intensity of R&D investment in 2022 and 2023 will be 1 trillion yuan and 1R&D investment of 1 trillion yuan divided by the revenue of the current year may be slightly different from the actual value.
In addition, central enterprises have completed investment in strategic emerging industries218 trillion yuan, a year-on-year increase of 321%, accounting for a new high of 36% of the total investment.
The central enterprises have also actively used the platform of listed companies to carry out professional restructuring, and in the past two years, the assets injected by the listed central enterprises have exceeded 300 billion yuan.
To sum it up:Under the "policy catalysis of assessing market value + ROE continuous improvement expectations + focusing on investor returns + value creation ability emergence".A new round of revaluation of the value of central enterprises may be worth looking forward to, and the value of dividends has been further diffused in the near future, and the performance of "Zhongzitou" is outstanding.
How to explore investment opportunities in the "Chinese prefix"?
Under the two-wheel drive of "policy logic + market logic".High-dividend central enterprises may be both offensive and defensive. On the one hand, focusing on value creation and assessing ROE and cash flow, central enterprises have the ability to continue to pay high dividends; On the other hand, in the process of economic transformation, fiscal diversification is needed, and the momentum of high dividends of central enterprises is also unprecedentedly high.
Absolutely low valuationCentral enterprises also have a large space for repair. The internal valuation of A-share central enterprises is also differentiated, and the valuation of some central enterprises represented by the large construction sector is extremely low, and there is a large room for repair. In addition, if the follow-up policy of "incorporating market value management into the assessment" is implemented, such listed companies are expected to be deeply broken, which is also the direction of strong market value management momentum and huge marginal improvement.
In addition, restructuring and integration is one of the main lines of the in-depth promotion of state-owned enterprise reform in the next stageStrategic restructuring and the formation of new central enterprisesand other related areas may be worth paying attention to. SASAC made it clear that the next step will be to steadily implement strategic restructuring and the formation of new central enterprises. According to the characteristics of the integration and integration of strategic emerging industries, greater efforts will be made to carry out professional integration in the fields of "information and communication, new energy, and equipment manufacturing".
Key references.
1. Shenwan Hongyuan "2024, the opportunity of central enterprises is in**? 20240124
2. Investment promotion ** "Market value management is included in the assessment of central state-owned enterprises, and the foundation of "medium and special valuation" is 20240128