Event: Recently, the relevant person in charge of the State-owned Assets Supervision and Administration Commission said that he would further study the inclusion of market value management in the performance appraisal of the person in charge of the enterprise, guide the person in charge of the enterprise to pay more attention to the market performance of the listed companies controlled by the company, and timely convey confidence and stabilize expectations through the application of market-oriented means such as increase in holdings and repurchases, increase cash dividends, and better return investors.
In 2023, the State-owned Assets Supervision and Administration Commission (SASAC) will optimize the main operating indicators of ** enterprises, and adjust them from the original "two interest and four rates" to "one interest and five rates". If market value management is included in the assessment system in the future, it will be conducive to increasing the dividend ratio of listed companies of central enterprises in the medium and long term, promoting valuation repair, and stabilizing capital market expectations in the short term.
In addition, the SASAC also mentioned that it will make greater efforts to carry out professional integration in the fields of information and communication, new energy, and equipment manufacturing, once again reflecting the importance of strategic industrial restructuring. Previously, we discussed in "In addition to the valuation of Zhongte, what are the expected differences in the reform of state-owned enterprises? It is mentioned that the focus of the merger of central enterprises has accelerated from "reducing competition in the same industry" and "vertical integration" to "professional reorganization of the industrial chain". Since 2021, the professional restructuring of central enterprises has accelerated, and the professional restructuring of central enterprises is worth looking forward to.
There are two directions worth paying attention to in terms of configuration:
1) Over-falling** + overweight direction. The SASAC mentioned the market value assessment, which was also aimed at the valuation and stock price of listed companies of central enterprises last year, and at the same time mentioned the use of means such as increasing holdings to convey confidence. Companies that are currently trading at a significant discount in stock prices and valuations and are still in the process of increasing their holdings are expected to be the first to benefit from the inflows from their holdings and see a recovery**. Comparing the stock price and valuation at the time of the launch of the "China Special Valuation"** in February 23, combined with the progress of the shareholding increase plan of the listed companies of central enterprises, we have screened out 15 central enterprises that are still increasing their holdings and have a high discount level.
2) Buyback of central state-owned enterprises that stabilize stock prices. Share repurchase can support the stock price during the downturn of the market, and increasing repurchase efforts is also one of the important measures for central enterprises to convey confidence to the market. We have selected a total of 15 listed state-owned enterprises that have passed the board of directors in the past year, but have not yet implemented the buyback plan.
3) High-dividend central enterprises that increase dividends. The SASAC also mentioned increasing dividends in this statement, considering the financial synergy (referring to Kweichow Moutai's high dividends to alleviate Guizhou's financial pressure), increasing dividends is expected to remain an important direction.
According to: 1) Dividends Net profit between 0 and 1;2) 23Q3 operating cash flow, 23Q3 net profit, net profit in the last 12 months》0;3) Undistributed Profits》0;4) Dividends" refinancing; 5) Average dividend yield in the past 3 years》3%; 6) PB<1, we selected 10 central enterprises.
This is an abridged excerpt from the report, the original PDF of the report
Thematic Strategy-Strategy Special Report: Which Central Enterprises Are Worth Paying Attention to When Market Value Management Is Included in the Assessment of Central Enterprises? - Caitong** [Li Meicen, Wang Yiyi] - 20240125 [Page 6].
Report**: Value Catalog