Tianfeng Research: The Marginal Decline of Policy Impact, the Internet Industry

The margin of policy impact is decreasing, and the Internet industry is shady and bright--Analysis of the investment value of China's Internet 30 Index

Tianfeng Strategy Liu Chenming

Core Conclusion:

1. China Overseas China Internet 30 Index (China Internet 30 Index, code 930604. CSI) selects 30 outstanding Chinese Internet companies listed on overseas exchanges as constituent stocks, which can reflect the overall picture of China's Internet industry more representatively and solve the problem of not being able to track outstanding Internet giants listed overseas.

2. Compared with other overseas Internet indexes, the distribution of China's Internet 30 weights is more reasonable. Compared with the China Internet 50 Index, the top ten weights of the China Internet 30 Index account for a total of 85.8%, the concentration is relatively lower, for Tencent and Ali, which are more affected by the policy, the China Internet 30 gives a lower weight, and gives Pinduoduo and Jingdong higher weights, which also makes the index on the one hand reduce the regulatory risk exposure of first-line enterprises, on the other hand, it can capture more of the expansion dividends of second-tier leaders.

3. The high proportion of R&D investment is an important support for funds to favor China's Internet 30 Index. The profitability of domestic Internet companies is relatively volatile, but in the context of high proportion of R&D investment, the preference for the long-term growth of Internet companies has made funds continue to increase the pursuit of China's Internet 30 Index. From the perspective of 2020 alone, under the impact of the epidemic, Internet 30 can still maintain a proportion of nearly 7% of R& D investment, far ahead in the main technology index and wide base.

4. In the context of common prosperity and stable growth, the purpose of anti-monopoly is to standardize the Internet industry, and to achieve sustainable development of the industry while bridging the gap between the rich and the poor to drive economic growth, rather than simply suppressing it. Although the current marginal pressure on China's total amount, but the government debt pressure restricts the credit force, the limited increment of macro factors means that stable growth to make good use of the high production efficiency of individual industries, so the industrial policy is still inclined to emerging industries to support economic growth, the Internet industry in the long term development environment is still optimistic.

5. Considering that the penalties and supervision of anti-monopoly and data security for Internet giants have been intensively implemented, and the panic of overseas investors has been released after the "double reduction", regardless of whether the current policy surface is "exhausted", the negative impact of potential regulatory policies in the future is decreasing marginally, and we believe that there is a left opportunity in the industry as a whole:

1) First-line enterprises: Diversified businesses bring new growth points, and the downward revision of performance is expected to converge

Platform economic supervision is mainly aimed at Ali, Tencent and other first-line Internet companies, although short-term games and other business inflection points are difficult to appear, but in recent years, Internet giants have achieved diversified layout, other business growth is expected to converge the overall performance downward revision. Tencent, Ali and other Internet leaders actively lay out cutting-edge emerging areas, which is conducive to alleviating the suppression of market value by anti-monopoly and continuing to provide excess returns.

2) Second-tier enterprises: the negative impact of anti-monopoly is limited, and the growth is or sustainable

In addition to BAT, in recent years, second-tier Internet companies have risen rapidly, and the negative impact of platform economic supervision on them is limited, and there is even a positive boost effect in some fields. On the other hand, with the lessons of first-line Internet companies, second-tier enterprises pay more attention to the guidance of social values in the development of second-tier enterprises, which reduces the probability of facing the impact of the policy "gray rhinoceros" in the later stage, and repairs the expected returns.

6. GF CSI Overseas China Internet 30 ETF (code 159605, abbreviation: China Internet ETF) investment tracking CSI Overseas China Internet 30 Index, providing investors with a one-click layout of the CSI Environmental Protection Index investment tools, is expected to fully enjoy the profit repair of China's first-tier Internet enterprises and the rapid growth of second-tier enterprises dividends, it is recommended to pay attention to.

【Risk Warning】

Anti-monopoly exceeded expectations to increase the risk, the epidemic exceeded expectations repeated risks, performance fell short of expectations, and so on

This article originated from the Financial Circle Network