The longer I talked to Zhao Qiang, the more I was infected by his optimism and tenacity. Graduated from the Department of Financial Management of Nankai University with a master's degree, he is an atypical Tianjin person, in addition to his innate humor, Zhao Qiang does not seem to like comfort and leisure, but "diligence and love, courage to challenge, and self-breakthrough" are engraved into his bones, becoming his "oars and sails" galloping in the "wind and waves" of value investment.
After 20 years of ups and downs, Zhao Qiang, who has managed both special account products and public funds, has gradually gained a lot of insights into the true meaning of investment. He said frankly: "The correct values and investment philosophy is the soul of investment, is the magic weapon through the market bull and bear, can not give up the principle for short-term performance pressure to opportunistically, to rely on excellent enterprises to create corporate value profits, adhere to reverse investment, the pursuit of high-quality growth, and always achieve the unity of knowledge and action." ”
Zhao Qiang, Master of Nankai University, joined Xinhua Fund in November 2016 as the equity investment director of Xinhua Fund, managing 7 products including Xinhua Preferred Dividend Mix, with high long-term performance. Since joining the fund industry in 2003, he has worked in Huaan Fund, Guojin Fund, Yingda Fund, China Europe Fund and other companies, and has rich investment experience.
Zhao Qiang, who was born in a finance class, is particularly sensitive to corporate financial reports, and years of exploration and practice have made him love the indicator of ROIC (return on invested capital). He said that using ROIC as the anchor to find a good company is to measure the operating profit margin, which can well measure the use effect and earning ability of the company's invested funds.
When it comes to the standards of high-quality companies in his mind, Zhao Qiang believes that there are five main aspects: profitability with high ROIC, good profit quality represented by cash flow, asset-light profit model, long-term stable demand, and high barriers to supply. These screening dimensions make him very fond of liquor, medicine and inverter tracks.
Break through yourself and continue to learn Xi and improve
As a native of Tianjin, Zhao Qiang's humor and optimism are deeply touched, and he can't hide his love for investment and says with a smile: "Investment seems to be the only profession in the world that can't lie on the 'merit book', no matter how brilliant the past is, once you stop learning Xi and progressing, it won't be long before it will be swallowed up by the tide of the market." ”
Zhao Qiang, who graduated with a master's degree, chose China Merchants Bank close to home for his first job. At that time, China's stock market was in the ascendant, Zhao Qiang said frankly: "The work of the bank is more of a test of comprehensive ability, the requirements for financial skills and research are not high, I always want to put my expertise into practice, so I mustered up the courage to leave my home and come to Beijing, and chose the more challenging fund industry." ”
Zhao Qiang, who joined Huaan Fund in 2003, did not get the opportunity to start as a researcher, but started from institutional sales, when the threshold and competitive pressure of the fund industry had "risen". "Since I have chosen, I have to work hard to do a good job, I have been working for five years, and I have become the vice president of the Beijing branch when I leave, but investment research is still the 'white moonlight' in my mind. He said.
In 2008, Zhao Qiang made a second choice in his life, giving up his sales leadership position and working as a researcher at a newly established small-scale fund company, mainly covering consumer and cyclical industries.
The transformation effort has finally paid off. In 2012, the newly established Yingda Fund "recruited" and threw an olive branch to Zhao Qiang, and he was soon promoted to assistant investment manager after joining, specializing in assisting leaders in managing special accounts. In 2014, when Yingda Fund issued its first public fund, he became the helm of this product.
He lamented: "My financial skills began to emerge and won the appreciation of Xia Chun, the then investment director, who was the 'top' fund manager of that era, and his investment research methods and operation style still influence me today." ”
At the beginning of 2015, Zhao Qiang joined the China Europe Fund Division, which broadened his horizons and exposed him to a larger scale of funds, but he encountered a sharp adjustment in the stock market that year and encountered a turning point until he came to Xinhua Fund at the end of 2016.
Looking back on the past, Zhao Qiang smiled and said calmly: "The cost and process of transformation are very painful, not only to face the disapproval of others, but also to start from scratch, the way of thinking, short-term income decline may be greatly affected, but life is not in vain, the most important thing is to have confidence in yourself, behind the confidence is the prediction and affirmation of your own ability." ”
"This spirit of perseverance and the courage to overcome difficulties, as well as the belief of 'keeping the clouds open and seeing the moon', are precisely the important qualities necessary for long-term value investing, which make me feel more calm and optimistic in the face of market and performance ups and downs. Zhao Qiang said.
Rely on high-quality enterprises to create value and profit
Over the past 20 years, Zhao Qiang, who has experienced the ups and downs of A-shares, has found that the market is always filled with greed and fear, and at extreme moments, it is also wrapped in fanatical leverage and extreme pessimism.
In Zhao Qiang's view, value investment is to understand the essential attributes of business, based on the understanding of fundamentals, to find high-quality companies with long-term undervalued value and hold them for a long time, and to obtain investment returns from the value continuously created by enterprises.
In a word, value investment is to create value and profit from high-quality enterprises. Zhao Qiang said that earning the company's money is a positive game, if your luck is not very good, buy at a high point, but the company can create value for you every year, over time there is a high probability that you can still make money, do not rule out a lot of returns.
Zhao Qiang said that therefore, to choose the most long-term high profitability in the market to invest, with the mentality of business owners rather than traders and speculators, choose those companies with good business models, excellent management, and high competitive barriers for long-term investment.
Contrarian thinking investment is also highly respected by Zhao Qiang, he believes that it is necessary to follow the general trend and reverse the small trend, conform to the general trend of industry development, and buy high-quality companies on dips under the premise of the correct direction, especially when the market panics and mud and sand, buy excellent companies against the trend, and keep calm and rational at the moment when the market is feverish "chicken and dog ascend to heaven".
High profitability seems to have become a label that Zhao Qiang attaches great importance to, and how to measure this dimension has become extremely important. With a financial background, he has always believed that ROIC is the key indicator, and from historical statistics, companies with high ROIC have significant excess returns in most years.
"ROIC is the ratio of operating profit after tax divided by invested capital (including the sum of working capital and fixed capital). ROIC measures the operating profit margin, and excludes the impact of capital structure changes, which is more objective than ROE (return on equity), which is the core indicator of comprehensive consideration of enterprise competitiveness, and is also the core indicator to measure whether an enterprise makes money. Zhao Qiang said.
When it comes to specific industries, Zhao Qiang said that from the average ROIC growth rate in the past ten years, the food and beverage, pharmaceutical, and electronics industries have grown rapidly, and the market has given a high valuation, but in the specific operation, we must also maintain a sense of awe of the excessive valuation. "In addition, we need to be wary of changing trends in companies with high ROIC. Zhao Qiang believes that this determines the marginal change in stock price, when excellent companies become worse or very expensive, they should be properly abandoned, not nostalgic and lucky, and not too persistent.
Valuations of high-quality leading assets are expected to return
After joining Xinhua Fund, Zhao Qiang has successively managed 7 public funds, including Xinhua Strategic Selected Stocks, Xinhua Preferred Dividend Mix, and Xinhua Industry Flexible Allocation Mix, with leading long-term performance. Among these products, he mainly has a long-term layout of sub-high-end liquor and real estate liquor, medical equipment and inverter and other track stocks.
"Baijiu is one of my favorite industries, and every time the bull market rises, Baijiu has never fallen. Zhao Qiang believes that the core logic of the liquor industry's bull stocks is that its profitability is strong and the barriers are high enough, and it is difficult for the industry to supply new brands, and once the demand "runs", the stock price will rise rapidly.
For the allocation of sub-high-end liquor and local liquor, Zhao Qiang explained that the price of this kind of liquor is generally distributed between 100 yuan and 300 yuan, which is within the reach of ordinary people's daily consumption and visiting relatives and friends, and has little to do with business.
For the layout logic of medical devices, Zhao Qiang said that first, he is optimistic about the "long slope and thick snow" of the pharmaceutical track in the context of aging; Second, medical devices do not have much pressure on centralized procurement, and most of them are purchased separately by hospitals; third, medical device companies are biased towards manufacturing, and after the expiration of their product patents, they are still price competitive with innovative drugs, and there is no need for professional research background of innovative drugs; fourth, with the strong support of policies, domestic companies are penetrating from low-end to high-end by virtue of engineer dividends and strong cost performance, so related companies have developed rapidly in the past two years.
For the sharp weakening of the new energy track in the past two years, Zhao Qiang said that it is mainly due to the deterioration of the supply pattern and the difficulty of removing inventory in a short period of time. In the long run, the trend opportunities for new energy still exist.
Zhao Qiang further said that many inverter companies are currently very cost-effective, and can still achieve rapid growth in the future, and the industry leader can even reach a growth rate of 30%. Many companies are currently in a state of over-decline, and their business models, long-term logic, and profitability have not changed.
"That's the hard part of value investing, you know it's a good company and the price is right, but the stock price keeps falling, it's up to you to hold it. Although it is painful in the short term, it is in line with the long-term gains to hold it. Zhao Qiang said frankly.
As for stock selection and timing strategies, he said that it is more likely to choose bottom-up research companies, and the left and right sides may not be very important, but most of the timing results will be a little left because they prefer to lay out earlier.
Zhao Qiang also attaches great importance to the company's profitability and margin of safety, and is more wary of technology companies with deteriorating financial reports. However, he also believes that no matter how good a company is, once the stock price is overdrawn in the future, it will fall if it does not rise, so it is necessary to do the band appropriately, especially when the increase is large, it must be avoided.
Looking forward to 2024, Zhao Qiang said that this year, multiple factors have suppressed the money-making effect, and the "dumbbell" strategy has gradually become the mainstream, on the one hand, thematic opportunities with high elasticity and marginal changes and even small and micro cap stocks are popular, and on the other hand, the pursuit of high dividends and strong certainty of dividend assets. However, next year is expected to return from a "dumbbell" to a "rebalancing", with the approach of the global liquidity inflection point and the easing of overseas funds, it will drive the return of the valuation of high-quality leading assets.
In the face of the current situation, Zhao Qiang said with a smile that when the trough is low, we must strengthen our beliefs, second, we must study hard and Xi, and third, we must actively lay out a good company that has fallen over. Within the risk tolerance range, you can increase your position appropriately, rather than falling and shorting.
