Why is the Chinese version of "NASDAQ" 2023 completely "kneeling"?

  Value Line | produce 

    Hotspot | Column 

Bian Jiang, Xiaojin| author 

   Jing Ke| edit

Value line guide

It has fallen until the end of the year, and how many people have collapsed. Is this the activated capital market?

Today, the Science and Technology Innovation 50 Index has reached a new low, and among the major A-share indexes, the Internet has fallen the most severely.

In 2020, the STAR 50 Index peaked at 1,726 points, closed with a green doji in 2021, fell 31% in 2022, and fell nearly 14% this year. It now closes at a new low of 825 points. It has fallen 900 points from its peak, a drop of more than 50%. (During the same period, the Shanghai Stock Exchange was -20%, and the ChiNext index was close to -50%)

Because it houses a group of so-called China's strongest "hard tech" companies, the STAR Market is considered China's future NASDAQ, and with the blessing of the slogan of "Chinese-style modernization", why is it so hurting investors?

You want to copy his bottoms, and then you find out that they are going to sell the company to you.

   Kill the valuation and kill the performance,

Kill the performance and kill the logic

Obviously, the current companies on the Science and Technology Innovation Board are experiencing a circular evolution of valuation, performance, and logic.

The continuous listing of new shares, refinancing, and the lifting of the ban on restricted shares have exacerbated the decline in stock prices.

1. Kill valuation. Before this round of decline, the valuation of the Science and Technology Innovation Board was ridiculously high, with the highest valuation of the Science and Technology Innovation 50 being about 110 times PE, and the highest valuation of the entire Science and Technology Innovation Board being about 130 times PE.

Under the superb "makeup technology" of investment banks, many companies are listed on the Science and Technology Innovation Board with ultra-high price-to-earnings ratios.

Such a high valuation is unsustainable in a normal market. Even if it has fallen for two or three years, it has fallen so much, and at present, there are still about 70 times PE in the whole index of the Science and Technology Innovation Board, and about 40 times PE in the Science and Technology Innovation 50.

2. Kill performance and logic. In the past, the valuation of the science and technology innovation board was often hundreds of times, and the basic logic was high growth. The business performance of the past two years shows that it is too difficult to maintain the performance growth rate at 30%, 50% or even above, especially for a long-term, continuous and multi-year period.

The most frightening thing is that some companies have not yet made money, and their subdivided industries have begun to roll in, and the logic of high growth in the next few years has been quickly falsified. For example, the stock price of a company called Yuneng Technology (which makes photovoltaic inverters) on the Science and Technology Innovation Board has fallen by nearly 70% this year. Last year's performance growth rate was 250%, and the high valuation of 100-200 times was maintained for a long time, but this year's valuation is about 50-60 times, and the market still feels expensive, the company's performance growth rate has become negative, and the overall fundamentals of the industry have also changed dramatically.

There are also some companies that have been listed for a few years, important products are still in research and development, the main operating income is very low or even none, and the time node of commercialization of major products cannot be seen in the next few years. For example, Cambrian in chips, some innovative drug companies, and quantum communication companies. Investors can trust them for a while, but not for a lifetime.

There are even some companies that have been exposed to serious fraud and fraudulent issuance, such as Amethystum Storage and Zeda Yisheng, today's latest news, the actual controller of Amethystum Storage has been arrested, and the real quality of A-share listed companies has undoubtedly frantically impacted the confidence of investors.

Under the comprehensive registration system, the logic of killing has another meaning. In the past, the market believed that the stocks in the Science and Technology Innovation Board were all new formats and high-growth targets, and resources were scarce. After the registration system, there are as many as four to five hundred new listed stocks every year. And most of them are GEM and STAR Market targets. In other words, there is a steady stream of "high-growth targets" that the market likes. In this state, the hype gimmick of "resource scarcity", and the attraction of a hammer?

For such a company, the actual controllers, large and small non-sellers have played refinancing during the restricted sale period, and they have smashed and sold off once the restricted period has passed.

You want to copy his bottom, and then you find out that they really want to sell the company to you.

Suddenly, the chip is bearish

The United States may use the "tariff weapon"

In addition, the decline of the science and technology innovation board is also following the decline of the chip and semiconductor industries to a certain extent.

At present, the Science and Technology Innovation 50 mainly covers electronics, power equipment, computers and other industries.

Among them, the electronics industry, which accounts for nearly half, mainly corresponds to semiconductor and chip companies.

core

Chips, semiconductors and other industries are under pressure this year

The decline is larger.

For example, the China Semiconductor Chip Index has fallen all the way since mid-to-late April, and today it also hit a new low this year.

Today, there is a major negative impact on the domestic chip industry.

According to reports, the U.S. Department of Commerce may next impose tariffs on Chinese chips that use mature process nodes. If tariff barriers are formed, the impact will be further extended to a large number of fabless, IDM and foundry companies in China.

Commerce officials said that although Chinese manufacturers are unable to occupy the global market with chips made with advanced processes, "China's heavy subsidies for the semiconductor industry" have given low-cost chips made with mature processes a competitive advantage, weakening the sales revenue of American and Western chip companies.

Beginning in January, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) surveyed more than 100 companies in industries such as automotive, aerospace and defense to understand the extent to which the U.S. relies on Chinese-made mature (e.g., 40nm and above) but important semiconductors.

As one of the most common nodes, 40nm covers the main products/process types in the industry such as logic, digital-analog hybrid, NVM, PMIC, CIS, etc., and the specific devices include MCU, DSP, CIS, ADC, DDIC, FPGA, MPU, PMIC and many other models, which have a wide range of influences.

U.S. Commerce Secretary Gina Raimondo said, "Over the past few years, we've seen some worrying practices that China may take to expand its company's mature chip production and make it harder for U.S. companies to compete." This survey will inform our next steps. ”

According to the report, based on the US government's concern about Chinese mainland's increasingly powerful chip manufacturing capacity, "tariffs will definitely be on the table."

An official, speaking on condition of anonymity, said the measures could include tariffs or other tools of trade. Recently, the U.S. House Select Committee on China urged the U.S. government to impose tariffs on mature chips from China in a bipartisan report.

In general, on the one hand, the United States restricts the breakthrough and upgrading of our high-end chips, and in the future, it will also suppress our mature process through tariffs.

Really NASDAQ amazing long cows

What's behind it?

On one side is the Chinese version of "NASDAQ" falling into the sky, and on the other side is the amazing long bull of the real NASDAQ.

We have seen that some of the leading U.S. technology companies in the NASDAQ can always lead the trend of the entire technology industry with disruptive technologies in the initial stage. On the other hand, companies in similar fields in China, most of the time, always appear as a follower and chaser, and they go bumpy.

In the medium term, the relevant U.S. stock companies can get enough performance support, which will bring rich returns to investors. On the contrary, these companies on China's science and technology innovation board have either stayed in the conceptual pie, or they have quickly piled up overcapacity, the price war is bloody, and the corporate profits are difficult, and the word "volume" is carried out to the end.

In the later period, U.S. technology companies relied on large-scale buybacks and write-offs, so that the stock prices of technology companies that had passed the high-speed growth period still hit new highs repeatedly. Statistics show that Apple has repurchased $600 billion of shares in the past 10 years and cancelled them, which has reduced the outstanding shares by about 40% compared with 10 years ago, resulting in a significant reduction in Apple's tradable market value and Apple's stock price.

On the contrary, A-shares have jumped out to reduce their holdings once the restriction period has passed, and now some companies are playing more and directly playing refinancing during the restriction period. Even if some companies buy back their own shares at a low price, most of them are used for equity incentives, and they rarely cancel their own shares.

On the one hand, it is leading technology, performance support, and company repurchase;

On the one hand, there are concept paintings, inflated valuations, and shareholders cashing out.

It is self-evident which is better and which is inferior.

This naturally results in very different investment returns for investors in both markets.

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