Xinhua News Agency, Beijing, April 18 (Xinhua) -- China Securities Journal published an article on April 18 titled ""Little Giant" Has "Big Energy" and the Investment Value of Beijing Stock Exchange Companies Appears. According to the article, recently, the market has increased the discussion of A-share small-capitalization stocks. The market capitalization of companies on the Beijing Stock Exchange is generally small, so some market voices regard the stocks of the Beijing Stock Exchange as "micro-cap stocks". But it's not.
Experts said that the Beijing Stock Exchange, as the third stock exchange in China, mainly serves innovative small and medium-sized enterprises, and the market development stage and ecology, the scale and structure of listed companies, and market liquidity have their own characteristics. At the same time, about half of the companies on the Beijing Stock Exchange are state-level specialized and new "little giant" enterprises, most of them are "pioneers" in the field of subdivisions, and the Beijing Stock Exchange companies generally attach importance to investor returns, showing the characteristics of high dividend rates, coupled with the allocation needs of index products and future ETF products, the Beijing Stock Exchange companies as a whole have high investment value.
A number of fund managers believe that the Beijing Stock Exchange companies as a whole reflect good innovation attributes, and some companies have a forward-looking layout of future industries and have a high value of industrial chain/industry allocation.
The market positioning is distinctive
The establishment of the Beijing Stock Exchange is an important strategic deployment made by the CPC Central Committee based on building a new development pattern and promoting high-quality development, and it is also an important reform measure to support the scientific and technological innovation of small and medium-sized enterprises. "The Beijing Stock Exchange is an important supplement to the structure of the mainland capital market, and is committed to providing a broader financing platform for innovative small and medium-sized enterprises. The relevant person in charge of Wanjia Fund said.
On November 15, 2021, the Beijing Stock Exchange opened for operation. Over the past two years, the Beijing Stock Exchange has supported the accelerated development of a large number of specialized, refined, characteristic and novel small and medium-sized enterprises. At present, the Beijing Stock Exchange has gathered 248 listed companies, half of which have been awarded the title of "Little Giant" Enterprise of National Specialization, Refinement, and Innovation, and the attribute of "Specialization, Refinement, and Innovation" is highlighted.
(File picture.) Xinhua News Agency)
Innovation starts with technology and becomes capital. Accelerate the cultivation and development of new quality productivity, and the Beijing Stock Exchange will take the lead. Pang Yaping, fund manager of E Fund's BSE 50 Index product, said that the Beijing Stock Exchange focuses on supporting enterprises in the fields of advanced manufacturing and modern service industries, and has gathered a number of small and medium-sized enterprises with strong innovation capabilities and scientific and technological achievements, covering artificial intelligence, humanoid robots, low-altitude economy and other new productivity-related fields, as well as multiple subdivisions such as material end, equipment end and precision machining.
"As a service innovative small and medium-sized enterprise, the Beijing Stock Exchange focuses on cultivating a 'specialized, special and new' capital market, and should actively build an ecology for cultivating new quality productivity, comprehensively promote the key core technology research of enterprises, promote the upgrading of the industrial base and the modernization of the industrial chain, and give full play to the advantages of grasping small and early. Li Min, vice chairman of Jingchuang Electric, told reporters.
The Beijing Stock Exchange is fully committed to building a characteristic institutional system for serving small and medium-sized enterprises. The access standards of the Beijing Stock Exchange are different from those of the Science and Technology Innovation Board and the Growth Enterprise Market, and efforts are made to improve the efficiency, transparency and predictability of the review under the premise of strictly controlling the access to issuance and listing. To meet the development needs of small and medium-sized enterprises and the characteristics of small and medium-sized market capitalization stocks, we provide diversified financing varieties, financing methods and market-oriented pricing mechanisms, implement market-making transactions and margin financing and securities lending mechanisms, and set up flexible equity incentive arrangements.
There is no shortage of high-quality investment targets
"The overall operating quality and fundamentals of the Beijing Stock Exchange have performed well, and the return on equity TTM of the Beijing Stock Exchange company calculated using the overall method is about 9.6% (as of the third quarter of 2023). According to the consensus expectation data, the average return on equity of the more representative BSE 50 constituents will reach 16.2% in the coming year. ICBC Credit Suisse BSE 50 Index Product Fund Manager Zhao Xu said.
According to data from Dongcai Choice, as of April 15, 82 listed companies on the Beijing Stock Exchange have disclosed their 2023 annual reports, of which 59 companies have achieved operating income growth, accounting for 72%, and 78 companies have achieved profitability, accounting for 95%. Looking further, there are 24 companies with an operating income growth rate of more than 20%, and 31 companies with a profit growth rate of more than 20%.
Liu Jing, chief analyst of Shenwan Hongyuan, told reporters that all companies on the Beijing Stock Exchange cannot simply be attributed to "small and micro caps" and "thematic investment" stocks, and many "specialized, special and new" companies on the Beijing Stock Exchange contain the characteristics of "high dividends" and "growth potential" at the same time. On the one hand, such enterprises have a high market share in subdivided industries, showing the characteristics of high gross margin/net profit margin and good cash flow, and on the other hand, there is still room for growth in terms of going overseas.
Listed companies on the Beijing Stock Exchange actively share operating results. According to the reporter's statistics, in 2022 and 2023, 66.05% and 76.15% of the Beijing Stock Exchange companies will distribute cash red envelopes. Among them, a total cash dividend of 2.716 billion yuan in 2022, with an average of 25.3841 million yuan per family, and a total cash dividend of 5.377 billion yuan in 2023, with an average of 29.545 million yuan per family. Among the companies on the Beijing Stock Exchange that disclosed their 2023 annual reports, more than ninety percent of the companies released dividend plans, with an estimated cash dividend amount of 2.707 billion yuan.
The new "National Nine Articles" require that the supervision of cash dividends of listed companies be strengthened and the investment value of listed companies be promoted. The Beijing Stock Exchange encourages listed companies to actively pay dividends, and the new regulations relax the time requirements for reviewing equity distribution plans, allowing listed companies to flexibly determine the time of dividends and can pay dividends multiple times in a year. At the same time, the new rules clarify that the interim dividend is based on the latest audited undistributed profit. For example, if a listed company plans to pay an interim dividend in July, if the semi-annual report is not audited, the distribution amount should refer to the undistributed profit and semi-annual profit in the annual report.
Long-term capital can be expected to enter the market
According to the 2023 fund annual report, the market value of shares held by public funds on the Beijing Stock Exchange is 7.3 billion yuan, an increase of 16% compared with the semi-annual report of the fund in 2023...... In the market downturn, some "smart funds" have recently bucked the trend and increased their layout on the Beijing Stock Exchange.
The new "National Nine Articles" proposes to vigorously promote the entry of medium and long-term funds into the market and continue to expand the long-term investment force. The measures include: vigorously developing equity public funds and significantly increasing the proportion of equity funds. Establish a fast-track approval channel for exchange-traded funds (ETFs) to promote the development of indexed investment. Optimize the policy environment for equity investment of insurance funds, implement and improve the performance evaluation methods of state-owned insurance companies, and better encourage long-term equity investment. Improve the investment policies of the national social security fund and the basic pension insurance fund. Enhance the flexibility of enterprise annuity and personal pension investment.
In Liu Jing's view, the new "National Nine Measures" convey the incentive signal of "value investment", which is conducive to guiding long-term funds to allocate assets such as "high dividends" and high-quality leading enterprises in subdivided industries, and guiding the market to pay more attention to corporate cash flow and corporate governance.
The reporter learned that in addition to actively promoting more domestic and foreign index companies to include the Beijing Stock Exchange companies in the relevant index constituent stocks, the Beijing Stock Exchange has stepped up research, development, and reserve more index products and ETF products to meet the needs of diversified and medium and long-term capital allocation.
Products are just tools, and attracting more capital into the market depends on high-quality enterprises. On the one hand, with the implementation of the strict entry gate, the reform of the delisting system and the implementation of the action plan to improve the quality of listed companies, the quality of listed companies on the Beijing Stock Exchange is expected to continue to improve. On the other hand, with the gradual improvement of the market function of the Beijing Stock Exchange, it will also help the listed companies on the Beijing Stock Exchange to seize development opportunities, realize industrial optimization and upgrading, and complete the butterfly change from "small and beautiful" to "large and excellent".
"With the gradual implementation of a series of reform measures, the Beijing Stock Exchange will bring together more innovative and growing specialized and new 'little giants' to attract more long-term funds to enter the market, and the long-term investment value of the Beijing Stock Exchange 50 Index will gradually emerge. Pang Yaping said. (ENDS)