When it comes to "market value management", what is the investment value of central state-owned enterprises?

The "National Nine Articles" released last week repeatedly mentioned the concept of "market value management".

Article 3 "Strict Continuous Supervision of Listed Companies" mentions that

"Promote listed companies to enhance their investment value. Formulate guidelines for the management of market value of listed companies. Research on the inclusion of market value management of listed companies in the internal and external assessment and evaluation system of enterprises. ......

Strictly crack down on market manipulation, insider trading, and other violations of laws and regulations in the name of market value management in accordance with the law. ”

At the beginning of this year, the State-owned Assets Supervision and Administration Commission of the State Council first mentioned that "it will further study the inclusion of market value management in the business assessment of the heads of central enterprises". Subsequently, the State-owned Assets Supervision and Administration Commission (SASAC) once again made it clear that it would promote the full implementation of the assessment of "one enterprise and one policy" and comprehensively promote the assessment of the market value management of listed companies.

Due to the high proportion of central state-owned enterprises in industries related to national security and the lifeline of the national economy, the market value management of central state-owned enterprises has undoubtedly become the focus of market attention after the "National Nine Measures".

Market value management and revaluation of central state-owned enterprises

The implementation of market value management is often accompanied by the improvement of corporate governance structure, which helps to build a healthier and more sustainable corporate growth model. Through market value management, central state-owned enterprises can pay more attention to their intrinsic value and market performance, and enhance their core competitiveness and market value by improving operational efficiency, enhancing profitability, and increasing scientific and technological innovation.

Market value management requires enterprises to establish positive interaction with investors, reduce information asymmetry through timely and transparent information disclosure, and enhance investors' trust and confidence in enterprises, so as to attract more long-term investment.

By increasing the proportion of dividends and implementing share repurchases, we will convey confidence, stabilize market expectations, reduce stock price fluctuations, and provide investors with a more stable investment environment.

With the deepening of market value management, the market awareness of central state-owned enterprises is expected to improve, which will help to realize the re-evaluation of enterprise value, especially in the central state-owned enterprises with earlier and deeper layout of strategic emerging industries, and their valuations may have greater potential room for improvement.

The thematic investment value of central enterprises in the context of "China Special Valuation".

From the perspective of value attributes, the "special valuation" is mainly based on central enterprises, state-owned enterprises and listed companies with special backgrounds in some industries, and the business operation of central state-owned enterprises has high safety and stability, and the characteristics of "sustainable operation" are more prominent than those of private and other enterprises.

Central state-owned enterprises account for a high proportion of industries related to national security and the lifeline of the national economy, many of which are businesses that must exist to meet domestic demand and are indispensable, such as energy, upstream industrial products, aerospace, finance and other national security industries.

The State-owned Assets Supervision and Administration Commission of the State Council said that state-owned assets and state-owned enterprises should continue to deepen the transformation of traditional industries, including technological transformation and optimal supply, carry out digital transformation action plans for state-owned enterprises, and vigorously promote the green transformation of traditional industries.

The SASAC has adjusted the assessment index from the previous "two interest rates and four rates" to "one interest and five rates" in combination with the development assessment index in the new era, which will help to continuously promote the improvement of the operation and management capabilities of state-owned enterprises.

What are the options for investing in central state-owned enterprises?

Central Enterprises Win-Win ETF (517090), Central Enterprises Win-Win ETF Connect (Class A: 019259, Class C: 019269)

Tracking the FTSE China SOE Open and Win-Win Index, the index is the first index to comprehensively reflect the overall performance of SOE-listed companies in Shanghai, Shenzhen and Hong Kong.

The index selects stocks based on indicators such as total operating income, and selects high-quality state-owned enterprise leaders. Factor weighting is adopted, and the proportion of overseas income and green income are introduced on the basis of stock selection indicators, which fully reflects the degree of opening-up, international development and sustainable and high-quality development of central state-owned enterprises.

Hong Kong State-owned Enterprises ETF (159519), Cathay Pacific Hong Kong State-owned Enterprises ETF Feeder (Class A: 021044, Class C: 021045)

It is an investment tool from the perspective of Hong Kong stocks under the valuation system with Chinese characteristics. The construction of a "valuation system with Chinese characteristics" is expected to make the value reshaping of high-quality state-owned enterprises become the main line of the market in the long run. The new round of state-owned enterprise reform plan is expected to become a catalyst for the repricing of Hong Kong stocks. The internationalization of RMB continues to advance, and Hong Kong stocks are expected to usher in an increase in offshore RMB allocation funds, which deserves investors' continued attention.

Cathay Central Enterprises Reform Equity Fund (001626)

It mainly invests in the stocks that have benefited from the reform of central enterprises, and its performance in the past one year ranks in the top 10% of the same category.

(Data source: Haitong Securities, data as of 2024/3/31.) The same category refers to the active stock open-ended, the specific ranking is 89/814, the mainland fund has been in operation for a short time, and past performance does not represent future performance)

Fund manager Zhang Yonghyuk

With many years of experience in macro strategy analysis, is an investment manager with a top-down macro perspective, he expects the economic growth in the first half of the year to be more than 5%, there is a huge repair space between this judgment and market expectations, continue to be optimistic about the performance of the broad-based index represented by the CSI 300, and focus on the sectors and leading targets that have a strong correlation with the economy and interest rates.

When the economic cycle is under pressure, central state-owned enterprises are often able to achieve excess returns due to their strong financing capabilities, good cash flow and better competitive landscape. In recent years, with the deepening of the assessment indicators of central state-owned enterprises by the State-owned Assets Supervision and Administration Commission, more and more emphasis has been placed on assessing the profitability and operation quality of central enterprises, and the financial indicators of enterprises have been further improved. With the proposal of the valuation system with Chinese characteristics, the value of central state-owned enterprises is expected to be revalued in the future, and there is room for improvement in valuation. On the whole, the long-term investment value of central state-owned enterprises is relatively high due to their stable operation and high dividend rate.

Welcome to follow

央企共赢ETF（517090）

Win-win ETF connection for central enterprises

(Class A: 019259, Class C: 019269)

港股国企ETF（159519）

Cathay Pacific Hong Kong State-owned Enterprises ETF Connect

(Class A: 021044, Class C: 021045)

Cathay Central Enterprises Reform Equity Fund (001626)

Revaluation

Embrace the times

Risk Warning

The views expressed in the article are for reference only and do not constitute any investment advice or commitment. The Central Enterprise Win-Win ETF is an equity fund, and its expected return and expected risk level are higher than those of hybrid funds, bond funds and money market funds. The Fund is an index fund with a full replication strategy and its risk-return profile is similar to that of the market portfolio represented by the underlying index. When the Fund invests in the underlying stocks of the Southbound Stock Connect, it will be exposed to the unique risks arising from differences in the investment environment, investment targets, market regimes and trading rules under the Southbound Trading mechanism. The central enterprise win-win ETF is an ETF feeder fund, and the target ETF is an equity index fund, which theoretically has a higher expected return and expected risk level than hybrid funds, bond funds and money market funds. The Fund tracks the performance of the underlying index primarily by investing in the target ETF, which has similar risk-return characteristics to the underlying index and the securities market represented by the underlying index. The Fund may invest in the underlying stocks of the Southbound Stock Connect, which will be subject to the unique risks arising from differences in the investment environment, investment targets, market regimes and trading rules under the Southbound Stock Connect mechanism. The SOE WA ETF and SOE WEF Connect are fully developed by Cathay Fund Management Limited and are not affiliated with, endorsed, sold or promoted by the London Stock Exchange Group of Companies and its subsidiaries (collectively, the "LSE Group"). FTSE Russell is one of the trade names of a specific LSE Group company. LSE Group shall not be liable for any person's use of the Fund or the Underlying Information. Hong Kong state-owned enterprise ETFs are equity funds, and their expected returns and expected risk levels are theoretically higher than those of hybrid funds, bond funds and money market funds. The Fund is an index fund that mainly adopts a full replication strategy and tracks the underlying index, and its risk-return characteristics are similar to those of the market portfolio represented by the underlying index. The Fund may invest in the underlying stocks of the Southbound Stock Connect, which will be subject to the unique risks arising from differences in the investment environment, investment targets, market regimes and trading rules under the Southbound Stock Connect mechanism. The Fund may invest in overseas securities markets, and in addition to the general investment risks such as market fluctuation risks similar to those of domestic securities investment funds, the Fund is also exposed to special investment risks faced by investments in overseas securities markets, such as exchange rate risks. Cathay Pacific Hong Kong SOE ETF is an ETF feeder fund, and the target ETF is an equity index fund, which theoretically has a higher expected return and expected risk level than hybrid funds, bond funds and money market funds. The Fund tracks the performance of the underlying index primarily by investing in the target ETF, which has similar risk-return characteristics to the underlying index and the securities market represented by the underlying index. The Fund may invest in the underlying stocks of the Southbound Stock Connect, which will be subject to the unique risks arising from differences in the investment environment, investment targets, market regimes and trading rules under the Southbound Stock Connect mechanism. The Fund may invest in overseas securities markets, and in addition to the general investment risks such as market fluctuation risks similar to those of domestic securities investment funds, the Fund is also exposed to special investment risks faced by investments in overseas securities markets, such as exchange rate risks. Guotai central enterprises have been reformed into equity funds, which are varieties with higher expected risks and expected returns among securities investment funds, and their expected risks and expected returns are higher than those of hybrid funds, bond funds and money market funds. If you need to purchase relevant fund products, please read the legal documents of the fund carefully, pay attention to the relevant regulations on investor suitability management, do a good risk assessment in advance, and purchase fund products with the corresponding risk level according to your own risk tolerance. Funds are risky and should be invested with caution.