#秋日随记#
For this case, the impact of Robam Appliances, which is located in first- and second-tier cities, is reflected in the data of its 2017 annual report:
Revenue growth declined, and net profit growth fell significantly, from 40% to 20%. (Note that this time due to the greater intensity, the lag time on the performance is shorter, but it is still close to 1 year)
To sum up, we will see two conclusions about the changes in the three industry environments in terms of stock price and valuation:
The tightening of the real estate environment will lag for one year, affecting the "real estate aftermarket" of range hoods;
The three tightenings encountered by Robam Appliances in the history have had a certain impact on the growth rate of performance to varying degrees, and then impact the valuation.
If the environmental changes are small and the impact on performance growth is small, the impact on valuation is relatively small, such as 2014-2015, which is the middle period. Coinciding with a bull market in growth stocks, despite its impact, it is not significant
Since the growth rate of performance is the most important factor affecting the change of valuation, to what extent is the end of such valuation ups and downs?
And this question involves a major issue in investment research: value VS price
What factors affect intrinsic value, and what factors affect extrinsic price? Where is the pivot around the valuation fluctuations around the pendulum and what factors are affected?
At this point in the analysis, combined with the business analysis framework, we put forward two logics for value and price:
The absolute value level of ROE and ROIC affects the foundation of corporate valuation (that is, the "lining" of fundamentals);
The growth rate of revenue and profit affects the elasticity of corporate valuation (that is, the "face" of fundamentals);
Let's take an example:
If a company's return on invested capital is consistently stable at the level of 20%, then if its growth rate is not negative, or if it fluctuates too much, then the reinvestment rate is calculated accordingly
According to the discounted cash flow valuation method, there should be at least a PE valuation range of 10 to 20 times as the basis for enterprise value (such as Shuanghui Development
If it is lower than 10X, the price is below the value, and if it is greater than 20-30X or even higher, the price may be out of value.
This is the valuation logic of value stocks.
It's like the famous metaphor about value vs. price: you walk your dog in a neighborhood, and the dog may sometimes run in front of you, sometimes behind you, but in the end it will never be too far away
On the basis of this logic, if the performance growth rate is very high (20% to 40%, which is greater than the level of return on invested capital), or even the profit growth rate is higher than the revenue growth rate
Showing the characteristics of growth stocks (such as profit growth rate of 40% and revenue growth rate of 30%, just like the situation before Robam Appliances), then the valuation given by the market may have a valuation amplification effect due to the rapid growth rate
Give a premium and raise the valuation range to 20X to 40X, or even 30X to 60X (such as Haitian Flavor and Pien Tze Huang, which we have studied before)
This is the valuation logic of growth stocks.
If, on this basis, there is a strong expectation of patent landing, mergers and acquisitions, and asset loading, the valuation method is not only cash flow discounting, but also suitable for considering the "option valuation method" that will accelerate profits after the landing of assets in the future
Then, the valuation range may even rise to 60X-100X (such as Aier Ophthalmology, Meinian Health, and Tigermed that we have studied)
This is the valuation logic of pharmaceutical stocks, as well as M&A stocks.
Predict the follow-up and listen to the next breakdown
It does not constitute any investment advice, the stock market is risky, and you need to be cautious when entering the market