What is the reason why tech stocks are not fragrant?
Recently, the plate rotation of the A-share market has become more rapid, and the shipping, military, chemical, pig, dairy and other industries have risen in turn, but the technology stocks are still unknown. Looking back at 2019 and 2020, technology stocks can be described as the "most beautiful boy" in the A-share market, and it is also the "cradle of bull stocks". Superimposed on the current global chip famine, when will technology stocks rise? How long will we have to wait for an overall rise?
Technology stocks performed weaker in 2021
From the perspective of market performance, Securities Times data treasure statistics, since 2020, the relatively popular sectors are medicine, large consumption, photovoltaics, hydrogen energy, lithium batteries, chemicals and so on. The technology stock index performed very brightly and steadily in 2019 and 2020, with the growth rate of the technology index in 2020 beating nearly 80% of the popular concept sector index at that time, of which the subdivided semiconductor industry index rose by more than 80% in 2019.
From the beginning of this year to the latest October 22, the trend of technology stocks is weak, some stocks have a large drawdown, and the chip and semiconductor industry indexes rose by only about 20% in the same period; the cumulative increase of the technology 100 index during the year was less than 15%, and the phosphorus chemical index rose eight times in the same period. Especially since August, the drawdown is obvious, the semiconductor industry index and chip index have fallen by more than 15% since August, and the former has retraced nearly 20%.
The return on investment in the A-share technology sector exceeds that of the United States
The market performance is comparable
In the perception of investors, stable performance and low valuation have an upward role in promoting the company's stock price. From the perspective of semiconductor and semiconductor production equipment stocks (hereinafter referred to as the semiconductor industry), although the return on investment of A shares (return on net assets (average)) exceeds that of US stocks, and the growth rate of performance (average) also significantly exceeds that of US stocks, the performance of the A-share semiconductor market in 2021 is basically the same as that of US stocks, and only in 2019, the A-share semiconductor sector significantly outperformed US stocks.
From the perspective of subdivided technology hardware and equipment sectors, the performance growth of A shares is slightly lower than that of US stocks, and the investment return of A shares exceeds that of US stocks; the software service sector, the investment returns and performance growth of A shares are higher than those of US stocks, but the average growth rate of technology stocks in these two sectors since 2021 is lower than that of US stocks; of which the average rise and fall of the A-share software and service sector since 2021 is negative.
In summary, it can be seen that the investment return and performance growth of the A-share technology sector are better than those of the US stock technology sector. What is the reason for the slight downturn in the A-share technology sector this year?
Notable institutions: Semiconductor demand may be overestimated
From the perspective of fundamental data, the statistics of Securities Times data treasure found that the valuation of the A-share technology sector significantly exceeded that of the US stock market; the average valuation of the A-share semiconductor industry was close to 100 times, while the average valuation of the individual stocks in the US stock semiconductor industry was less than half of the former. In the technology hardware and equipment sector, the average valuation of A-shares is more than 63 times, and the average valuation of US stocks is not more than 50 times. Under such high valuation pressure, the A-share technology sector is obviously insufficient upward momentum.
Morgan Stanley said semiconductor demand may have been overestimated; the agency said that demand for smartphones, TVs and computer semiconductors is weakening, and there will be problems with LCD driver ICs, niche memory and smartphone sensor inventories.
When is the inflection point coming
Valuations are more than 1x higher than the lows
The trend of US technology stocks is worth referencing. After World War II, the United States experienced two major technological advances, one is the 20 years after World War II (1947 to 1969), the market tested production efficiency, and continuous orders, electronics, communications, etc. There have been obvious technological advances; the second round (1980 to 2001), small computers and Internet software and hardware have developed rapidly, and the number of netizens has expanded rapidly. In both time periods, individual stocks in the technology industry rose by more than 500%, and both significantly outperformed non-technology stocks.
For China's technology sector, the performance of the US technology industry has certain enlightenment. In the 14th Five-Year Plan, scientific and technological innovation has been significantly deployed. Relevant leaders also mentioned that "China's economic development has reached the current stage, and scientific and technological innovation is not only a development problem, but also a survival problem." "Scientific and technological innovation is highly valued, soft technology: big data, artificial intelligence, cloud computing, hard technology: semiconductors, chips, etc., will become the main development direction." In particular, hard science and technology has become the most competitive field at home and abroad.
When will the inflection point come, and when will technology stocks usher in a rebound? Data treasure statistics, in terms of the stage lows since 2019, on January 31, 2019, March 30, 2020, December 11, 2020, and March 25, 2021, the average valuation of individual stocks in the semiconductor industry, technology hardware and equipment, software and services in the three industries of A-share technology stocks (excluding extremes) was lower than the current, and on January 31, 2019, the average valuation of the semiconductor industry was less than 40 times, less than half of the current one. If according to the comparison of valuations, the technology sector still has some room for correction from the low valuation, and the current valuation is 1.6 times higher than on January 31, 2019, and the arrival of the inflection point will take some time.
20 undervalued semiconductor stocks were intensively investigated by institutions
The sector performance is sluggish, but technology stocks are receiving intensive attention from institutions. Securities Times data treasure statistics show that the latest valuation is less than 40 times, and the current valuation is lower than January 31, 2019, there are 20 technology stocks that have been surveyed by more than 30 institutions in the past three months, including 5 stocks such as TCL Technology, Industrial Fulian and Baotong Technology, which are valued less than 20 times.
Judging from the survey in the past 3 months, 5 shares such as Shengyi Technology, Transsion Holdings, and Lixun Precision have been investigated by more than 200 institutions, and Shengyi Technology has been investigated by 260 institutions, with an average of more than 3 institutions surveyed every trading day. The company said that some customer orders were received from October to November, high-end consumer orders are relatively long, and PCB customers have a better order status.
In terms of performance, among the stocks that have been disclosed in the three quarterly reports, TCL Technology, ZTE, and Shengyi Technology have a higher net profit growth rate in the first three quarters of 2021, and the first two shares are expected to double, of which the median increase in net profit of TCL Technology has reached 3.5 times, mainly benefiting from the prosperity of the semiconductor display industry higher than the same period last year, the continuous growth of production capacity, business and product structure optimization, and the semiconductor display business has achieved a year-on-year increase in shipping area of more than 30% in the first three quarters.
Disclaimer: All information content of data treasure does not constitute investment advice, the stock market is risky, and investment should be cautious.
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