The value ranking of 81 companies on the Beijing Stock Exchange, and institutions placed these 36 companies ahead of schedule (subsidiary shares)

Red Week Reporter | Liu Zenglu

New markets, new opportunities. With the upcoming implementation of the Beijing Stock Exchange's market opening expectations, in the nine trading days since November, the total transaction amount of select tier companies has exceeded the turnover for the whole month of October. Of the 71 stocks listed on the select tier, 69 outperformed the 1.57% stage increase in the three-board index during the same period.

Behind the rise of these companies, their quality has also performed well. According to the reporter's statistics, at present, in the first three quarters of this year, all select tier companies were superior to the main board and GEM companies in terms of revenue growth rate and net profit growth rate, and their profitability and operating capacity were also clearly superior. At the same time, as can be seen from the institutional holdings published in the Third Quarterly Report, 36 companies have already entered the list of major positions of investment institutions.

Some investors told the “Red Weekly” reporter that in the future, the performance of “specialized, special and new” companies will continue to meet expectations and raise expectations, and as market capital recognition continues to increase, attention to institutional capital will also continue to rise and drive up sector valuations.

Selected tier companies generally rose before the opening of the Beijing Stock Exchange

As the opening of the Beijing Stock Exchange approaches, the market performance of select tier companies can be described as extremely active. Overall, since November (as of the 11th, same below), the total number of shares traded by select tier companies has been 605 million shares, with a total transaction amount of 9.886 billion yuan, surpassing the transaction volume of 385 million shares and 7.888 billion yuan for the whole month of October.

Previously, select tier companies belonged to the OTC market, and many institutional investors were restricted by investment qualifications and were unable to enter, resulting in poor market liquidity and a certain discount on corporate valuations. However, the establishment of the Beijing Stock Exchange means that the new third board and the main board will be further connected. Wang Yang, an analyst at Zhejiang Securities, believes that after the opening of the Beijing Stock Exchange, the valuations of selected companies will be clearly repaired upward.

At the individual stock level, out of 71 selected listed companies, 69 outperformed the 1.57% stage increase in the three-board index during the same period, with an “outperformance rate” of 97%. Among the two individual stocks that “lost”, Guandian Defense still suspended trading because it applied for a transfer to the Science and Technology Innovation Board. Out of these 71 stocks, excluding the individual stocks that have just been listed, the one with the strongest trend is Geshe Foods, which achieved an increase of 110.61% in just 9 trading days; 4 companies, Tonghui Information, Guangzhou International, Meizhikao, and Yintu Internet, received gains of more than 50%.

Since the official announcement of the establishment of the Beijing Stock Exchange in September, there have been 16 selected companies, and 5 have completed listing. Judging from the performance on the first day of listing, Guangmai Technology had the highest increase, with an increase of 87.76% on the first day; Guangzhou International, which had the weakest increase, also rose 4.21%.

The overall performance of these “sub-IPOs” is in stark contrast to the IPO performance of the Shanghai and Shenzhen markets. Since mid-October 22, when technology created the first day of IPO listing in the Shanghai and Shenzhen markets this year, 9 IPOs have successively experienced first-day breakouts. The most serious first-day breakout was Chengda Biotech. The closing price of 80 yuan/share was 27.27% off the initial price of 110 yuan.

When the Beijing Stock Exchange opens, will it be affected by the current high number of IPO breakouts in the Shanghai and Shenzhen markets? In response, Yu Dingheng, chairman of Shenzhen Yihu Investment, said in an interview with the “Red Weekly” reporter that it is unlikely that this will happen. He believes that the market's expectations for the Beijing Stock Exchange are relatively high, and the valuation premium offered will also be higher. Zhang Kexing, chairman of Grey Asset, also told the “Red Weekly” reporter that even if it had an impact, the Beijing Stock Exchange is positioned as China's “Nasdaq,” and its opening is of epoch-making significance.

The overall performance of the three quarterly reports of the selected tier is excellent

Compared to companies listed on the Shanghai and Shenzhen Stock Exchange, select tier companies are generally smaller, but the company's growth rate is very high. According to the reporter's performance statistics for the Three Quarterly Report, the overall performance of select tier companies in the first three quarters of this year was excellent.

Currently, out of 71 listed companies, with the exception of Guangmai Technology, all have completed the disclosure of the three quarterly report data. These companies achieved total revenue of 41,518 billion yuan, an increase of 35.07% over the same period last year; realized a total net profit of 4.562 billion yuan, an increase of 32.5% over the same period last year. The overall growth rate was only weaker than the Science and Technology Innovation Board, which was clearly superior to the Main Board and GEM. If you count the overall profitability of select tier companies, the average return on net assets of 9.33% for the first three quarters of this year is superior to that of the Main Board, GEM, and Science and Technology Innovation Board. At the same time, in terms of operating capacity, the overall inventory turnover ratio of the three quarterly reports of select tier companies was 3.09 times and the total asset turnover ratio of 0.53 times also ranked first in the major sectors. Obviously, the overall sales capacity of select tier companies has also been relatively strong since this year.

Compared with performance, the overall valuation of select tier companies has a “depression” effect. Currently, the average price-earnings ratio of 42.88 times is only higher than that of main board companies.

Specifically, at the individual stock level, 29 companies in the selection tier reported a three-quarter increase in total operating income of more than 30% year on year; 20 companies had positive net profit with a year-on-year increase of more than 30%; at the same time, there were 12 companies that satisfied an increase of more than 30% in revenue and net profit. Among them, Betray achieved three-digit growth in both revenue and net profit.

According to information, Betray started with natural graphite and expanded the field of artificial graphite, and its anode material shipments rank first in China. Guotai Junan analyst Pang Junwen believes that given the company's overall costs are expected to be further reduced and the product's widespread influence among well-known companies such as Samsung, LG Chem, Ningde, SKI, and Panasonic, the company's growth is worth looking forward to, and the company's net profit is expected to reach 2,750 billion yuan from 1,461 billion yuan this year by 2023.

The agency laid out 36 select tier companies ahead of schedule

At the institutional level, some investment institutions have established select tier companies. According to the reporter's statistics, out of 70 selected companies that have disclosed their three-quarter reports, public and private equity funds and brokerage firms appeared in the majority shareholder list at the end of the third quarter of 36 companies; the latest institutional holdings of 8 companies increased further from the end of the second quarter, including Liancheng CNC, Anhui Phoenix, Changhong Energy, Bingyang Technology, Longzhu Technology, Tongxiang Technology, Jiaxian Co., Ltd., and Zitong Palace; 6 companies became heavy institutional targets for the first time in the third quarter, including Datang Pharmaceutical, Jilin Carbon Valley, Wuxinzhuang, Meizhigao, and Starlight Technology, Qilu Huaxin.

According to statistics from the number of participating institutions, the information technology company Changhong Energy received the most attention. At the end of the third quarter, a total of 6 institutional products were heavily invested in them, and among them, Huitianfu Innovation and Growth Growth has regularly opened hybrid funds for one year, Capital Securities, Hongta Securities, Jianghai Securities, and China Merchants Growth Select all increased their positions or created new positions for a year. In the end of the second quarter, the total holdings increased by 1.121,200 shares compared to the end of the second quarter. According to statistics on the increase in shares held, Liancheng CNC, a new energy equipment and service company, received the highest number of additional shares. Although only three institutions, CICC, China Merchants Growth Select, the Hybrid Fund, and the Southern Consumer Upgrading Hybrid Fund, had heavy holdings on them, their total holdings reached 8.2932 million shares, an increase of 6.654,600 shares over the end of the second quarter.

Being in the new energy sector, which currently has a high level of attention in the capital market, Liancheng CNC, founded in 2007, became the first batch of new three-board selection tier enterprises in July last year. The company is the world's leading manufacturer of crystalline silicon growth and processing equipment for the photovoltaic and semiconductor industry. Its main products include monocrystalline furnaces, wire cutting equipment, grinders, and argon gas return devices. In the first three quarters of this year, the company achieved a net profit of 177 million yuan. As the global carbon reduction campaign begins, the power industry bears the brunt of the impact. Because of its cleanliness and economy, photovoltaic power generation is the first energy source in the wave of electricity substitution. According to the CPIA forecast, in 2025, the number of new photovoltaics installed in the world will reach 270 to 330 GW. In order to cope with the rapidly growing demand for installed equipment, the proliferation of new entrants in silicon wafer technology and the acceleration of monocrystalline silicon wafer production expansion, Huaxin Securities analyst Liu Huafeng analyzed and predicted that the company's net profit attributable to the parent company from 2021 to 2023 was 416 million yuan, 583 million yuan, and 755 million yuan, respectively.

Tong Diyi, general manager of Longying Fuze Asset, told the “Red Weekly” reporter that “specialization and innovation” is an important direction in the medium to long term of the market. In the future, the performance of “specialized, special and new” companies will continue to meet expectations and raise expectations. As market capital recognition continues to increase, attention to institutional capital will also continue to rise, thus driving the stock prices of these companies to continue to strengthen.

(This article was published in “Red Weekly” on November 13. The article mentions individual stocks for example analysis only, not trading suggestions.)

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