Source: Guotai Junan Securities
General trend analysis: The volatility pattern of 3100-3500 points in the first half of the year is maintained, and the situation will be broken and waiting for the second half of the year. In 2020, A-shares started with a bumpy start, with a brilliant middle of the year, and the whole year was a tug-of-war of expectations of profits and liquidity. Looking ahead to 2021, the epidemic, China and the United States and other "old risks" will gradually be implemented, the global economic recovery is gradually showing dawn, but the tide of liquidity will recede, the global economic recovery is facing a proven truth, and the deterioration of geopolitical contradictions will be highlighted. The increase in economic momentum combined with the expectation of spring restlessness, and the market's expectations for economic growth further upward will make the index likely to break through 3,500 points, but it will still return to the 3,100-3,500-point volatility pattern in the first half of 2021; the recovery of profits in the second half of 2021 exceeds expectations and the rise in risk preferences under the expectations of the 14th Five-Year Plan reform will be the reasons for the breakthrough.
021 attaches importance to profit in the first half of 2021 and pays attention to risk preference in the second half of 2021. Logic 1: Overall profits in the first half of the year will meet expectations. Under the resonance of global consumption and manufacturing repair in the second half of the year, profit repair is expected to exceed expectations; Logic 2: Interest rate range fluctuates, liquidity pattern is stable, including China, and the slow exit of monetary policy is the general direction, and the focus should be on leveraging risks; Logic 3: External risks (epidemic, China and the United States), internal dual-wheel drive (capital market reform + opening up to the outside world), and risk preference is expected to rise in stages.
Industry configuration: Three golden flowers invested in the first half of 2021. is in a state of integrity and has a surprising structure. 2021 is still a crucial year for structure. The industry allocation method is crucial to gradually shifting from the industry rotation and comparative rules brought by the original economic cycle to the analysis and judgment of styles. Combined with the two characteristics of economic recovery driving profit recovery and slightly increasing risk appetite, we recommend the three golden flowers to invest in in 2021: the first golden flowers: from the infrastructure real estate cycle to the global raw material cycle. In 2021, the focus of market efforts will shift, the focus of economic growth at home and abroad will shift from infrastructure real estate to export, and domestic pricing cyclical products will give way to global pricing cyclical products. Recommended: copper/aluminum/petrochemical/magnetics. The second golden flower: shifts from a necessary consumption to an optional consumption. As the certainty of domestic and foreign political and economic environments increases, the certainty premium of low-risk essential consumer goods stocks will be marginally weakened. In the future, it will be necessary to test the ability of relevant listed companies to grow their performance, rather than relying on premiums to drive valuations. On the one hand, in the context of economic recovery, the rise in residents' marginal consumption tendency has brought about improvements in domestic demand; on the other hand, with the implementation of uncertainty in overseas and epidemics, risk preference has increased phased. Profit repair and risk preference environment make optional consumption better than necessary consumption. Recommended: home appliances/cars/hotels/tourism/furniture/textiles. The third golden flower: concentration, new energy technology. The risk preference position is still at the medium and low level, and a profitable track should still be selected in the technology style. With the optimization of the industrial structure and the acceleration of technological innovation, the prosperity of the new energy vehicle industry chain, which has been recognized by both technology and products, will still exceed market expectations. It is recommended to tracks related to the new energy vehicle industry chain, including new energy vehicle equipment/battery/panel/Internet of Vehicles.
Theme investment: exports, counterattacks of private enterprises, new retail. ) Export: a trinity of global resonance recovery, improvement of trade environment, and European and American warehouse replenishment cycle. Although the logic of supply advantages in the recovery of the epidemic is limited, the core momentum is beyond expectations on the demand side. We are optimistic about export performance, involving companies with a high proportion of exports in industries such as home appliances, textiles and clothing, and home furnishings. 2) Private enterprises counterattack: the total economic volume has been restored, but the structural changes have been huge. After experiencing the epidemic, vulnerable enterprises are forced to clear out, and the competitive advantages of advantageous enterprises have been strengthened. In the traditional manufacturing industry controlled by state-owned enterprises, excellent private enterprises with low cost and high efficiency will usher in the counterattack, involving industries such as machinery and equipment/petrochemicals/building materials/automotive parts. 3) New retail: an era of rapid changes in scenarios, model upgrades, efficiency upgrades and experience upgrades drive market share improvements. We are optimistic about the new retail determined by the "three-liter" trend, involving e-commerce/cosmetics/medical beauty and other industries.
Risk warning: (1) Repetition of the epidemic, strain mutation and vaccine progress are less than expected (affecting risk preferences and profits); (2) Policy uncertainty such as deleveraging and interest rate hikes (affecting risk preferences and risk-free interest rates); (3) Peripheral geopolitical risks (affecting risk preferences).
1 General trend analysis:
021H1 is still fluctuating, and 2021H2 breaks the deadlock
2020, A-shares started with a bumpy start, and the middle of the year is brilliant, and the whole year is staged a tug-of-war of expectations of profit and liquidity. Looking ahead to 2021, the epidemic, China and the United States and other "old risks" will gradually be implemented, and the global economic recovery will gradually show dawn, but pressures in many aspects such as global economic recovery, deterioration of geopolitical contradictions, and the retreat of liquidity will be highlighted. Since 2000, we must admit that the elasticity of each round of repair cycle has gradually weakened. In 2021, the global market will once again step out of risks and enter a repair cycle. Against the background of weakening of cycle elasticity, the probability of appearing beyond expectations in the total dimension is decreasing. This also means that strategic research needs to seek changes, top-down rotation and industry comparison are decreasing, and research needs to gradually deepen the structure, capture changes in business models and industrial structure, and find advantageous tracks and leading companies.
2021 general trend analysis: Spring is restless, and then return to calm, and the first half of the year is still fluctuating, and we will break the deadlock and wait for the second half of the year. In the first half of the year, the tug-of-war between liquidity tightening and the expected recovery of profits was the core reason for the fluctuation; in the second half of the year, the recovery of profits beyond expectations and the rise in risk appetite under the expectations of the 14th Five-Year Plan reform will be the reasons for the breakthrough.
Logic 1: Profits will generally meet market expectations in the first half of the year. In the second half of the year, under the resonance of global consumption and manufacturing industry recovery, profit recovery is expected to exceed market expectations.
There are no differences in the market in terms of the rhythm and direction of profits - 2021Q1 earnings peaked, and maintained positive growth in Q2-Q4. The key difference in the market lies in the profit repair slope : Currently, there are relatively sufficient expectations for the high slope in the first quarter of 2021, and there are also expectations for the slowdown in the slope in the Q2 quarter, while the vague area of expectations is in the second half of 2021. Looking ahead to the second half of 2021, it will not only be a rebound after the epidemic, but also a process of effective allocation of factors and effective release of demand in the context of vaccine promotion and improvement of the global trade environment. The global economy will enter a stage of deep recovery. We believe that the slope of the downward profit in 2021Q3-Q4 will be weaker than market expectations, and the profit recovery of globalization will be highly resilient.
Logic 2: Interest rate range fluctuates, liquidity pattern is stable, and the slow exit of monetary policies in the world, including China, is the general direction. The key point is to consider the risks of deleveraging in the second half of 2021.
2020 is a year of shock absorption due to the impact of the epidemic; 2021 is a year of recovery from the impact of the epidemic. Since China's monetary policy exit was earlier, although short-term disturbances in credit bonds will cause bond funds to pursue interest rate bonds, the turning point of economic expectations and liquidity will cause the overall upward trend of interest rates in 2021Q1, and the interest rates in 2021Q2-Q3 are expected to decline (the bottom is around 3%). In our overall judgment framework, the core of disturbance at the interest rate side is the impact of deleveraging and the rhythm of asset breaking the rigid guarantee, which still requires continuous observation.
Logic 3: External risks (epidemic, China and the United States, etc.) are implemented, internal dual-wheel drive (capital market reform + opening up to the outside world), and risk preference is expected to rise step by step.
Looking ahead to 2021, we need to analyze several paths that affect risk appetite one by one: (1) The epidemic. Although there is still uncertainty in the development of the epidemic, the pricing has basically been fully priced in the expectation of easing. What we need to pay attention to is the negative impact that exceeds expectations, but overall the possibility is relatively low. (2) The game between China and the United States. At the same time, as the global pattern enters a phased steady state, the Sino-US issue remains the most important issue under the current global political and diplomatic pattern. On the one hand, since 2018, the market's risk assessment of events such as China and the United States has been declining; on the other hand, with the increase in the probability of Biden taking office, the return of the normalized trade environment will actually increase risk appetite. Overall, the Sino-US game will enter a new stage, and there will be no phased "unexpected disturbances", but it will return to the normal game.(3) Internal dual-wheel drive will become the core variable in 2021. 2021 is an important year for the 100th anniversary of the founding of the Party and the implementation of the 14th Five-Year Plan. After the mid-2021, internal reforms and external opening paths will gradually be clear, and market risk preferences will increase step by step.
Core assumption:
first, the epidemic will not have a large-scale outbreak again in China, and the vaccine will be implemented in 2021H1 according to the consistent market expectations;
second, does not consider the impact of exogenous geopolitical events.
2 Invest in 2021 Three Golden Flowers:
Global Raw Materials + Discrete Consumption + New Energy Technology
Since 2019, the logic of market structural opportunities has gradually shifted from the industry rotation and comparative rules brought by the economic cycle to the analysis of style. The strategic team of Guotai Junan Research Institute believes that the essence of style analysis is caused by weakening differentiation among industries and strengthening within the industry under the existing economic structure. The Longma market we proposed in 2016 of "marginal improvement of competitive advantage" is the best proof. Looking back, we will usher in a period of phased economic recovery in 2021, but overall style analysis and judgment are still the top priority.
In 2020, the market has reached its peak. Since 2018, due to problems such as deleveraging and trade frictions, it has been various sub-tracks under the stock pattern. The logic of the marginal increase in competitive advantages of leading companies driving the increase in market share has gradually strengthened. With the help of the large inflow of foreign capital in 2019 and the loose liquidity in 2020, this type of company has moved from one end of the balance to the other end. In this regard, we must answer a question: Can we continue to use the ideas of these years when investing in 2021?
2021, investment certainty - not the certainty of the downward valuation, but the certainty of the upward valuation. In 2021, when valuation is under pressure, we need to pursue certainty more, but the source of certainty is not the safety cushion of valuation, but the certainty premium of profits.
.1. The first golden flower: Domestic bases turn to global raw materials
1 In October, China's infrastructure (excluding electricity) and real estate investment growth rates were +0.7% and +4.6% respectively, with the slope gradually flattening. Considering the completion status of government bond quota and the "credit turning point theory", investment has limited marginal action power. Infrastructure is expected to decline slightly in 2021. Real estate itself has strong resilience and will re-enter the slight decline channel under regulation. Since July, the long upward cycle of resource products has begun. Combined with the previous strength of the futures market and the Fed's expansion of the balance sheet to suppress the US dollar index, it is expected that upstream resource products globally priced in 2021 will perform well.
.2. The second golden flower: optional consumption is better than necessary consumption
As the certainty of the domestic and foreign political and economic environment increases, the certainty premium of low-risk must-have consumer goods stocks will weaken marginally. In the future, it is necessary to test the ability of relevant listed companies to grow their performance, rather than relying on premium to drive valuation.
After the impact of the epidemic, the domestic economy has undergone two stages of recovery driven by "resumption of work and production" and "policy investment". The overall process is more than half. The current economy has entered the third stage of domestic and foreign demand resonance. Consumption and exports have danced ballroom dance. In the future, the improvement of consumption is the strongest sustainability. On the one hand, considering the completion status of government bond quotas and the "credit turning point theory", investment has limited marginal action power. Infrastructure is expected to decline slightly in 2021, real estate itself has strong resilience and will re-enter the slight decline channel under regulation; on the other hand, the recovery of income of enterprise departments and residents' departments has triggered an endogenous recovery of demand, consumption behavior, especially cluster and social consumption behavior, normalization, marginal consumption tendency increases, marginal improvement in profit hedging risk preferences, and optional consumption is better than necessary consumption.
From the United States, consumption recovery is stronger than and earlier than manufacturing recovery. In terms of exports, my country's export volume in October (in US dollars) increased by 11.4% year-on-year, and increased by 1.5% month-on-month. Following the decline in epidemic prevention materials, non-epidemic prevention materials have become a new driving force for export growth, among which the growth rate of the automobile industry chain in October expanded by 12 percentage points to 15%, and the growth rate of toys expanded by 15 percentage points to 22%.The University of Michigan's consumer expectations index increased significantly from the Sentix investment confidence index for four consecutive months, and the gap between the growth rate of US manufacturing shipments compared with the retail consumption still exists, indicating that the market is generally worried about the rise in foreign demand, and the process of repairing foreign supply is not rapid, and the logic of substitution of overseas supply remains valid. A new round of stimulus from the United States may drive the export growth rate to remain above 6% in 2021. Under the assumption that China-US tariffs are cancelled, some optional consumer goods and upstream components will open upward space.
.3. The third golden flower: concentrate on the energy, new energy technology
risk characteristics stock selection is still the key, and the risk characteristics of new energy vehicles are worth paying attention to. In our report "Procyclical Direction under Low Risk Characteristics 20200801", we pointed out that wearing a seat belt between China and the United States means that everyone has a lower risk appetite, and stocks with low risk characteristics benefit relatively, while stock selection of current risk characteristics is still the key. We use the idea of CAPM model to calculate the Beta value to try to characterize risk characteristics, but there are some deviations: (1) CITIC's first-level industry precision is limited; (2) The three major factors affecting Beta - operating leverage, financial leverage, and return fluctuations cannot fully represent the risk at the investment level.
New energy vehicles are neutral in the low, medium and high risk divisions. Through the review of the 100-week and June beta values of CITIC's first-level industry after 2010, we found that power equipment and new energy are neutral in the low, medium and high risk divisions, which match the slow rebound in the risk assessment of China and the United States and the slow recovery of low-risk preferences in September may be the expected freezing point.
The profit cycle of new energy vehicles has become a consensus. If it is not done, the market focus is on the subsidy policy in 2021. We believe that the overall slope reduction is limited. According to the latest subsidy policy in 2020, the subsidy standard in 2021 will decline by 20% based on 2020. Based on the current maximum bicycle 22,500 yuan, the maximum reduction in bicycle subsidies in 2021 is 4,500 yuan, and the overall decline is controllable. At the same time, in terms of car companies, Volkswagen, BMW, , Audi, and other international car companies will have a number of new models in China in 2021. We believe that under the stimulation of multiple factors such as the slow withdrawal of national subsidies, the successive launch of new cars by mainstream car companies, and the continuous improvement of battery technology, the overall sales volume will return to a rapid growth level in 2021. In the medium and long term, the current penetration rate of new energy vehicles in my country is less than 3%, which still has a lot of room for improvement compared with the 25% planned share in 2025.
3 The petals of golden flowers:
Industry configuration view
.1. Changes in industry configuration: meso-weakening VS Micro-strengthening
m3m3m0m3m3m4: The industry's prosperity tends to be dispersed. According to the industry prosperity framework of Guojun's strategy and combined with the quantity and price indicators of various industries, the current cyclical industry, especially the mid- and upper-stream cycles, has sufficient growth momentum, but the overall industry prosperity is relatively scattered, and there is no ultimate interpretation of a certain style. The top ten industries in the meso-level industry are building materials, agriculture, forestry, animal husbandry and fishery, national defense and military industry, computers, mining, building decoration, machinery and equipment, steel, household appliances, and automobiles. Based on the ranking of style exploration, growth: computer (4); communication (16); electronics (18); finance: banking (23); non-bank finance (24); consumption: agriculture, forestry, animal husbandry and fishery (2); leisure services (12); food and beverage (20).
The weakening of the mesopotence: the industry's differences are downward at a high level. The Longma market of "five waves in consumption cycle" in 2017 quickly opened up the difference in market performance between industries A, and the rise of the new economy from 2019 to 2020 drove the main line of growth, keeping the industry's differences at a high level. By style, the slope of industry differences in the cycle gradually flattened, signs of growth downward gradually appeared, and consumption has declined. Looking back, with the advancement of my country's economic transformation and the empowerment of digitalization and intelligence, the division of labor between industries is becoming increasingly blurred, the industrial chain is showing a high trend of integration, and the relative importance of industry comparison has declined.
Microscopic enhancement: Beta keeps the right, Alpha is surprisingly. From 2005 to 2017, most industries in my country experienced a feast of growth, and the median beta of A continued to rise; from 2018, the tunnel from the growth period to the maturity period was opened, and the reach of growth space and the deterioration of the competitive landscape are the only way to turn from quantity to quality.Although the future of Beta is not abolished, how to find a leading company (unexpectedly Alpha) in the wave of industry concentration will be the key to winning.
.2. Global raw materials: strong upward cycle
(1) Copper/aluminum: Prices have exceeded the pre-epidemic level, and mid- and downstream demand is expected to continue to drive
0 Since April 2020, the price of copper and aluminum has recovered strongly. As of November 17, 2020, the spot price of LME copper price was 7,050 yuan/ton, and the spot price of LME aluminum price was 1,944.5 yuan/ton, up 46.97% and 30.59% from the end of March, respectively. In terms of large metal copper, the current Chile and Peru copper mines have not returned to pre-epidemic production levels after the epidemic. As of October 2020, my country's cumulative growth rates of copper ore and concentrate imported from Peru and Chile were 4.20% and -19.27% respectively, and copper ore imports continued to be at a low level. Looking back, as the market starts trading and recovery expectations are expected, coupled with the compression of copper mine capital expenditure during the epidemic, copper prices in 2021 are expected to continue to be strong under the mismatch of supply and demand. In terms of large metal aluminum, as of November 16, 2020, the social inventory of electrolytic aluminum has dropped to 596,000 tons. Looking back at the domestic demand for completed infrastructure, the performance of metal aluminum is worth looking forward to. At the same time, with the sharp increase in the amount of aluminum used in prefabricated buildings, coupled with the increase in the amount of aluminum used after lightweight and electrification of automobiles, the demand for aluminum may exceed expectations.
(2) Petrochemical/chemical: High increase in textile and clothing exports drive upstream chemical demand
In terms of petrochemical, weaving orders exceeded expectations, and the prosperity of polyester filament continues. Overseas demand and order transfer, terminal weaving orders have increased significantly, the operating rate of looms in Jiangsu and Zhejiang has increased sharply, and the price of polyester filament has stabilized and rebounded. As of November 16, 2020, the price of CCFEI polyester POY was 5,160 yuan/ton, an increase of 10.97% from April. Inventory has reached a low level due to the increase in production and sales of polyester filaments. As of November 16, 2020, the inventory of POY/FDY/DTY polyester filament factory dropped to 18/17/28 days. In terms of
basicization, the sales of MDI and titanium dioxide at the completion end of the real estate industry are expected to continue to improve marginally. my country's share of aggregated MDI exports has steadily increased, of which exports accounted for 39.5% in 2019, and the main exporters are the United States, , the Netherlands, , and South Korea. Currently, we believe that the lowest stage of MDI overseas demand has passed. With the slow recovery of the global economy, MDI sales will continue to show a marginal improvement trend. In September 2020, the number of aggregated MDI exports increased by 11.36% year-on-year, and has been marginally improving for six consecutive months. Titanium dioxide will also benefit from the recovery of overseas demand, driving the rise in both volume and price. The year-on-year growth rate of titanium dioxide export volume in August and September 2020 was 34.09% and 33.45% respectively. In terms of price, the price increase of titanium dioxide continues to be strengthened. At present, the spot price of titanium dioxide (rutile type) has returned to around 15,000 yuan/ton.
Overseas orders are back, and viscose staple fibers, spandex and dyes continue to maintain a high prosperity driven by high growth in exports of textile and clothing companies. Overseas orders such as India are showing a trend of shifting to the domestic market. Domestic textile and clothing exports are expected to gradually improve under the influence of improved demand and order transfer, which will drive the recovery of the prosperity of chemical products such as viscose, spandex, and dyes. In terms of viscose staple fibers, as of November 12, 2020, the price of viscose staple fibers (1.5D/38mm) was 10,600 yuan/ton, which is higher than the 9,500 yuan/ton at the beginning of the year. As cotton prices rise, demand for viscose staple fiber as a substitute will continue to rise. In terms of spandex, driven by the influence of downstream textile and clothing demand in the peak season and the upward price of raw materials at the cost side, product inventory sales were smooth and product prices increased. As of November 16, 2020, the price of CCFEI spandex 20D was 46,000 yuan/ton, an increase of 26.03% from the beginning of the year. In terms of dyes, with the upward transmission of downstream textile and clothing prosperity and the gradually optimistic expectations for future economic recovery, printing and dyeing factories are expected to gradually start the process of actively restocking after solving the cash flow and collection problems, prompting dye prices to bottom out and rebound.
In addition, due to insufficient overseas start-ups and improvements in domestic demand, tire performance is expected to exceed expectations. On the one hand, domestic passenger car production and sales have recovered, and the trend of domestic demand improvement is obvious. On the other hand, benefiting from the insufficient start of overseas tire leaders, the growth rate of tire exports will continue to rebound. In September 2020, a total of 625,300 tons of tires were exported, an increase of 16.61% year-on-year.
.3. Optional consumption: Recovery must be based on the medium-term dimension
(1) Home appliances: The gap in overseas supply and demand supports high export growth
0 The post-cycle angle of the United States real estate industry, refrigerators benefit more.In September, the sales of newly built housing in the United States increased by 33.93% year-on-year, and the export data of refrigerators after the epidemic was highly synchronized with it. The main reason is that other home appliance engineering channels in the United States account for a large proportion, and only refrigerators need additional purchases. From the inventory perspective, home appliances have greater flexibility in restocking. If used as a benchmark in 2010, the current overall inventory level of the U.S. manufacturing industry has reached the historical 15% quarter. By industry, although the inventory of U.S. home appliances has been in a state of continuous replenishment since June, the quantile level was only 21.8% of that in September, with a greater replenishment elasticity.
Domestic demand, the power of the post-cycle real estate industry is gradually showing, and the prospectus housing provides strong support. The completed residential area in September was -10.5% year-on-year, up 0.8% less than in August, but considering the base effect, the net increase in September was 0.3%, and the growth difference between the completed area and the area for sale narrowed. The sales area of existing houses and pre-sale houses was -17.9% and +1.3% year-on-year respectively, and the pre-sale house data returned to positive for the first time since the epidemic. Considering that the conduction delay between existing houses and pre-sales and home appliances is about 3 months and 8 months, the high elasticity of pre-sales since the beginning of the year will provide strong support for the post-cycle of real estate. In addition, 2020-2021 is a concentrated outbreak period for the renewal of China's home appliances, and the demand for renewal attention to the high proportion of ice and washing is needed. From 2010 to 2011, China's home appliances flourished under a series of consumption stimulus policies such as "home appliances go to the countryside", "energy conservation and benefiting the people", and "old for new". Referring to the safety service life standards of 8-10 years and the deepening of people's aversion to overdue service products under the background of consumption upgrades, 160 million home appliances are expected to reach the safe service life in 2020, including 37 million washing machines, 52 million air conditioners, 58 million refrigerators, 18 million electric water heaters, and 14 million range hoods. The logic of this round of home appliance renewal will continue until 2021. In terms of the proportion of update demand, 80% of the ice and wash with high maturity are worth paying attention to, while the air conditioner with slightly higher life cycle is about 50%.
(2) Auto: Sales volume continues to grow high, profit advantages spread
From the stabilization of industry sales to the continuous rapid growth, the profit advantages of the automobile industry will spread from leading companies to the entire passenger car complete sector in the future. Automobile production and sales were quickly repaired after a pitfall in February. In February 2020, the year-on-year growth rate of automobile production and sales was -79.82% and -79.08%, respectively, but by April, the year-on-year growth rate of production and sales had both turned positive, at 2.41% and 4.52%, respectively.
5 Since May, the growth rate of automobile sales has continued to remain above 10%. Judging from this round of automobile recovery cycle, the strength of automobile sales data since April 2020 is mainly due to the strong performance of passenger cars. Judging from the passenger car production and sales data in the second half of the year, the overall trend is showing a strong production and sales trend. The passenger car production data has maintained positive year-on-year growth since the epidemic returned to normal in June, reaching 2.08 million vehicles in October, a year-on-year increase of 7.56%, close to the high level since 2018. The sales data has improved more significantly. Since sales recovered in May, they have stabilized at more than 10%-15% year-on-year, of which 2.11 million units were sold in October, 9.46% year-on-year. From the perspective of terminal demand, the automobile consumption index in August 2020 was 77.8, which has been rising for three months and is significantly higher than the same period last year. Auto sales are expected to still grow rapidly in the future.
In addition to the increase in sales, the average sales price of passenger cars in this round is also continuing to rise, further reflecting the recovery of demand rather than relying on price reduction promotions. The high prosperity of automobiles is not only reflected in the recovery of passenger car sales data. In terms of price, the current price of passenger car has also seen a significant increase, among which the average sales price of passenger cars has increased from around 145,000 yuan/unit at the beginning of the year to nearly 160,000 yuan/unit. The overall price change index is also ongoing up, with the indicator reaching 8.72 in September, at a 10-year high. Therefore, the sales exceeding expectations in the passenger car market since the second half of 2020 is not the result of price reduction promotion, but the phenomenon of both volume and price increase.
(3) Hotel/Tourism: Travel demand is gradually releasing
Popular mobility is accelerating the recovery, and the urgent demand for business and travel supports the current hotel demand. In the future, the gradual release of travel demand will become an important increment that drives the improvement of hotel passenger flow month-on-month.Current population mobility is accelerating recovery. The railway passenger volume in September was 235 million, recovering to 78.7% from the same period last year, and the civil aviation passenger volume in August was 45.976 million, recovering to 84.7% from the same period last year. Since April, the first recovery of business and travel activities has become the main force driving the recovery of accommodation demand. With the continuous improvement of economic activities in the future, the demand for business and travel is expected to continue to support hotel demand. At the same time, in terms of travel demand, due to the impact of the epidemic, residents' travel demand has been suppressed since the beginning of the year. With the disposal of the epidemic in the future, the gradual release of travel demand will become an important increase in driving the improvement of hotel passenger flow month-on-month. In addition, due to the epidemic, individual hotels have accelerated their outflow, but due to their strong risk resistance, the annual store expansion speed of leading hotels has not been affected by the epidemic, and the concentration of the hotel industry will increase in a leap.
(4) Furniture: The vitality of the retail market is gradually emerging
From the demand side, real estate sales are gradually recovering, strongly supporting furniture demand. As of September 2020, the cumulative year-on-year growth rates of residential sales area and residential sales were -1.0% and 6.2% respectively, and there have been significant repairs. In terms of completion, as of September 2020, the cumulative completed area of residential buildings fell by 10.5% year-on-year, and the restoration was slightly lower than that of the sales side.
At the same time, as offline terminal stores resume normal operations, the retail market demand in the furniture industry has gradually released and brought about quarter by quarter. Since February 2020, the decline in furniture retail sales and building materials and home furnishing stores has narrowed and gradually recovered. As of September 2020, the year-on-year growth rate of furniture retail sales was -0.6%, and the year-on-year growth rate of retail sales of building materials and home furnishing stores was -11.79%. Although the growth rate has not turned positive, it has narrowed significantly. The recovery in the retail market is expected to bring about further improvements in furniture sales.
(5) Game: The prosperity of the mobile terminal continues to increase
The prosperity of the mobile game market continues to increase, and the sales revenue of the domestic mobile game market continues to maintain rapid growth. In the first quarter of 2020, due to the impact of the epidemic, domestic mobile games actually achieved sales revenue of up to 55.4 billion yuan, a year-on-year increase of 46% and a month-on-month increase of 38%. In the second quarter of 2020, sales revenue fell slightly to 49.3 billion yuan, but the year-on-year growth rate was still 26%. After experiencing explosive growth in the first quarter and a decline in the second quarter, the actual sales revenue of mobile games in the third quarter of 2020 rebounded compared with the previous quarter, reaching 50.8 billion yuan, a year-on-year growth of as high as 25%. We expect the mobile game market to grow by more than 30% in 2020, and the market prosperity continues to improve.
cloud gaming will be the first to become one of the 5G commercial application scenarios, and the market size will continue to grow rapidly. Cloud gaming is a game based on cloud computing. After adding computing power to the cloud, it has high requirements for bandwidth and low latency. With the acceleration of the construction of 5G base stations, cloud games have already had the foundation for rapid development. Cloud service providers, IDC service providers, game operators and developers are expected to be the first to enjoy the dividends brought by the explosion of the cloud gaming industry.
(6) Textile and clothing: At the same time, benefit from retail + high export growth
Retail industry is recovering rapidly, and the growth rate of online retail is expected to be restored to more than 20%. In September, the retail sales of clothing, shoes, hats, and textiles reached 112.5 billion yuan, an increase of 8.3% year-on-year, the highest growth rate since September 2018. The growth rate of online clothing retail in September was 3.3%. Although it is lower than the overall retail growth rate, its growth rate recovery slope is very stable and is expected to continue to recover to more than 20%.
Overseas orders are back, textile and clothing companies benefit from the high growth in exports. Under the influence of the epidemic, India, a major textile and clothing exporter, has seen a sharp decline in export growth rate since the epidemic, and its export volume has dropped by more than 20% for five consecutive months since April. Overseas orders returned against the backdrop of India's decline in exports. In September, my country's textile and clothing exports grew by 14.84% and 0.18% year-on-year respectively. At the same time, with the improvement of the industry's prosperity, raw material prices have risen rapidly, with the 328 cotton price index close to 15,000 yuan/ton, and the advantages of low-priced cotton inventory of the original leading industry companies have emerged.
.4. Concentrate energy, new energy technology
(1) New energy vehicles/batteries, etc.: The sales volume is expected to increase by 2025 target
After the epidemic, the recovery of new energy vehicle sales has shown great flexibility, and the upstream prosperity has improved. In 2020, due to the impact of the epidemic, my country's overall sales of new energy vehicles were 393,000, a year-on-year period of -37.4%.Starting from July, sales of new energy vehicles gradually recovered. In July, August and September, sales of new energy vehicles were 97, 109 and 137,000 units, respectively, an increase of 22.65%, 28.22% and 72.96% year-on-year. Stimulated by the growth rate of production and sales, the upstream prosperity has increased significantly. In terms of electrolytes, the prices of lithium hexafluorophosphate and dimethyl carbonate (DMC) have continued to rise since June, and the prices of dimethyl carbonate have continued to remain above 10,000 yuan/ton. In terms of positive electrode materials, the price of electrolytic nickel (Ni9996) has continued to rise since April, exceeding the price of 114,500 yuan/ton at the beginning of the year. The performance of lithium and cobalt prices has stabilized. After experiencing a sharp decline in 2019, the price of lithium has stabilized at the bottom. After experiencing a slight upward in August, the price of cobalt tetroxide (; 72%) has stabilized at 210 yuan/kg in October.
In the short term, the subsidy policy will continue and the overall decline will be limited in 2021. At the same time, the construction of charging infrastructure will accelerate under the background of new infrastructure, and the improvement of supporting facilities is expected to further stimulate sales. According to the latest subsidy policy in 2020, the subsidy standard in 2021 will decline by 20% based on 2020. Based on the current maximum bicycle 22,500 yuan, the maximum reduction in bicycle subsidies in 2021 is 4,500 yuan, and the overall impact is controllable. In addition, in March 2020, new energy vehicle charging piles were included in the seven major areas of new infrastructure. Since then, from the State Grid to local governments, a series of construction plans and subsidy policies have been introduced. The acceleration of charging infrastructure construction is expected to further stimulate sales.
In the medium term, the sales growth of new energy vehicles under the 20% target in 2025 is expected, and the profits of new energy vehicles, industrial chain equipment and batteries will exceed expectations. On November 2, 2020, the State Council issued the "New Energy Vehicle Industry Development Plan (2021-2035)", proposing that by 2025, the sales volume of new energy vehicles will reach about 20% of the total sales volume of new automobiles. Currently, new energy vehicles account for far less than 20% of automobile sales. In July, August and September, the proportion of new energy vehicles was only 5.37%, 5.00% and 4.60%, and the historical highest value was only 8.45% in December 2018. With the target of 20% in 2025, sales of new energy vehicles will usher in rapid growth. The profits of new energy vehicles are closely linked to sales, and future profits are expected.
(2) Panel: LCD supply and demand continue to improve, 5G replacement drives OLED
LCD panel supply and demand improve, and downstream demand for TV, vehicle and other downstream demand will drive the continuous increase in panel demand. The sharp drop in LCD panel prices in 2019 has led to the continued deterioration of the operating conditions of panel manufacturers. In order to cope with the pressure of operating losses, major panel manufacturers have controlled output by reducing the production rate and closing production lines. The supply and demand pattern of LCD panels has improved significantly. From the perspective of downstream demand, TVs are still the largest application market in the downstream of panels. In the third quarter of 2020, global TV shipments reached 62.05 million units, a year-on-year increase of 12.9% and a month-on-month increase of 38.8%. As overseas demand picks up in the future, the increase in TV shipments under the resonance of domestic and external demand will continue to drive demand for large-size panels. The current price of TV LCD panels of all sizes has risen by 40% compared with May. In the future, the price prosperity will continue with strong demand for panels. In addition, the trend of large-size display panels in the car and 5G smart screens will bring further demand to LCD panels. In terms of
OLED, 5G replacement will further drive AMOLED demand. Smartphones are the largest application market for AMOLED panels. In the future, with the popularization of under-screen fingerprint and under-screen camera technologies, the penetration of AMOLED on the mobile phone will be accelerated.
(3) photovoltaic : The bidding subsidy policy exceeds expectations, the volume and price increase
The domestic bidding subsidy policy exceeds expectations, the volume and price of the photovoltaic industry are both upward, and the performance elasticity is high. From a quantitative perspective, photovoltaic demand will continue to grow in the next year. In June, the National Energy Administration released the photovoltaic bidding subsidy results far exceeding market expectations - the total supported installed capacity is 26GW. According to the forecast of Guojun Dianxin team, the annualized demand of the photovoltaic industry in Q4 2020 will reach 160GW. Therefore, from the perspective of performance elasticity, photovoltaics have both the growth slope of technology stocks and the volume-price elasticity of cyclical stocks, and the profit recovery slope has advantages. From a price perspective, as of November 9, the domestic polysilicon material price rose by 42% compared with the end of the first half of the year, and the price of silicon wafers also stabilized and rebounded. On the one hand, the rise in prices shows that the industry's prosperity has rebounded significantly, and on the other hand, it increases the performance elasticity of the photovoltaic industry chain.
From the perspective of overseas proportion, representative companies in the photovoltaic industry accounted for 36% of the overseas business in 2019. As the overseas epidemic is controlled, the photovoltaic industry's foreign demand rebounds is highly elastic. In the future, with parity in the grid, the profitability of photovoltaic industry will be increased and the profit quality of photovoltaic operators will be improved.
4 Theme investment:
Export, counterattack of private enterprises, new retail
.1. Export: The efforts will continue to be the trinity of the global resonance recovery, the improvement of the trade environment, and the European and American warehouse replenishment cycle. Although the logic of the supply advantages of the epidemic repair is limited, the core momentum is beyond expectations on the demand side. We are optimistic about export performance, involving companies with a high proportion of exports in industries such as home appliances, textiles and clothing, and home furnishings.
first, export growth accelerates, and the proportion of global export share continues to increase. my country's export volume in October (in US dollars) increased by 11.4% year-on-year, an increase of 1.5% month-on-month, and China's commodity trade exports account for the global export share. Following the decline in epidemic prevention materials, non-epidemic prevention materials have become a new driving force for export growth, among which the growth rate of the automobile industry chain in October expanded by 12 percentage points to 15%, and the growth rate of toys expanded by 15 percentage points to 22%. my country's replacement of export share to other countries is still continuing.
Second, demand exceeds expectations is the core momentum, and exports may maintain high growth in 2021. The trinity of global resonance recovery, improvement of trade environment, and European and American warehouse replenishment cycles. Although the logic of the supply advantages of the epidemic recovery is limited, the core momentum is beyond expectations on the demand side. Based on 2010, the overall manufacturing inventory level in the United States in September has reached the historical 15% quarter. We are optimistic about export performance, and companies that account for a high proportion of exports and have flexibility in replenishing the warehouse in industries such as home appliances, textiles and clothing.
.2. Private enterprises counterattack: It has come to the time
2021, the economy will return to its original normal level. Even if the total demand and total output return to its original level, the structure of the enterprise has undergone tremendous changes. We have seen that after experiencing the epidemic, vulnerable companies have been forced out of the industry and the competitive advantages of advantageous companies have been strengthened. Excellent private enterprises continue to seize market share with low cost and high efficiency. If the corporate structure is improved, corporate profits will also undergo structural differentiation. The epidemic has promoted the industry reshuffle. Taking manufacturing as an example, the market will re-recognize that overcapacity is not an important label for manufacturing. The key is private enterprises with competitive advantages that counterattack.
Private enterprises counterattack: the total economic volume is restored, but the structural changes are huge. After experiencing the epidemic, vulnerable enterprises were forced to clear out, and the competitive advantages of advantageous enterprises were strengthened. It can be seen that the gross profit margin of private listed companies was ahead of state-owned (34.27%; 30.34%). Excellent private enterprises with low cost and high efficiency will usher in a counterattack, involving industries such as machinery and equipment/petrochemicals/building materials/auto parts.
.3. New retail: model upgrade, efficiency upgrade, experience upgrade
Top-down logic: strong recovery of consumption under economic recovery. The market’s doubts are that the gap between the rich and the poor under monetary easing will affect the slope of consumption recovery. In addition, the deterioration of residents’ balance sheets under the impact of the epidemic has led to top-down suppression of consumption capacity. However, we believe that the rise in residents' savings rate and bank deposits for two consecutive quarters means that the problem of residents' balance sheet is not the core issue, the key lies in the repair of consumption channels and consumption scenarios. With the deepening of economic recovery from local to comprehensive, we believe that consumption under the economic recovery will be at a high slope.
The meso-view logic: the "three-up" trend in the new retail direction is determined, and the competitive advantage continues to rise. As a "place", retailers play the role of connecting "goods" and "people", and their core value is to reduce losses, improve efficiency, product and service experience. E-commerce has greatly improved circulation efficiency by breaking information asymmetry and enriching product selection. The rapid changes in traffic and the enhanced platform's voice enhance the barriers to e-commerce operations are expected to promote a steady increase in industry concentration. Benefiting from the empowerment of e-commerce, the cosmetics and medical beauty industries have shown an accelerated recovery trend in Q3 2020. With the increase in residents' marginal consumption tendency, the GMV of related platforms is expected to further increase in the future.In an era of rapid changes in scenarios, model upgrades, efficiency upgrades and experience upgrades drive market share improvements. We are optimistic about the new retail with the determined "three-increase" trend, involving e-commerce/cosmetics/medical beauty industries.
5 Risk warning:
sudden factors affecting logic
(1) Repetition of the epidemic, strain mutation and vaccine progress are not as expected
The secondary outbreak of overseas epidemics is true, and the rise in confirmed cases in Shanghai, Tianjin, Anhui, Inner Mongolia and other places since November has caused the market to worry about the repeated domestic epidemic. At the same time, under the cold winter, the possibility of strain mutation cannot be ignored. Since the clinical effectiveness of Pfizer vaccine exceeds 90% to boost confidence, the recent trial data of Moderna and AstraZeneca have been unblinded one after another, but before large-scale vaccination, the new crown vaccine still needs to go through multiple links such as registration and declaration authorization, marketing approval, and pricing confirmation, and the pace is difficult to control. On the one hand, this will put pressure on risk preferences, and on the other hand, it will restrict the profit-side logic of domestic and external demand resonance.
(2) Policy uncertainty such as deleveraging and interest rate hike
Although from the perspective of slope, compared with the leverage repair process of the impact of the financial crisis, residents are still on the way to increase leverage, but at the absolute leverage level, my country is currently unable to say the safety margin. Deleverage is the sword of Damocles hanging on the equity market. Recently, the recent statement that the current interest rate is lower than the natural level has brought doubts about interest rate hikes, and no transactions related to this expectation have been found in the market. The uncertainty of the above policies will increase interest rates while reducing risk appetite.
(3) Peripheral geopolitical risks
The global economic vulnerability under the impact of the epidemic has been demonstrated. The rise of anti-globalization and populism have exacerbated geopolitical risks. The horizontal and vertical retraction of the industrial chain poses a challenge to my country's status as a "world factory". In China and the United States, although Sino-US relations have temporarily "relaxed", the long-term trend of the Thucydides trap is irreversible, and risk events will temporarily suppress risk preferences. After Biden took office, on the one hand, the epidemic governance first and tariffs were cancelled, there was a dispute over whether he would fulfill his promises; on the other hand, the theory of China's threat is a consensus between the two parties in the United States, and Biden's promotion of multilateral trade cooperation and re-entering the group is also unfavorable to our country.
6 Guojun Strategy 2021 Gold Stock Portfolio
