statement: personal investment notes, not as investment advice.
Foreword: This article is still written around consumer products, and the idea of stock selection for industrial products can be applied.
A good company must have a good product, and a good product is the "wheel" of the flywheel.
General consumable consumer goods are in the form of traditional products for individual consumption, and they will no longer exist or be incomplete after consumption.
e-commerce and social apps like Taobao, WeChat, etc. belong to the Internet platform, which is also a new type of product form. The difference is that it can be consumed by multiple people at the same time.
To consume the former, we generally have to pay measurable money, and to consume the latter, we generally have to pay immeasurable time. From the perspective of the limited length of life, we may be incurring a greater cost than we imagined to consume the latter. Friends who understand opportunity cost can understand the information content of this view. The world is so big, I want to see more, but the more time we use the Internet platform, the further away we are from the real natural world.
The author has always believed that a platform such as short video APP is not the welfare of the world to some extent, but the success of capital, and a disaster for society. Money defines the world, which is very sad. Z1z
stretch, our attention is the scarce resource in the world, we don’t need to pay directly when using the Internet platform, but when we use the platform, we donate our attention resources for free, and the platform uses these attention resources to monetize or trade. . For example, when advertisements are realized, the wool comes out of pigs.
In order to facilitate the presentation, we will further restrict the product to the traditional consumer product form in the follow-up text. As a framework, industrial products and Internet consumer products can be discussed independently with reference to this idea.
first express his opinion directly: a good product of must have three attributes, namely, rigid demand, high frequency and "high gross profit".
one is just needed.
Good products must have rigid requirements.
What is rigid demand? It just has to be used, it doesn't work.
What consumption is just needed in life?
seven things to open the door, firewood, rice, oil, salt, sauce, vinegar and tea are just needed. In these few words, we can at least see several companies with a market value of hundreds of billions. Arowana, which has just gone public, has a market value of Haitian flavor industry. In most Chinese kitchens, it is actually a very strange thing to not see these brand labels. The market value of tens of billions is even rarer, such as Hengshun Vinegar Industry, Angel Yeast, Fuling Mustard and so on. Just need it.
Chai, rice, oil, salt, sauce and vinegar tea is just needed by the general public, and there is a category of products that have niche needs, such as the high-end seasoning Qianhe Weiye. It should be reminded that the investment is not worth investing just for the public, and it is not worth investing for the minority. Whether it is worth investing must be comprehensively evaluated in conjunction with two other attributes such as consumption frequency and gross profit.
Let's give an example that the minority just needs.
Shenzhou is very empathetic, and we have deep feelings when we exchange cups. Everyone, look at the valuation of baijiu, all of which are flying in the sky.
No matter how many people drink baijiu, any baijiu brand is essentially operating a niche market relative to the masses. The authentic Feitian trademark of
is only owned by Moutai, so Moutai is worth two trillion, and it may be worth ten trillion in the future. why? The logic is that Moutai is a niche group that likes to drink Moutai. The demand exceeds supply. Direct sales, price increases, and the expansion of production capacity mean that there is still a lot of room for future development. In addition, if the niche is slightly more frequent, or the niche is slightly more popular, it is a huge marginal increase in the output value and profit of Kweichow Moutai. Seeing this is the key to understanding Maotai's valuation.
draws a key point: a good product of must be a rigid demand of some consumer groups.
The world is so big and there are so many people. A seemingly small proportion of people just needs to add up is actually a lot.
The second is high frequency.
went on to say, whether the masses or the niche, if they only consume once, twice or three times, even if the total amount is large, it is not sustainable enough and does not meet our requirements for the sustainable development of high-quality companies. What about
? Look at the frequency of consumption.
must be used for just need, high frequency is used, but also used frequently.
Good products must be consumed more frequently. No matter how good things are, no matter how expensive they are, and the low consumption frequency means that there is always a visible ceiling for market capacity.
For example, air conditioners are not high-frequency consumer items, so IWe can see why Gree feels tired today because the consumption frequency of its main products is really low. Air conditioners are generally not replaced for seven to eight years, and the volume of other products has not risen. Gree’s smart equipment is now generally expected in the market. In essence, it is not an industrial product purchased at a high frequency. No matter how good the Asimer products are for lithography machines, they cannot be compared with consumer goods companies like Apple in terms of market and valuation. . Although Gree's valuation has recently picked up, it is more about the improvement of the reference market, rather than the strategic transformation and the essential changes in the consumption attributes of current main products. The market value has reached the mark of four to five hundred billion yuan. It is obvious that air-conditioning products alone cannot support the further increase in market value. It is not that the air conditioner is not good, but the consumption frequency is too low. The recovery in valuation can only say that the market believes that Hillhouse and Sister Dong are very likely to think of a way to transform.
mobile phones are not the same, two to three years at most three to four years of replacement cycle, compared with air conditioners, televisions are high-frequency consumption. I have used a mobile phone for up to five years, and I feel that I can use it as a cultural relic directly after leaving my post. The shortest one took less than half a year. I bought more than 7,000, and I was too lazy to repair the broken screen on the ground. I couldn’t stop working for a day, so I immediately bought another 4,000-plus. No way, this is determined by just need + high frequency.
From this perspective, under the background of the suppression of Huawei, Rebs’s vision of the king of the Xiaomi Group has become clearer. Of course, Huawei will not be suppressed, Xiaomi is also fighting stubbornly, the road is right, China's industrial intelligent manufacturing pioneer. Lei Jun's ambitions are different from those of ordinary people. From design, manufacturing to consumer electronics, he is a strategist with a deep layout in the era of the Internet of Things.
food and beverages are more frequent, and medications for chronic diseases are also frequent, and they are used every day. Coca-Cola and Nongfu Spring are all high-frequency consumption beverage products that are seen every day. Hypertension, diabetes, and hyperlipidemia medications are also inseparable from patients who have been diagnosed every day. Of course, there are more factors in the collection of medicines, and evaluation is complicated. Some more.
Three is "high gross profit".
products have rigid demand and high-frequency consumption. Is everything going to be all right?
is not.
must also have "high gross profit". The author puts quotation marks on purpose. This gross profit is a bit different from the gross profit in general accounting meaning. To optimize it, it is the product sales revenue minus the product direct cost minus the product sales expense.
Generally speaking, the first subtraction is what we usually call gross profit. It should be noted that some industries may have a false "high gross profit" trap with high gross profit and high sales expenses. For example, the direct manufacturing cost of biomedical products is not too high, and the gross profit is very high, but the corresponding sales expenses are also high. Then this must be viewed objectively. The gross profit is only appraised after subtracting the sales expenses. It can be easily observed that, relative to the scale of income, the absolute value of the net profit of general pharmaceutical and biological companies is much lower than the sales expenses, and the high gross profit is eaten up by the sales expenses. The sales cost of several billions is very, very scary. Of course, this topic is "the emperor's new outfit". Anyone who knows knows what is going on. The author never thinks that the board should be used in the head of pharmaceutical companies. They are themselves weak under the policy and market environment. The solution to this problem is ultimately Look at the rationality and speed of the policy evolution of the medical industry. Z1z
products with real high gross profit attributes are easy to judge from market phenomena. It is basically right to find these characteristics: sells well, does not worry about selling, and is infinitely close to the seller’s market.
The seller sets the price, the seller decides the number of sales, and the seller earns the profit under the set profit level.
Of course, sellers in the seller’s market will make decisions cautiously. Even if there is only one seller in the market, they must also consider policy control issues. The woods will be destroyed by forest winds. The premise of allowing a free market to exist is to ensure the common welfare of society. The grasp of this degree is more a psychological problem. The
enterprise has done too well to benefit the world, and there will be more regulatory measures waiting. Anti-monopoly and evasion of anti-monopoly are issues that large companies must face.
There was once a domestic company that almost sold itself successfully, but was terminated by the Ministry of Commerce in the name of anti-monopoly, and ended up in desperation. It is the tragic Huiyuan juice.
The traditional consumer goods industry does not have too many monopoly and anti-monopoly issues. The monopoly gains high and competition comes naturally. Huiyuan has encountered incomprehensible control and is a victim of the times. Internet anti-monopoly is imperative, because the industry has a natural monopoly trend. Once a natural monopoly, it is like forming a traffic artery.Antitrust users and consumers have almost no room for struggle. For example, Alipay, WeChat Pay, and WeChat, which are now in full swing, are all like this. After the Internet platform has grown larger, it has essentially evolved from a purely market-defined product to a part of the social public infrastructure, and it is inevitable to face stronger supervision. How many products of
large A shares have the most high gross profit attributes?
Others may have different opinions. So far, Kweichow Moutai should be recognized as meeting these high-margin descriptions. This is why for so many years, the most legendary investment target is Kweichow Moutai. The other liquor brothers have largely sought the favor of Guimao. After all, the market retail price of more than 2,000 and the general cost of several dozen yuan This has left enough market performance space for a large number of liquor peers.
Kweichow Moutai’s success has historical reasons, and depends more on the correct decisions of the previous management and the patience and patience of . This may be the author’s different view than the market. The right time, the right people and the uniqueness that makes Moutai.
The author does not invest in liquor companies, the above is only used as an example. The author does not vote for liquor and does not deny the financial investment value of liquor companies.
finally struck the relationship between the three attributes:
just need is the premise and the foundation. Without rigid demand, there will be no high frequency and no high gross profit. Selling fake-demand products means high sales costs and high gross profit is useless. The
high frequency is the guarantee of continuous income, and it is the layer upon layer of rigid demand.
High gross profit is the embodiment of the unique brand competitiveness based on rigid demand + high frequency, commonly known as brand premium, mastering the pricing power is like holding the golden key to high gross profit.
Stock investment optimization just need + high frequency + "high gross profit" product company, patiently discover good targets.
Note: The notes were first published on the official account of "Skyscraper Investment Notes" on November 15, 2020.
