Source Lesheng assets: “steady” stage singing “new” drama

2022-05-26 0 By

Left: Lv Xiaojiu, founding partner and fund manager of Source Lesheng Right: Yang Jianhai, partner and fund manager of Source Lesheng In the fourth quarter of 2021, the GDP grew by 4.0% year on year, the growth rate dropped significantly.In order to maintain normal economic recovery in 2022, great efforts must be made to stabilize economic growth and provide a growth rate within a reasonable range for high-quality development.In December 2021, the Central Economic Work Conference stressed the importance of ensuring stability, and called for efforts to ensure stability, economic development, and social security, strengthen and improve macro regulation, increase cross-cycle adjustment of macro policies, and make macro policies more forward-looking and targeted.We believe that the significance of “stable growth” is to provide a better macro environment for high-quality development and economic transformation. The best investment opportunities may not lie in economic growth itself, but in structural adjustment and economic transformation.The divergence of Monetary policies between China and the US has attracted the attention of many investors. However, compared with monetary policies, we should pay more attention to the pattern of relevant industries in China’s economy and the deduction of its policies.Reviewing the development of Chinese and American industries, we can find that compared with the United States, many Chinese industries have a strong consistency of growth in the early stage of increasing penetration rate. However, after a certain penetration rate, Chinese industrial companies will quickly enter the Red Sea market from the blue sea, and competition will intensify, thus affecting their profitability and stock price performance.Therefore, mid – and long-term investment from the perspective of Chinese industry is not only a simple judgment of monetary policy, but also the impact of industrial life cycle and relevant industrial policies on the natural growth rate of enterprises.China’s economy is facing several major changes, including changes in international relations, China’s official “3060” dual carbon target, the COVID-19 pandemic, and China’s demographic transition.Based on these changes, we put forward several investment themes worthy of attention: Reducing carbon emissions is a topic that few major countries can reach consensus on when international relations become increasingly complex. There is no doubt that countries are determined and motivated to carry out green transformation.Dual carbon is an important narrative that will shape the world over the next 5-10 years.Many people believe that the double-carbon related industry has been rising for more than a year and a half, and it is difficult to find significant investment opportunities. However, we believe that the double-carbon industry will be the “sea of stars” industry in the future. Some links may be oversupplied at present, but there are always some links that will benefit.For example, upstream raw material production capacity to increase the price of decline, downstream expansion is the most benefit.The new energy industry related to double carbon is still worth exploring.Recently, many investors have withdrawn from the new energy industry, and related stocks have also suffered a large decline. In the long run, we believe that there are still great opportunities for some industrial links with good industrial patterns. Of course, links with deteriorating competition pattern or imbalance between supply and demand in the industrial chain should also be avoided as far as possible.At the same time, we must achieve security across key supply chains in key areas, including resources, materials, equipment, technology and processes;In the context of the penetration of the Internet into industrial Internet and continuous breakthroughs in superimposed algorithms and computing power, many aspects of the business sector have already started digital transformation. The COVID-19 pandemic has become the accelerator of this process. In the face of the challenge of social isolation, both the supply side and the demand side need digital means to meet their demands.We are optimistic about semiconductor, some medical sectors to maintain high growth.But to be specific, the overall semiconductor industry chain is long, and the prosperity of each industry segment is also different. Some segments of the conquered technology have a huge space for future development.Industries including scientific instruments and new military materials are also good investment opportunities in the future.The export advantage of China’s low-end manufacturing industry is weakening, and economic growth is shifting from demographic dividend to population quality dividend/engineer dividend. Technological breakthroughs in the fields of automobile electrification and intelligent industrial chain, innovative pharmaceutical R&D and manufacturing industry chain, semiconductor and new materials are all benefiting from this.In 2021, due to factors such as the unexpected growth of overseas commodity demand caused by the epidemic and the contraction of commodity supply caused by the pressure of supply chain at home and abroad, the prices of domestic upstream and some midstream manufacturing industries rose sharply, which put a lot of pressure on the gross margin of downstream finished product enterprises.With the slow resolution of supply chain pressures and the slow release of upstream supply, we can expect downward adjustment pressure on the prices of mid-to-upstream goods in 2022, which means the gap between PPI and CPI will narrow.Historically, gross margins for downstream producers of finished goods have improved in such situations.This means that the distribution of profits in various industries will shift from upstream to downstream, which will benefit the performance of equity markets.(Written by Source Lesheng Asset Management Co., LTD.