Newsletter summary

The policy of the Beijing Stock Exchange catalyzes reform and high-quality development. In 2023, revenue declined and net profit declined, while 2024Q1 revenue continued to decline and net profit decline narrowed. The ROE of the Beijing Stock Exchange is superior to other sectors, with excellent performance in characteristic industries such as automobile and artificial intelligence. The number of initial public offerings has declined, the products of public offering funds are innovative, and the valuation level is low. It is suggested to pay attention to the fields of machinery, electrical innovation, chemical industry, TMT, automobile and so on. Risks include policy, liquidity and lower-than-expected corporate earnings.

Text of news flash

Stable development, reform and innovation of the Beijing Stock Exchange to create the "main position" of innovative small and medium-sized enterprises

Since the implementation of the 19 articles of Deep Reform, the Beijing Stock Exchange has issued a number of policies, involving the bond market, public offering review and other areas, in order to promote the stable development and innovation of the market. As of April 30, 2024, the Beijing Stock Exchange has 248 listed companies, with an average market capitalization of 1.4 billion yuan, and 50% of them are state-level "specialized and special new" small giant enterprises, highlighting their special and new features and smaller market capitalization.

The performance end of the Beijing Stock Exchange is under pressure, with both revenue and net profit falling in 2023.

In 2023, 226 companies in the Beijing Stock Exchange achieved positive return net profit, accounting for 91%, but the average revenue decreased by 0% compared with the same period last year.Customarcademachines.38% to 701 million yuan, while net profit fell 24.85% to 51 million yuan compared with the same period last year. In 2024, the average revenue of the Beijing Stock Exchange continued to be under pressure, falling 11.46 per cent year-on-year to 143 million yuan, while net profit narrowed to 14.43 per cent, an improvement from the 35 per cent year-on-year growth rate in the previous quarter.

The revenue volume of the Beijing Stock Exchange is relatively small, and the year-on-year decline in 2023 is less than that of Science and Technology Innovation Board.

In 2023, the cumulative average return net profit of the Beijing Stock Exchange (- 24.85%) was less than that of Science and Technology Innovation Board (- 39.90%), but in Q1 in 2024, the year-on-year decline of the North Stock Exchange's net profit (- 14.43%) was greater than that of other sectors. In addition, the average ROE of each quarter of the Beijing Stock Exchange has been significantly better than that of other sectors since 2023.

The advantage of the characteristic industry of the Beijing Stock Exchange is outstanding, and the performance of the automobile and artificial intelligence industry chain is relatively excellent.

In different industries, the automobile industry chain of the Beijing Stock Exchange has a strong performance, with an average revenue growth rate of 17.4% year-on-year in 2023, better than the 15.3% of the motherboard. In the field of machinery and equipment, the performance shows a trend of revenue growth and profit decline, which is mainly affected by factors such as the decline of manufacturing industry and the intensification of price competition. The overall performance of the TMT industry is under pressure, while the profit proportion of the basic chemical industry will reach 100% in 2023, and the performance of Q1 shares will be divided in 2024. In the new field of electricity, affected by the overcapacity of the industrial chain, profits generally declined, but some equipment and auxiliary materials enterprises performed well.

The number of initial public offerings on the Beijing Stock Exchange has declined, the products of public offering funds have innovated, and incremental funds have entered actively.

From January to April 2024, the number of initial public offerings on the Beijing Stock Exchange declined somewhat, but the market was steadily expanding. At the same time, public offering fund products continue to innovate, and incremental funds enter the market actively. Three new passive index funds have been added to the 24Q1 North Stock Exchange, and the size of the North Securities 50 passive index fund has exceeded 2.129 billion yuan.

The trading end of the North Stock Exchange is structurally differentiated, and the valuation level is relatively low.

Q1 in 2024, the market heat of the Beijing Stock Exchange gradually declined, the trading structure was differentiated, and the turnover of thematic stocks changed significantly. The average daily turnover of Beijing Stock Exchange / Science and Technology Innovation Board / gem in April was 48.97519.59 / 210.372 billion yuan respectively, down from the previous month. The valuation level of the Beijing Stock Exchange is relatively low, with the median of PE (TTM) and PB (LF) being 20.23x/2.10x, respectively, lower than Science and Technology Innovation Board and gem, and there is room for continuous increase in the future.

Investment advice focuses on the "specialized and innovative" enterprises of the Beijing Stock Exchange, focusing on a number of niche areas.

Investors are advised to pay attention to the scarcity targets in machinery, Dianxin, chemical industry, TMT, automobile and other subdivisions of the Beijing Stock Exchange, including but not limited to machinery enterprises such as Tongli shares, Dingzhi Technology, electric new enterprises such as sharing Technology, basic chemical companies such as Hechang Polymerization, light industry and consumer enterprises such as Minshi, TMT companies such as Odeway, and automotive industry chain enterprises such as Yi Shi Precision.

Risk hints involve policy risk, liquidity risk and lower-than-expected corporate profits.

While paying attention to the investment opportunities of the Beijing Stock Exchange, investors should also pay attention to the possible policy risks, liquidity risks and the risk that corporate profits fall short of expectations.

(Customarcademachines: congratulations