"Nuggets" in the low-end valuation

As the market continues to soar, the "28 phenomenon" in the market has reappeared. The differentiation of individual stocks is obvious, the strong are constantly strong, and the weak are constantly weak. Significant differentiation trend.

On April 21, more than 30 stocks hit record highs, and 22 stocks fell by the limit; among the declining stocks, 17 stocks hit record lows, 8 fell by the limit, and more than 50 stocks fell by 5% %above.

A large number of investors made the index but did not make any money. How to capture the "two" in "twenty-eight" in the next wave of market prices does require a lot of effort.

Market participants believe that the biggest difference between this round of market cycle and the historically rising market of A shares is that this round of rising is because high-quality stocks are sought after. The maturity of the market is ultimately based on performance. Whoever discovers high-quality stocks early can make money.

Since the end of last year, the A-share market has gradually stepped out of the bear market. One of the fundamental reasons is that investors have seen that the valuation of the A-share market is relatively low compared with mature markets, and a number of listed companies have investment value. From an investment point of view, if you enter the market when the value is undervalued, the probability of making money is very high. In other words, the process of investing is the process of finding undervalued stocks and leading the market. Because stocks that are truly undervalued will eventually be discovered and recognized by the market and return to their original colors.

Looking for "three low" companies

Institutional investors are often good at "digging gold" from low-end valuation fields.

United Securities advised investors to look for "three lows" investment opportunities in a report. When encountering cyclical industry troughs, if a large-scale company can maintain good asset quality and operating conditions during the downturn, and the company is undervalued, such a company should maintain a relatively low price-earnings ratio, price-to-book ratio, and price-to-current ratio. In this way, companies with “three lows” financial indicators, even without the incremental support of industrial capital, can still recover relatively faster when the next industrial cycle rises. These large-scale companies are generally companies with a total market value of more than 3 billion yuan.

Southern Asset Management believes that from the perspective of valuation, industries such as steel, paper, textile, coal, electricity, as well as highways, airports, and ports have all been significantly lower than the market average valuation level, but the recent market performance has continued to lag behind .

The bull market follows the trend, and the bear market follows the valuation. From the current point of view, the current market optimism and the structural bull market phenomenon make China Southern Asset Management still tend to the principle of industry trend allocation in the second quarter, and continue to maintain a positive outlook on current performance, and the industry has a strong and sustainable business overweight allocation; However, due to the high market uncertainty in the second quarter, valuation will be a more important consideration once refinancing and the separation of new and old shares and the listing of non-tradable shares have a negative impact on market sentiment. Therefore, investors should also pay close attention to investment opportunities in low-end areas of valuation, and gradually turn to industries that are expected to improve performance expectations.

Utilities stocks are undervalued

In terms of listed road and rail companies, Southern Asset Management believes that rising oil prices, possible fuel taxes, excise taxes on automobiles, increased maintenance spending, and uncertainty about asset acquisitions are all in the near future. Negative factors affecting the expressway listed companies, although the valuation after the share reform is very low, but investors do not like it. However, the company's stock price will grow slowly with the continuous growth of performance, and the investment timing may be after the announcement of the first quarter results.

Southern Asset Management recommends paying attention to G Tielong and the A-share listing plan of Guangzhou-Shenzhen Railway. Under the market background of increasing railway investment, listed companies related to upstream and downstream railways, including equipment, construction, transportation and other companies, will face good development opportunities.

Wanjia Funds said utilities stocks with low overall valuations deserve attention. At present, the 2006 dynamic price-earnings ratio of listed expressway companies after the share reform is only about 11 times, while the average dividend yield is mostly over 5%, and maintains a growth of 10% to 20%. The investment value is very obvious. The market price of listed companies such as airports and ports is generally discounted by more than 30% from the discounted cash flow value, which has a sufficient margin of safety.

There are periodic trading opportunities in power stocks

In addition, the power sector has not performed well in the recent market, and it is also considered to be undervalued. China Merchants Securities believes that blue-chip companies in the power sector have become more and more obvious in their "value earning" characteristics due to insufficient growth and high dividend yields in recent years. Larger market opportunities in the future will come from industrial consolidation and restructuring. Short-term opportunities will arise after the stock prices of mainstream companies fell again in March and were generally significantly undervalued. Under the expectation of coal-electricity linkage, they rose in late March and early April. Upside, the magnitude depends on the rate of increase in the broader market, and the power sector will see a compensatory rise in the rotation of the industry sector.

From the perspective of short-term opportunities, the valuation of leading companies in the power sector is obviously low. Coal and electricity linkages improve company performance. The fall in market coal prices will increase the expectations of power companies' future performance. Therefore, it is more likely that the market will rise after the market rises.

International, historical, and inter-industry comparisons show that the price-earnings ratio of leading power companies is low, which does not match their relatively fast growth. Moreover, the key leading companies have generous dividends and high dividend yields, and the dividend yield is comparable to that of bonds.

Guosen Securities believes that periodic trading opportunities in the power industry will become relatively prominent in the second quarter.

Analysts suggest that investors can choose from leading large companies and featured small companies. Companies with long-term asset allocation are: Guodian Power, G Changdian, G Huaneng, and G Yue Power. The companies with more opportunities in the stage are: G Shenzhen Energy, G Huajing, Laurel Power, G Polarihua, G Jinshan, G Zhangdian. The firm defensive company is: G Shenergy.

Companies worthy of attention

G Tielong

G Tielong achieved a main business income of 110 million yuan in the first quarter of 2006 and a net profit of 31.4974 million yuan; The main business income decreased by 4.65%, and the net profit increased by 36.87%.

According to the analysis, the main reason for the decrease in revenue but the substantial increase in net profit is that the Shawan Railway branch line acquired by the company at the end of October 2005 is operated according to the new model, and began to obtain transportation clearing income, railway freight and Lingang The revenue of logistics business increased compared with the same period of last year, and its main business profit increased by 11.18 million yuan.

Judging from the first quarter report, the incremental net profit contributed by the Shawan Railway branch line will exceed the company's forecast. The company completed the acquisition of the special container assets and business of China Railway Container Corporation at the end of the first quarter, and the railway container logistics business will begin to generate revenue and profits in the second quarter. According to the forecast, starting from the second quarter of 2006, the special box business can bring the company a net profit of 30 million yuan, equivalent to 0.065 yuan per share.

Analysts predict that the company will achieve earnings per share of 0.34 yuan in 2006; the 2006 dynamic price-earnings ratio is 20.3 times. Everbright Securities maintained an investment rating of “Advantage-2” on G Tielong.

GJinxi

Jinxi Axle's 2006 1st quarter report shows: the main business income is 79.87 million yuan, a year-on-year increase of 17.5%; the main business profit is 17.82 million yuan, a year-on-year increase of 47.8%; the net profit is 4.51 million yuan , an increase of 8.6% year-on-year. Earnings per share reached 0.044 yuan, lower than market expectations.

CICC believes that the company has sufficient orders, export orders have reached 40,000 units, and domestic sales orders are expected to gradually increase; as the technological transformation projects gradually take effect in the second quarter, the company's production capacity bottleneck is expected to be partially alleviated; the proposal to acquire a group company's vehicle factory It has been approved, the second quarter can be consolidated, and it is expected to contribute several million yuan in net profit for the whole year.

Analysts predict that the company's earnings in the second and third quarters will be significantly better than the first quarter. The long-term demand of China's axle market is still very optimistic. CICC analysts believe that the current price-earnings ratio of the company's 2006 earnings is 18 times, and the price-to-book ratio is 2 times, which is not high. With the release of profits in the 2nd and 3rd quarters, the company's stock price will still have a good increase, maintaining the recommended rating.

G-Wantong

In 2005, the company's performance grew rapidly. The company's bicycle revenue under the method of weight-based charging and the completion of the renovation of the Hening Line brought the super-speed growth of profits.

In 2005 and the first quarter of 2006, the performance increased rapidly: the annual report and quarterly report realized the main income of 1.54 billion and 410 million yuan, respectively, up 24% and 4% year-on-year; earnings per share were 0.40 yuan and 0.11 yuan, respectively, year-on-year Growth of 63% and 27% was largely in line with expectations.

China Merchants Securities believes that the company's performance is still expected to continue to improve on the current basis, and the current stock price is underestimating the company's intrinsic value, giving it a "recommended-A" investment rating.

Considering the stable growth of the company's traffic flow and the possibility of major shareholders injecting high-quality assets, in addition, according to the share reform agreement, a high dividend ratio will be achieved in the next few years (the dividend yield in the next few years will be above 6%), refer to A The price-earnings ratio of 12 to 14 times in 2006 is acceptable, and the reasonable price range is 5.4-6.3 yuan, which is still 14%-33% higher than the current price. The investment rating is "recommended-" A".