Cai Mingzhang’s point of view: New Year’s Eve market mainstream replacement of high valuations will fall, low valuations will become stronger | Anue Juheng

The theme of today’s report is “New Year’s Eve market mainstream replacement, high valuations will fall, low valuations will become stronger”.

Wanbao Investment Gu Cai Mingzhang emphasized that the New Year’s Eve market is expected to advance, the candidate for the chairman of the Federal Reserve will be determined soon, and the monetary policy will continue the dovish stance. The two major landmines of the mainland economy, Evergrande Real Estate and Ziguang Group, will receive capital injections and acquisitions. Taiwanese stocks have two major advantages: the profit growth of listed companies and the high yield rate next year. It should break through the historical high of 18,034 points in the lunar new year in January next year. Look forward to the target price of 18,500 points.

However, this week’s Thanksgiving holiday disturbance in U.S. stocks, and Taiwan stocks have been rising for 7 consecutive weeks, short-term overbought, fear of shocks and consolidation before the Wanba barrier, if the market is forced to pass, it is easy to see a sharp decline after Wanba, the end of January next year in the Chinese New Year Early in the morning, Taiwan stocks were closed for 11 days, so the capital is the most loose before the Spring Festival, and it is expected to hit a swing high.

Wanbao Investment Gu Cai Mingzhang emphasized, the question is which stocks will play the leading role in the new year’s market? The biggest threat to the global stock market in 2022 is the interest rate environment. If inflation remains high, it is possible that the Fed will raise interest rates earlier from December to July, and raise interest rates twice throughout the year. If interest rates are raised earlier and the number of times increases, The highest point of Taiwan stocks next year will fall in the first quarter, so it is necessary to launch this New Year’s Eve market early.

Wall Street’s famous saying is “Never run counter to interest rates.” Once the Federal Reserve raises interest rates, it will change the valuation of stocks. Any stocks with high price-to-earnings ratios, low dividend yields, high price-to-net-value ratios and large stock prices will collapse. These stocks should not become the protagonist of this New Year’s Eve market.

Sell ​​early and win first. Investors with slow hands and feet will be caught up in high-end interest rate hikes in the second half of next year, and the Federal Reserve will start a cycle of interest rate hikes. It will not only raise interest rates once or twice, but for two or three consecutive years, many times, overvalued. The value of stocks all the way down, the decline will be amazing.

Wanbao Investment Gu Cai Mingzhang emphasized that let’s take a look at the following phenomena. The new crown epidemic broke out last year. Taiwan stocks rose 23% in the first year. The index closed at 14,700 points at the end of the year. 8. In the past two years, it has risen by 44%. Investors must admit that the crisis has turned into a turning point, and the base period of Taiwan stocks has increased substantially.

Once interest rate hikes pour cold water, which stocks will fall the most? It is definitely not a performance stock with a low valuation, but a high valuation that has risen too far. In other words, what Buffett said, “When the tide goes back, you will know who is swimming naked.” This will be fully revealed next year’s interest rate hike.

Wanbao Investment Gu Cai Mingzhang emphasized that “people without long-term worries, there must be near worries.” Highly-valued stocks have to wait until the market’s low volatility to sell. It is better to take advantage of this wave of New Year’s Eve market rallies. Usually, small and medium-sized stocks rise the most after a crisis, and they can’t stop rising to a high price-to-earnings ratio.

When the epidemic was at its worst in March last year, Silicon Power-KY(6415-TW) The minimum is 666 yuan, and the P/E ratio is calculated based on the EPS 35.72 yuan of the year, which is less than 20 times. Later it rose by 7 times, but now it is more than 5,000 yuan. The P/E ratio calculated based on this year’s estimated EPS of 66 yuan has reached nearly 80 times. Since last year, the P/E ratio has increased by 60 times.

Compare MediaTek (2454-TW) The P/E ratio at the lowest price of RMB 273 in March last year was 10 times, and now it is more than RMB 1,000. The P/E ratio calculated with this year’s estimated EPS of RMB 67 is 16 times. In the past two years, MediaTek’s P/E ratio has increased by 6 times, and Estimated revenue next year will exceed 20 billionDollar, An increase of 18% compared with this year, it is estimated that it will pay a cash dividend of 62 yuan with a yield rate of 6%, while the dividend yield of Silicon Power-KY is estimated to be less than 0.5%. It may not be that all small and medium-sized stocks will fall sharply in the interest rate environment next year. However, the high valuation will not escape the catastrophe.

Wanbao Investment Gu Cai Mingzhang emphasized that looking at the performance of domestic equity funds, foreign investors sold more than 540 billion yuan in Taiwan stocks last year, and this year they sold another 480 billion yuan. In the past two years, foreign sales have exceeded 1 trillion yuan. Needless to say, foreign trader performance is not as good as investment trust. Taiwan stocks rose 23% last year, but the average return rate of domestic equity funds was 26%, beating the market. The top 10 returns took off at 39%, and the champion won 51%.

The broad market has risen 21% so far this year. As of November 18, the average performance of 165 domestic Taiwan stock funds has an average performance of 35%, and the average return rate of the top 15 funds in performance is as high as 64%, which is three times that of the broad market. Carefully analyze why the performance of domestic stock funds is so good. The adoption of small and medium-sized stocks by investment credit is the main contributor. However, using the warnings of fund sales, past performance does not represent future performance.

Wanbao Investment Gu Cai Mingzhang emphasized that the base period of small and medium-sized stocks is too high. When faced with the test of interest rate hike next year, the stock price will fall more than the increase rate. Stocks, transferred to undervalued stocks.

According to statistics, the investment letter has sold Super Chihara since November (3035-TW), Qiangmao(2481-TW), Xinxing(3037-TW), Han Lei (3707-TW), Keibo (3189-TW), Shunde (2351-TW) Waiting for the electronics stocks that have experienced big gains this year. Among them, Hanlei and Zhiyuan have increased by more than 270% this year, and their estimated P/E ratios are 256 times and 44 times respectively.

Conversely, the most over-buying of investment letter in November is the airline duo China Airlines (2610-TW), Evergreen Airlines (2618-TW), memory Winbond (2344-TW), Panel Double Tiger AUO (2409-TW), Innolux (3481-TW) And Financial Holding’s First Gold (2892-TW), Development Fund (2883-TW), Shin Kong Gold (2888-TW), Cathay Pacific (2882-TW) Wait. Note that these stocks have a different style. They are no longer small and medium-sized, but undervalued stocks.

The protagonist of this New Year’s Eve market is in low-valued memory, panel, finance, shipping, and steel. There are many soldiers available, and they take turns to battle, just as the stronger the compression of the ball, the stronger the rebound. Cloud and computer demand will help memory bottom to rebound in the first half of next year. Investment banks are optimistic about Micron, which will also drive Taiwanese manufacturers Winbond and Macronix (2337-TW), South Asia (2408-TW), ADATA (3260-TW), Jinghao Branch (3006-TW)。

Winbond made a profit of 4.4 billion yuan in the third quarter and EPS of 1.13 yuan, both hitting a record high. Although the fourth quarter was off-season, it fell by 20% from the high point. This year, the increase is only 9%. The stock price has fully reflected the bearishness of the memory industry. In the first three quarters, Jing Hao Ke’s EPS was RMB 13.72, the full-year estimate was RMB 19, and the P/E ratio was 9 times. The estimated dividend for next year was RMB 10 and the yield was 6%, but the peak fell by more than 20%.

The media reported that China Zhaoyi Innovation, Changxin, and Yangtze Storage will cut into niche memory, posing a threat to Taiwanese manufacturers, but the actual global market share is very low, and the business is different from that of Taiwanese manufacturers. The threats to Taiwanese manufacturers It’s too early.

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