Ling Peng is very interesting. The period from 2010 to 2012 is the afterglow of A-share asset investment along the economic cycle. Ling Peng is the most insightful and appealing strategic analyst at this stage. His strategic thinking + wide-body policy theory + industry comparison three series of research reports, in my opinion, have solved three problems: A-share constraint interpretation (market structure + listed company structure) + strategic research methodology (driving force + verification signal) +A-share industry sorting (upstream, midstream and downstream industry sorting).
The saddest part of the dragon slaying technique is probably that the dragon died . At the beginning of 2013, China’s economy has entered a period of transformation, and the pro-economic cycle assets have entered a long journey. There are also phased market conditions brought about by supply-side reforms, but in general, resources + finance + real estate + heavy capital investment are big Class combinations have not been popular in the past decade.
The new development paradigm is not completely clear so far, but the old methodology must not be able to cover the market. Therefore, Ling Peng’s private equity performance is not good. I think it’s not that Ling Peng doesn’t know how to invest, but that he can’t find a sword in the ocean of the rising new economy.
By the way, these are also the opinions of the family. I still like to read Mr. Ling Peng’s content very much, and it is very enlightening for investment. Investment has many facets, just take a look at different viewpoints and have fun. I believe that my nonsense will not damage Mr. Ling Peng’s senior image in the slightest. I’m talking about these because Mr. Ling Peng’s article on consumption today is very interesting to me.
Ling Peng did not directly answer how to look at consumption at present, but recalled how he looked at the cycle in 2012. At that time, he had four logics for seeing the long cycle:
1. Great stories are still being delivered. An important reason for everyone holding cyclical stocks back then was that China’s urbanization rate still had room to improve and the real estate bubble continued. In hindsight, this assertion was very true. Reflecting on this logic, everyone has overlooked one point: Although the story is still fulfilling, the best time may have passed, and at that best time, major companies are desperately expanding their production capacity, and these production capacities will be cashed out in large quantities when the slope of future demand slows down. , This is also a problem that consumer products need to face in the next few years.
2. The valuation is at the lowest level in the previous five years. In 2012, due to the decline in the previous two years, the valuation of many cyclical product industries was at the lowest level in the previous five years. Bubbles can sometimes be very long, maybe not more than one or two years. When you have been in the prosperity of an industry for five or even ten years, you are naturally accustomed to high positions. But in the end, as the tide fades, the valuation will reach an unimaginable position. In 2020, the valuation of cyclical stocks is generally 10% or even lower than that in 2007.
3. There is no problem with short-term fundamentals. After in-depth research and continuous follow-up, investors at that time felt that the fundamentals were fine. If you were short on cyclical stocks at that time, they would come up with countless micro-research and corporate guidance to ridicule the short-sellers for their lack of in-depth research. However, when an industry goes down, the valuation is first killed, and then the fundamentals are realized.
4. Bad news is being released, and good news is emerging. The opposite of love is not hate, but indifference, which was the reality back then! In fact, since 2010, the decline of cyclical stocks is no longer a matter of monetary policy, but the past of an era. Just standing at that stall, everyone has not yet broken free from their original investment habits, and the stock price will still react in a “muscle memory style”, but the general trend is over!
Ling Peng believes that looking at today’s consumer stocks, everything has a feeling of deja vu.
The so-called killing is nothing more than that. These four logics can be found in the corresponding trend of thought in consumer stocks at the moment: consumption upgrades, five-year low valuations (but absolute valuations are not cheap), some high-end consumption data is still beautiful, economic expectations After the improvement, the consumption inertia rose.
It really takes courage to make the judgment that consumption is at its peak. In the A-share market for nearly two decades, the sector with the most profitable effect is consumption. Food and beverage, home appliances, condiments, traditional Chinese medicine and other tracks, where cattle come and go, have achieved countless legends of A-share value investment. There was a joke before that if a fund manager chooses the consumer track, he has already succeeded in half.
In my opinion, if you look at the k-lines of leading consumer stocks such as Moutai, Gree, and Yili, you can actually see that the rhythm is basically the same. It started to take off in 2005, accelerated around 2012, and went crazy in 2019.
From the perspective of fundamental logic, leading consumer companies have generally enjoyed two waves of growth dividends, the first wave is channel dividends, and the second wave is brand dividends. Liquor, milk, air conditioners and other consumer goods have completed the entry into the national market, which means a wave of super growth. At the same time, after the formation of brand effect, leading consumer companies have formed an absolute competitive advantage over waist companies. In terms of marketing budget and product follow-up, waist companies have little power to fight back.
Three elements of consumer product analysis: channel power, product power, and brand power. Most of the success of leading consumer companies in the past was built on channel power and brand power.
If fund managers in the consumer track have a deep enough understanding in these two fields, they can make a lot of money. This can be called the golden age of consumer fund managers.
However, in the past two years, the overall beta of the leading consumers around high-quality factors has not been good.
There are several reasons that are debatable. First, in the large category of consumer goods, leading companies have completed channel layout and brand building. The industry dividends are exhausted, and the performance basically depends on the industry prosperity. Second, the macroeconomic situation in the past two or three years has been bad, and residents’ willingness to consume has been low. Third, after experiencing high valuations since 2017, most leading consumer companies are not cheap.
This has also led to the sluggish performance of consumer fund managers in the golden age.
Looking forward to the future, the difficulty of consumption and investment will increase significantly. It is entering the silver age. Traditional consumption beta is difficult to continue to provide high growth, while new consumption also has many problems.
On the one hand, there will be a situation in which supply creates demand in the consumer industry, and new consumer products emerge one after another. From sweeping robots to various medical and aesthetic projects, a large-scale market can be created within a few years; on the other hand, any new supply industry The competition is particularly fierce, and it is difficult to judge the sustainability of the industry and the competitiveness of the company. Some new consumption is booming, and its death is also sudden. For example, blind boxes have become the focus of research by many giant fund companies.
Consumption investment in the silver age, Alpha comes from the precise grasp of new consumer products and the forward-looking judgment on the market appeal of products. To sum up, the golden age of consumption pays more attention to the understanding of channel power and brand power, while the silver age of consumption needs to pay more attention to the grasp of product power. The alpha of consumption at this stage may come more from various corners of the segmented consumer market, which also puts forward higher requirements for fund managers, and both breadth and depth are indispensable.
I will write more about the consumer fund managers of the Silver Age later. I am more concerned about Dacheng Qi Weizhong, Harvest Wu Yue, and Bank of Communications Han Weijun. If you have any consumer fund managers in the Silver Age that deserve attention, you can also recommend them~
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