Core conclusion:
1. The high probability of policy reversal is temporary, and there is a high probability of exit after the economy stabilizes. The next trend depends on the business capabilities of each company, rather than the “small composition” of the policy.
2. Due to its outstanding business model, strong moat and high-tech attributes, the Internet sector will have excess returns compared with the CSI 300, and its growth will be more certain.
3. However, the Internet is no longer a high-speed growth track stock like the new energy in 2019, and it can only grow steadily in the future.
4. Risk warning: Internet companies going overseas and Hong Kong stocks are subject to the turmoil of international relations.
policy reversal
First of all, the reversal of the Internet policy is actually likely to be similar to the “urinal-style” stimulus of real estate, that is, when the downward pressure on the economy is high and an industry needs to stand up to support GDP, some liberalization will be carried out. There have been many rounds of urinal-style stimulus for real estate. Specific measures include cutting interest rates, lowering down payment ratios, and liberalizing purchase restrictions to stimulate real estate sales:
Image source: “[Guosheng Securities] In-depth review five times “steady growth””, from the picture we can clearly see the ebb and flow of policies.
This is like raising interest rates and lowering interest rates. This is the responsibility of the central bank. It cuts interest rates when the downward pressure on the economy increases, and suppresses it by raising interest rates when it is hot. This is a cycle. Then, the same periodical de-regulation of the real estate Internet is also carried out, and there is a high probability that it is not a complete reversal.
The confidence of the Internet to outperform the Shanghai and Shenzhen 300
After all, the Internet is an industry with a faster growth rate and greater certainty than the performance of the CSI 300. Therefore, it is highly probable that the holding Internet will achieve excess returns compared with the CSI 300 in the future. However, if your purpose of buying the Internet is to copy the myth of buying new energy in 2019, then I advise you to take back your illusions. Because the Internet has actually completed the transformation from track stocks to value stocks.
For example, Zhang Kun, he is a famous value investor. Even on the eve of the outbreak of new energy in 2019, he will not buy new energy, nor will he buy high-end emerging industries such as semiconductors, because he is interested in the certainty, moat, monopoly, low-cost Valuation, then Tencent perfectly fits this feature, but this also just proves that Tencent has moved away from the attributes of the track stock that it used to be.
Value investing focuses on steady growth, rather than earning ten times in three years like track stocks. Tesla is a typical track stock. As for whether the Internet can become baijiu in 2013, that is another question. Not all industries can become baijiu after the reversal of the industry’s difficulties. The counterexample is actually real estate. No matter how real estate reverses, it cannot escape the profound and irreversible impact of population decline on its fundamentals.
Liquor and the Internet both belong to consumption, but there are huge differences between these two industries. After the cancellation of Sangong consumption, baijiu has become a high-end consumption of consumption upgrades, and China’s middle and high-end classes have become more and more affluent. But the Internet is not aimed at high-end consumption, it is more of a very common consumption, and Pinduoduo even benefits from the downgrade of consumption, so it is biased to compare it with high-end consumption of liquor. The only thing comparable to them is the moat.
With the deepening of aging and the reduction of newborns, the number of new Internet users in the future will definitely shrink, and the cake in this industry cannot grow bigger and bigger.
Internet with high-end technology
The Internet is the most intensive application place for artificial intelligence technology. If there is any advanced technological development in the future, mobile Internet companies such as Tencent will be able to take advantage of it.
For example, our current top technologies, such as AIGC, which is like ChatGPT, and the AI for science technology I research, such as AI+ innovative drugs, AI+ protein structure prediction, are backed by Microsoft, Google and Tess They are all top Internet companies in the world today.
From a domestic point of view, Baidu has transformed into an artificial intelligence company, for example, Baidu’s driverless Apollo:
Baidu’s large model, similar to ChatGPT:
Tencent’s layout in the direction of AI+Science:
It is undeniable that the Internet is indeed a technology company, and its technology content is far greater than that of the CSI 300. In the short term, although these businesses are unlikely to turn into profits, it also proves that the Internet has a certain room for technological growth, at least compared with those real estate chains that have lost their logic of big growth, that is, the CSI 300, which even accounts for more Industries with a weight of 40 to 50 percent are much better, such as real estate, banking, home appliances, building materials, architectural decoration, and steel.
However, the progress of domestic AI is far behind that of foreign countries, and it is still a follower. Because cutting-edge technology needs to burn money, the current financial situation of major manufacturers does not support burning money. However, it is precisely for this reason that after the business of these large companies stabilizes, small businesses in these emerging industries will slowly develop and become the next growth point of the Internet, which will turn into profits in the next 5-10 years.
$Tencent Holdings(00700)$ $Alibaba(BABA)$ $Zhongguo Internet Index ETF-KraneShares(KWEB)$ # #2023春节研究读闻#
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