GF Sec stated that given the heat-up of the 'rate cut expectation' of the Federal Reserve, and the expectations of both fundamental improvement and valuation recovery, the innovative drugs, science and technology (S&T) chip, and military industry sectors are expected to encounter dual positive factors.
As of July 15, the disclosure of the conditional performance forecast for the first half of the year of listed companies in Shanghai and Shenzhen main boards has been completed under the revised rules. There are 1571 companies that have disclosed their performance forecasts and earnings reports, with a disclosure rate of about 30%. About 40% of all A-share disclosure companies showed a pre-earnings rate of increase. The main industries that feature disclosure companies experiencing high growth of pre-earnings rate, a large number of pre-positive companies, and high interim report growth rate are: electronics, chemical engineering. GF Sec stated that given the heat-up of the 'rate cut expectation' of the Federal Reserve, and the expectations of both fundamental improvement and valuation recovery, the innovative drugs, S&T chip, and military industry sectors are expected to encounter dual positive factors.
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With PPI contributing positively, the non-financial sector in A-shares is expected to continue to improve in the interim report under price support. However, based on the earnings trend of the industrial enterprises in the second quarter, it is expected to remain in a relatively weak earnings improvement cycle.
Taking the mandatory disclosure of previous period's performance forecasts as of July 15 as the guideline.
About 40% of all A-share disclosure companies showed a pre-earnings rate of increase. The main industries that feature disclosure companies experiencing high growth of pre-earnings rate, a large number of pre-positive companies, and high interim report growth rate are: electronics, chemical engineering.
The interim report of the foreign demand chain may marginaly decrease in growth rate, but it still remains in a high prosperity interval.
Due to the disturbance of variables such as exchange rate and freight, the growth rate of the performance of the foreign demand chain may decline compared to the first quarter report, but the interim performance report of the main sectors and companies still falls within a 30%-50% or even higher growth interval. They are still relatively scarce in the industry and at a high prosperity level.
Under the impact of the 'Trump trade', the foreign demand chain will pay attention to companies that have little exposure to the US market, and that can improve their penetration rate in Asia, Africa, and Latin America while guaranteeing their overseas competitiveness.
The structural 'double positive factors' exist in the S&T growth index.
Looking at key companies, the representative companies of semiconducting devices, PCB, panels, light modules, servers, and consumer electronics, have disclosed their performance forecasts of 'absolute high increase' or 'impressive increase and acceleration'.
GF Sec stated that given the heat-up of the 'rate cut expectation' of the Federal Reserve, and the expectations of both fundamental improvement and valuation recovery, the innovative drugs, S&T chip, and military industry sectors are expected to encounter dual positive factors.
Apart from industries that have a natural competitive edge, some major industries that were ranked first or second have reduced price wars, do not invest in capital, have lots of free cash flow, and have potential in their undistributed profits. They have gradually developed under the 'anti-intensification' sentiment and thought. Judging from the interim report, among these leading companies in the above-mentioned industries that were screened by financial data from top to bottom and verified from bottom to top, the earnings forecast was quite good. The industries include e-commerce and express delivery, solid waste, papermaking, buses, and titanium dioxide.
In addition to industries with a naturally good competitive situation, some industries where the top two market share holders have reduced price wars, do not invest in capital, have a lot of free cash flow, and have potential. They have gradually shown features of an industry under the 'anti-intensification' sentiment and thought.
Judging from the interim report, among these leading companies in the above-mentioned industries that were screened by financial data from top to bottom and verified from bottom to top, the earnings forecast was quite good. The industries include e-commerce and express delivery, solid waste, papermaking, buses, and titanium dioxide.
The characteristics of macroeconomic operation in the second quarter are: strong productivity and weak consumption. Among the consumption categories, rural areas had stronger consumption than urban areas. Therefore, the overall performance expectations of traditional domestic demand-oriented real estate and consumer sectors in the interim report were flat, but there are a few bright spots in the traditionally favorable categories like soft drinks, condiments, and tourism.
The characteristics of macroeconomic operation in the second quarter are: strong productivity and weak consumption. Among the consumption categories, rural areas had stronger consumption than urban areas. Therefore, the overall performance expectations of traditional domestic demand-oriented real estate and consumer sectors in the interim report were flat, but there are a few bright spots in the traditionally favorable categories like soft drinks, condiments, and tourism.
Before there will be significant improvements in the overall demand, 【Assets featuring economic cycles】 will mainly focus on the opportunities presented by the supply-side clearance, such as fluorine chemical, phosphorus chemical, spandex, vitamins among the components.