* * Before reading the financial report, we should make some necessary preparations: * *
* First, understand the basic research methods and current situation of the industry.
Every industry has its own business logic and basic research methods, and we can't just look at revenue and profit.
For example, industries that value assets invest first and then make money through scale effect; Industries that value assets compare operational barriers and operational efficiency; The industry that sells people's heads looks at project resources and management efficiency; The industry selling brands depends on gross profit and channel control ability.
For example, when analyzing the financial statements of banks, profits are not the most important, because it is too easy for banks to adjust profits, and the revenue and cash flow that normal enterprises often look at are not important. The most important thing for banks is the quality of assets, followed by the proportion of non-interest income.
ROE is the most important indicator, but it can't be all over the world. Each industry has its own special indicators:
For example, building materials enterprises depend on cash flow, because downstream developers are heavily in debt and are suppressed by the government, so "cash ratio" and "net cash ratio" are important indicators.
Financial reports are not novels. Only when you know the key points can you know what to read.
* Second, understand the basic financial knowledge.
Needless to say, corporate financial reports are based on three financial statements, and at least we should understand the contents, functions and relationships of major financial departments.
However, we should not overemphasize the three forms. Read the financial report, not the financial data. Although many investors like to choose stocks through financial data, including quantitative procedures, in fundamental research, financial data is more to verify your research speculation.
* Third, if it is a new enterprise that has never been studied, it is best not to look at the financial report directly. First, read an in-depth research report of reliable brokers to understand the basic logic, but don't believe the conclusions in the report easily.
Different from financial reports, the contents of in-depth research reports of securities firms are all sorted and refined investment frameworks and points, which are in line with human reading habits and facilitate investors to establish a basic understanding of the company.
* Fourth, if it is a company that you have studied or owned in depth, you should establish basic expectations and the information you want from the financial report before reading the financial report.
We often see the expressions of "exceeding expectations" and "falling short of expectations" in financial report analysis articles. Professional investment will follow wherever it goes, and there must be a sense of expectation. It is a complete investment process from "establishing expectations" to "judging the expected gap" in financial reports and finally "deciding to trade".
After completing these four preparations, you can naturally read the information you want from a financial report. However, the information disclosed in the financial report is also hierarchical. The most useful information is the information that is most directly related to the enterprise strategy, the information that the CEO is most concerned about, and the information that investors should be most concerned about.
* Focus 1: The core logic of strategic advancement verification.
It is certainly a good thing to see that the revenue profit exceeds expectations after reading the financial report, but excellent enterprises are driven by strategy, rather than following the market and operating figures. Understanding the corporate strategy and verifying the core strategy with financial reports are the things that value investors should be most concerned about.
Take Alibaba as an example, its business is extremely complicated. In this quarter's financial report, the core e-commerce business was challenged by Pinduoduo, but the users of the new Taobao Special Edition grew rapidly, and the cloud computing business continued to grow at a high speed. However, the loss of major overseas customers, the loss of film and television entertainment business, the continued struggle in high investment in life services and the maintenance of market share can not be simply described as "exceeding expectations" or "below expectations".
There is only one dimension to evaluate a complex enterprise like Alibaba-promotion strategy.
Everyone can think about a problem. In the battle for high-level giants such as e-commerce, all three companies can achieve high growth without low penetration rate. Therefore, the competitive pattern should be combined with the strategic management ability. If the competitors' strategic advancement is also weak, the final competition will be a lose-lose, and the upstream and downstream will benefit; If competitors have strong strategic promotion ability, the result may be a win-win situation, and both upstream and downstream industries or other industries lose.
Therefore, compared with Ali's long-term development strategy, this quarter's financial report is qualified in my opinion.
Take the semi-annual report of Jinyu Medicine as an example.
Influenced by the testing business in COVID-19, the performance expectation of Jinyu Medical is confusing. The seller said it exceeded expectations, but the market was voting with its feet. The way to eliminate the interference of COVID-19 test business is to pay attention to strategy.
In 20 19, the domestic ICL market was about 37 billion, accounting for about 8% of the medical inspection market. Compared with mature markets such as the United States, Europe and Japan, the penetration rate is 35%, 50% and 67% respectively, and there is still much room for improvement in the future. Due to the characteristics of China's medical system, the breakthrough point of increasing the penetration rate can only be placed in the special inspection business of high-tech barriers in tertiary hospitals and single hospitals.
These two directions are also the two growth logics of Jinyu Pharmaceutical and the focus of our financial report.
Let's look at the penetration rate of tertiary hospitals first: Excluding the business in COVID-19, the income from routine inspection business increased by 48% year-on-year, and increased by 32% in the first half of last year. The gross profit margin increased year-on-year, because the unit yield of customers increased by 53% year-on-year, and the proportion of income business in tertiary hospitals increased by 1.75 percentage points.
Look at the proportion of special inspection business: in the first half of the year, the company's special inspection business continued to exert its strength, including hematological diseases, neuro-clinical immunity and solid tumor diagnosis business, which increased by 40%, 57% and 54% respectively.
Jinyu's fundamentals are actually very simple, but its judgment is easily influenced by COVID-19's business. If you are concerned about the company, then you can only pay attention to the promotion of strategy with a long-term vision.
Companies with high valuations need to be more cautious, not only to see whether the strategy is promoted for a long time, but also to judge whether the growth in the next quarter will slow down in the medium term. The former affects certainty, while the latter affects valuation.
Taking Wuxi PharmaTech as an example, the core logic is first of all CXO integration, which was extended to CDMO through the acquisition of Hequan Pharmaceutical, so CDMO was a relatively weak piece before, and it was also a business that provided growth momentum in the past two years.
Secondly, see if the customer structure can develop long-tail customers, reduce business risks and improve premium ability while maintaining the advantages of overseas head customers.
Thirdly, the logic of CXO includes overseas transfer+local new business, but domestic business is affected by policies, and short-term uncertainty is relatively large, so high valuation depends on the continuous growth of overseas business.
Also, at present, the biggest bottleneck of head CXO enterprises is production capacity. The capital market can solve the problem of money, but it can't solve the problem of talents. This can be seen from the total number of employees.
The specific finance will not be interpreted, and the summary is almost the same, so the high valuation does not mean that the company will fall. As long as the core logic of the financial report is perfect, the current valuation range can be roughly maintained.
Reading financial reports is time-consuming, and the depth of interpretation of financial reports is also related to the weight of your position.
If your position is heavy, it is not enough to look at the core logic above. You should also pay attention to the recovery and operation of American laboratories that restricted performance in the first half of the year, and also look at the progress of ADC drug integration CDMO business. The former can improve performance, while the latter can maintain valuation.
Another example is China Merchants Bank. As mentioned above, the most important thing for banks is to look at the asset quality and the proportion of non-interest income.
In terms of asset quality, the non-performing rate and overdue rate decreased at the end of June compared with the beginning of the year, and the quality of loan assets further improved; Loan impairment losses accrued in the first half of the year decreased by 60% year-on-year. Obviously, it was cut too much in response to the government's request last year, which led to a decrease in non-performing loans on the balance sheet.
From the perspective of non-interest income, the year-on-year growth rate of non-interest net income is slightly higher than that of 1 quarter, which is higher than the income growth rate, and the proportion is further increased, mainly due to the joint contribution of net fee income and other non-interest net income.
If China Merchants Bank only does configuration, it is enough to look at these two items. If it is a heavy position, you need to see more projects.
* Focus 2: Pay attention to the factors that have the greatest impact on the stock price at present.
The research report is not a pure research, but a transaction-oriented research, which is the core factor that affects the stock price at present-what is the supporting factor in the upward trend? What are the depressing factors in the downward trend? Where are the factors that may break the balance of long and short judgments in the volatile market?
Especially those companies with high valuation and low valuation should use a magnifying glass to read financial reports.
Among those who invest in Tencent, many investors think that Tencent has investment value from the perspective of low valuation. However, underestimation does not mean investment value, and investment value does not mean that you can buy it. If you want to buy it, you'd better find the factors that suppress the stock price disappear in the financial report.
What are the factors that suppress Tencent's share price? Not because of its own performance, the number of Tencent users is stable, and the growth of advertising and mobile game business is in line with expectations. The depressing factor is supervision. Can this factor be removed? The financial report mentions "using technology to contribute to the real economy and society", including the 50 billion projects invested by the company to establish "sustainable social value innovation" and the planned investment of 654.38+000 billion, which shows that it may be just the beginning now.
If Ali makes this statement, there is no problem at all, because Ali's core e-commerce, cloud computing and life e-commerce services are all empowering SMEs and the real economy, but Tencent's core is advertising and games. How can it "contribute"
A deeper interpretation is too sensitive for me as an investor. At least it is clear that the factors that suppress the stock price have not been lifted, but they will soon affect the business. Just because it has no impact on past performance does not mean that it will not have an impact in the future. Low PE now does not mean low PE in the next year or two.
If you are still a qualified value investor, you should understand that a reasonable valuation does not depend on the current performance, but on the discount of future cash flows.
Similarly, if the factors supporting the stock price rise tend to weaken or disappear, the rise will also weaken or stop; If there are factors that break the balance of long and short judgments, the balance of stock prices will also be broken.
Looking at Gao PE Company again, we know that investors will return to normal valuation sooner or later, and their mentality is relatively impetuous, so we must look at its core logic with impeccable requirements when reading financial reports.
Take Jianlang Hardware as an example. After the announcement of the interim report, the stock price rose sharply. After the official release of the interim report, the stock price fell by 30% in a few days. Is the interim report not as good as expected? In fact, it is only slightly lower than the median, not lower than expected.
* What really shakes investors is the problem of cash flow. *
As mentioned above, investors attach great importance to the cash flow of building materials enterprises, and the operating cash flow and "net cash ratio" of Jianlang Hardware Newspaper are both negative-these two are no problem, which are often caused by the increase in hoarding raw materials when prices rise. However, it is worth noting that the cash-out ratio is 75%, which means that only 75% of the proceeds are cash, returning to the state of 20 18, while the valuation at that time was only 20 times. This indicator is worse than 90% in the first quarter, which is why the operating cash flow in the first quarter is also negative, but it does not affect the stock price.
Looking closely at the financial report, the main reason is that accounts receivable and bills amounted to 3.76 billion yuan in the first half of the year, up by 654.38+0.469 billion yuan year-on-year, responding to investors' long-term concerns that the tight capital chain of downstream real estate and the rising prices of raw materials such as steel will affect the construction progress and payment. This needs to be verified by the interim reports of other building materials companies. For example, the "cash flow ratio" of Oriental Yuhong, which mainly earns B-end income, has dropped from 1 15% last year to 88%, while the bunny who takes the C-end channel is still 105%.
The same cash flow was less than expected, and the share price of Jianlang Hardware fell more than Oriental Yuhong, only because the valuation of Jianlang Hardware was much higher than the latter.
On the surface, financial reports require neutrality and objectivity, and every sentence must bear legal responsibility, but there is no absolute neutrality and objectivity in the world. The financial report is compiled by listed companies, which is subjectively motivated by whitewashing; It is investors or institutional investors who read the financial report. Since I am concerned, I generally read more, and subjectively hope that the company will have good news.
In this state of mind, it is easy to magnify the positive and hide the negative. To be objective and neutral, we must overcome the following four common subjective tendencies:
* First, don't believe the negative explanations of listed companies.
All negative information has reasonable explanations, but many explanations only tell investors "I will work hard", and more explanations are to cover up strategic mistakes with tactical diligence.
* Second, the analysis should not be influenced by the stock price.
Although value investors believe that the market will make mistakes and want to look for opportunities from market mistakes, in fact, most investors believe that the stock price trend hides something we don't know. Therefore, in the upward trend, investors are used to looking for good things in financial reports, while in the downward trend, investors are used to looking for bad things in financial reports.
* Third, a statement cannot change the long-term market perception.
There is a saying called "Don't try to educate consumers". There are some long-standing understandings in investment that will not be reversed because of an excellent financial report. For the more difficult logic of "longer cycle", the market must have more than three financial reports to confirm. The previous good financial reports were all high and low, and returned to the shock range. Only after several excellent financial reports can we get out of the cycle and realize a round of rising prices, such as Wanhua Chemical; In case one season falls short of expectations, it will be a round of plunge, such as Sany Heavy Industry.
* Fourth, the invisible competition pattern in financial reports is more important.
The competition pattern is the real reason behind many behaviors of enterprises. For example, the cash flow problem of Jianlang Hardware mentioned earlier may be fatal if it is replaced by a company with poor competition pattern. The competition pattern is rarely involved in the financial report, and it is necessary to read the prospectus, industry research report or in-depth research report.
Financial report is like your subordinates reporting to you regularly: a bad boss can only know his subordinates from the report, so he is often cheated by them; A good boss must have a good understanding of his subordinates' personal characteristics, work priorities and phased goals, and then compare them with the contents of the report in order to evaluate their true abilities and performance.
The object of our investment is stocks. The stock is not a listed company. They are only a simple projection of a three-dimensional company in a two-dimensional world, and financial reports are only an instantaneous silhouette.
Look at the companies in the financial report, and understand the information behind the financial report more deeply after reading the company. This is the correct posture for reading financial reports.