Edited by Guotai Junan Securities: "the Framework of Industry Research-- the relationship between Fan Yang and Huang Yanming"

It is better to teach people to fish than to teach people to fish. Fu Tu Research has specially launched a series of articles on the research framework, which aims to work with investors."correct research ideas, understand the nature of the market, and seize investment opportunities".This article is the first in a series of research frameworks. Let's think about it-- what is the basic framework of industry research?

1. Overview of industry framework

At the beginning, we present an industry framework map that brings together many years of research experience and countless painstaking efforts. All the knowledge needed for industry research is shown in the following figure:

* it was formed by Huang Yanming, director of Guotai Junan Research Institute, and Yang Jili, chief analyst of the home appliance industry, through years of research experience and thinking.

This framework is serious and obscure. It doesn't matter. Let's take a look at the Human dialect version.

2. Industry frameworkUnderstand

The direct cause of the rise and fall of stock prices can fall on the question of "exceeding expectations", and where "exceeding expectations" comes from is the core question that we want to answer in our research.

• Industry Lifecycle: how to find"exceeding expectations"?

Judge the life cycle of the industry-- > the market's "expectations" for the current stage-- > look for possible sources of "exceeding expectations".

1) introduction period.Greater growth potential than expected source: when the market does not believe that someone can create the future, one possibility to create the future is to "exceed expectations".

2) the period of growth.The certainty of growth is high, the "ceiling" of growth is unknown; more than expected source: the location of the "ceiling" is unknown.

* the core of the growth period is to establish replicable business models, and then let economies of scale play a role, so that the value of technological innovation continues to expand.

3) mature stage.Business advantage solidifies, battle edge shifts from innovation to cost; higher-than-expected source: investors misjudge the future (recession / diversification / stability cycle, etc.).
* large-scale manufacturing, industrial chain integration, relying on efficient operation and synergy to consolidate the market position has become the top priority in the mature period.

4) decline period.The key for the industry to enter a recession is the emergence of substitutes. Higher-than-expected source: accurate prediction and bets on substitutes.

• Industrial policy: is it medicine or poison?

Industrial policy change-- > how does the industry development trend and industry competition pattern change (long-term and short-term)

The source of exceeding expectations: due to the emergence and strengthening of policies, or excessive pessimism due to the withdrawal or weakening of policies, but the law of the development of the industry itself will not change substantially due to the views of the market, in between, it will form the "exceeding expectations" we want.

Take the home appliance industry as an example to observe the impact of the policy.

* from 2007 to 2011, the government implemented a series of policies for the home appliance industry to go to the countryside-trade in the old for new-energy conservation and benefit the people to promote the popularization of major household appliances in China.

1) over-optimistic about the emergence of incentive policies

In the short term, policy subsidies benefit all home appliance manufacturers and most consumers. However, the subsidy policy will also bring some negative effects, such as fraudulent compensation disrupting the market order, the influx of low-quality products into the market will harm the interests of consumers, and consumer overdraft and other problems.

2) excessive pessimism due to the withdrawal or weakening of the policy

The effects of different stages of sub-industries are different.For the air-conditioning industry, the subsidy policy stimulated the demand of the rural market and completed the market education and popularization; for the refrigerator industry, which is already popular, the rural ownership of refrigerators increased rapidly as a result of home appliances going to the countryside. After the end of the subsidy policy, the growth rate of the industry declined significantly from the high level, and in the following years, it formed obvious pressure on the industry.

In the long run, when the subsidy policy ends, the side effects of subsidies will be slowly corrected by market forces.After the end of home appliances going to the countryside, the market share of the leading companies in the industry began to show a trend of increase, so that even in the case of a significant slowdown in the growth rate of the industry, the growth of the leading industry of home appliances is still bright.

• Supply and demand analysis: determine the "periodicity" of the industry

Describe real and visible demand and supply-- > findIdentify the structural opportunities and risks of an industry

The source of exceeding expectations: the source of cyclical attributes is the unknowability of human beings about the future, which leads to the mismatch of supply and demand in time. This mismatch may bring us similar investment opportunities in traditional cyclical industries.

The following cases help to understand:

In the face of the periodicity of the industry, how to make investment decisions?

• Industry structure: description and Analysis of Competition pattern

How the existing competition pattern is formed (history)-- > how it will change in the future (human nature).

More than expected source: under what circumstances will the affection of the past turn into a grudge in the future due to the changes in industry structure and competition pattern?

* the industry structure is based on the analysis of the relationship between supply and demand, which describes the subdivision structure of demand (region, age, gender, population …... ), the overall characteristics of supply (competitive advantage, resource endowment, concentration) and the overall characteristics of supply and demand matching (industry value chain analysis, competition pattern description).

• Market behavior: countless verification points of industry research

Observe the market behavior all the time-- > make, revise and verify the judgment about the development stage and prospect of the industry.

* Market behavior describes the direct behavior of major players in the industry. common observable market behaviors include pricing mechanisms (cost-plus pricing, brand premium, low-price dumping). Competitive advantage construction methods (technological innovation, scale leadership, channel dominance, marketing leadership, business model reconstruction), capital behavior (M & A behavior, financial strategy) and so on.

• Industry performance: the connection point of verification and error correction cycle

Establish a valuation model, convert logic into numbers-> compare with market expectations / real data, verify the accuracy of logic / identify and correct logic errors in a timely manner.

3. Summary

• The relationship between the six modules