Source: Brokers China Author: Chen Shuyu
What are the “new tricks” for investment veterans in the second quarter?
As the fund's second quarterly report was revealed one after another, fund managers' operations also came to light. In the second quarter, Xie Zhiyu added heavy holdings in FTF, ZTE, and Yao Ming Biotech. He said that in the first half of the year, on the one hand, we focused on and explored investment opportunities in emerging industries such as artificial intelligence, and on the other hand, we continued to track cycles, consumption, pharmaceuticals, new energy, etc.
Zhu Shaoxing added heavily stocked stocks like Xingqi Eye Medicine, Chunfeng Power, and Guocera Materials to replace Wuliangye, Dongfang Wealth, and Hualu Hengsheng in the first quarter. Among them, the prices of the two new shares performed brilliantly. Xingqi Eye Medicine rose more than 60% in the second quarter, and Chunfeng Dynamics rose nearly 30% in the second quarter. Zhu Shaoxing pointed out that in the future, he will still focus on finding value in high-quality stocks and knocking over more “stones.”
The Ruiyuan Growth Value Blend, which is co-managed by Fu Pengbo and Zhu Yi, continued to have high positions in the second quarter. One big move was the increase in holdings of nearly 3.49 million shares during the Ningde era, with a position increase of 73.86%. In addition, Jinbo Co., Ltd., which is mainly engaged in the production of advanced carbon-based composites and products, has entered the fund's top ten largest holdings. Fu Pengbo said that based on the “rock over the rock” stock selection method, individual stocks that had already been reserved and adjusted a lot in the early stages were added. Most of the targets were “small giants” with unique characteristics in segmented industries, and the business was growing rapidly and replacing imports.
Xie Zhiyu: Balancing the contradiction between short-term stock price fluctuations and the company's long-term investment
Looking at Xie Zhiyu's holdings, technology is still the main focus.
Judging from the top ten heavy-held stocks, there was not much change in Xingquan Helun. By the end of the second quarter, the top ten heavy-held stocks were San'an Optoelectronics, Hikvision, Haier Smart Home, Lanqi Technology, Yunda Co., Ltd. Wanhua Chemical, Zhongji Xuchuang, Jingchen Co., Ltd., Jianyou Co., Ltd. and Meihua Biotech joined the top ten.
In addition to FTF and ZTE, Xie Zhiyu also increased his holdings in CXO (Pharmaceutical Outsourcing) leader Pharmaceutical Ming Biotech and reduced his holdings in Huahong Semiconductor, Shunyu Optical Technology, and Jianyou shares in Xing Quan Huayi, which can invest in Hong Kong stocks. By the end of the second quarter, the top ten heavyweight stocks were Kuaishou, San'an Optoelectronics, Tencent Holdings, Jingchen Co., Ltd., Lanqi Technology, Industrial Fortune Federation, Haier Smart Home, ZTE, China Resources Brewery, and Yao Ming Biotech.
According to the second quarterly report of Xing Quan Helun, the macroeconomic economy has shown a weak recovery trend since 2023. Real estate data is still in a downward cycle, supported by infrastructure investment. Consumer consumption growth is still affected by weakening income expectations. After the overseas Federal Reserve continuously raised interest rates, there was still no decline in various US economic data along with monetary easing. Looking at various sectors, with the release and application of ChatGPT4.0, artificial intelligence opens up space on the application side, and demand for servers, computing power, models, and chips continues to expand; game versions increased in the first half of the year, the supply of video and television products increased, combined with artificial intelligence to help game film and television output content and reduce costs, and the market value of related companies increased. Industries related to the solid investment cycle weakened, such as real estate, building materials, coal, iron and steel, light industry, etc.
The second quarterly report mentioned that in the first half of the year, on the one hand, the fund focused on and explored investment opportunities in emerging industries such as artificial intelligence, and on the other hand continued to track cycles, consumption, pharmaceuticals, new energy, etc. The fund maintains a high overall position and will continue to pursue long-term returns with the main goal of pursuing long-term returns, continue to pay attention to factors that affect the long-term value of the company, such as industry sentiment, the company's core competitiveness, business model, entrepreneurship, etc., balance the contradiction between short-term fluctuations in stock prices and the company's long-term investment, and continue to seek and hold companies with good investment cost performance from a long-term perspective, hoping to obtain a steady return on investment for investors.
Opinions on Hong Kong stocks were expressed in the Xing Quan Heyi Second Quarterly Report. The Hang Seng Index and the Hang Seng Technology Index fell 4.37% and 5.27% respectively in the first half of the year. Internet companies' stock price performance was weak due to unclear policies and weak demand.
Zhu Shaoxing: Find value in high-quality stocks and knock over more “stones”
In the past two quarters, veteran Zhu Shaoxing continued to search for companies with good “corporate genes,” perfect corporate governance structures, and excellent management. Among the newly entered top ten heavy-held stocks, the performance was outstanding.
By the end of the second quarter, Fuguo Tianhui's top ten heavy-held stocks included Kweichow Moutai, Xingqi Eye Medicine, Bank of Ningbo, Jinyu Medical, Chunfeng Power, Aier Ophthalmology, Mindy Healthcare, Lanxiao Technology, Ningde Times, and Guocera Materials. Among them, Xingqi Eye Medicine, Chunfeng Power, and Guocera Materials were the top ten new heavy-traded stocks in the second quarter, replacing Wuliangye, Dongfang Wealth, and Hualu Hengsheng in the first quarter. It is worth mentioning that the prices of the two new shares performed brilliantly. Xingqi Eye Medicine rose more than 60% in the second quarter, and Chunfeng Dynamics rose nearly 30% in the second quarter.
The Fuguo Tianhui Second Quarterly Report said that the real economy continued its first-quarter recovery trend in the second quarter, but the strength of the recovery fell short of expectations. Monetary policy has remained relaxed, the results of fiscal policy have not been significant, and corporate investment confidence has recovered relatively slowly. The recovery in investors' risk appetite was relatively weak.
Although the recovery shown in the current data is not very strong, we should see whether it is a positive factor or a slow process of working. What is more important is that the overall valuation of the market is in a very attractive position in the long cycle. Currently, the equity market is in a good risk-return range.
The Second Quarterly Report mentioned, “In a longer time frame, we believe that the many difficulties we are currently facing will eventually find a solution. It is quite appropriate for investors to currently choose to bear the expected level of return corresponding to market fluctuations. In the future, we will continue to work to find value in high-quality stocks and remove more 'stones'. We do not have the reliable ability to accurately predict short-term market trends; instead, we focus our energy on patiently collecting excellent companies with great prospects, waiting for the realization of value creation by the companies themselves and the cyclical return of market sentiment at some point in the future.”
At the level of individual stock selection, the fund prefers to invest in companies with good “corporate genes”, perfect corporate governance structures, and excellent management. We believe there is a greater probability that such companies will create value for investors in the future. Sharing capital market benefits from a company's own growth is the best way for growth funds to reap returns.
Fu Pengbo: Looking for unique “little giants” in industry segments
In the second quarter, Ruiyuan's growth value mix managed by Fu Pengbo and Zhu Wei still operated with high positions. The top ten positions accounted for 52% of net worth, and the top 20 positions accounted for more than 75%. By the end of the second quarter, the top ten heavy-traded stocks were China Mobile, Ningde Times, San'an Optoelectronics, Tongwei Co., Ltd., Lixun Precision, Wanhua Chemical, Dongfang Yuhong, Guanghui Energy, Xinzhoubang, and Jinbo.
It is worth mentioning that Ruiyuan's growth value mixed with the Ningde era in the second quarter when it increased its holdings by nearly 3.49 million shares. The increase was as high as 73.86%, making it the largest individual stock to increase positions. Jinbo Co., Ltd., which is mainly engaged in the production of advanced carbon-based composites and products, entered the top ten new heavy-traded stocks.
Regarding operations in the second quarter, Fu Pengbo and Zhu Wei disclosed in more detail the configuration adjustments compared to the first quarter portfolio in Ruiyuan's Growth Value Hybrid Second Quarterly Report.
Absolute holdings fell for the majority of the top ten heavy positions, but the changes were limited. Some position cuts are based on a year-on-year decline in the short-term performance of individual stocks and are under valuation pressure; some are choices made after re-evaluating their sentiment.
Since then, the top ten holdings have changed significantly, with the addition of individual stocks in the photovoltaic and communications sectors. The former increased holdings benefited from the accelerated layout of battery components and low-cost intelligent manufacturing upgrades based on individual stocks; the latter chose leading communication and computing power companies based on the era of artificial intelligence, which has a prominent position in services and memory. Hong Kong stocks have mainly added Internet targets.
Based on the “rock over the rock” stock selection method, individual stocks that had already been reserved and adjusted a lot in the early stages were added. Most of the targets were “small giants” with unique characteristics in segmented industries, and the business is in the process of rapid growth and import substitution. Over the same period, the portfolio also reduced the number of individual stock holdings where performance was under pressure during the year and where medium- to long-term fundamentals fell short of early judgment.
Looking ahead to the second half of the year, the two fund managers believe that overall demand may still be weak. From a year-on-year perspective, it may face marginal improvement factors, such as easing the cost side of domestic upstream raw materials and a decline in the profit base of listed companies, while overseas demand may be better than expected. Considering that the market was still in the adjustment stage in the first half of the year (with the exception of TMT, media, and the Chinese alphabet), the overall valuation is at a lower level in history. If it is possible to select a group of stocks with improved fundamentals and reasonably low valuations, it may bring good long-term earnings. Based on this, we will combine the semi-annual reports and operating data of listed companies to continuously adjust and optimize the portfolio, evaluate the company's growth space from multiple angles and objectively, carefully grasp valuations, and try our best to control fluctuations in net worth.
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