"Overall, there are no problems." Su Yi put down the fund investment strategy report in his hand and said, "But regarding the 'security camera lens' theme investment sector, what are your thoughts?"
Hearing Su Yi's words, Hou Baolong asked, "Manager Su thinks... is there a problem?"
"No," Su Yi said with a smile, "I just want to hear how you view the future prospects of this theme investment sector, and why you believe the demand in this industry will experience explosive growth in the coming period."
Wang Yifan lightly coughed and said, "According to the industry tracking data from various analysis groups in our investment strategy department, in the past year, the 'security camera lens' industry has seen significant growth in the performance of various product manufacturing and sales companies, due to equipment upgrades, the full popularization of 4G networks, and the implementation of the national 'Skynet' plan.
Moreover, due to equipment upgrades and the widespread deployment of new networked devices. It is evident that in the next one to two years, the overall market demand will continue to experience explosive growth.
As for why we chose 'Hikvision' and 'Dahua Shares' as the entry points for this theme investment sector. It is also because these two companies possess sufficiently strong competitiveness within the entire industry.
Furthermore, regarding technology products. Based on past market development history and changes in corporate competitiveness under product iteration, it has always been a situation where leading companies dominate, holding an absolute advantage, and 'the winner takes all'."
"Hmm." Su Yi listened to Wang Yifan's analysis and nodded slightly, "The technology product market indeed has this characteristic."
"So, Manager Su agrees with our strategy formulation logic for the 'security camera lens' theme sector?" Wang Yifan, having received Su Yi's approval, said with a slight excitement, "I believe that with the further comprehensive explosion of 'security camera lens' market demand, 'Hikvision' and 'Dahua Shares', as industry leaders, will certainly experience a good market trend, and the duration of this trend will not be short."
"What about commercial real estate development?" Su Yi saw nothing wrong with the investment strategy of allocating funds and establishing positions in the 'security camera lens' sector, particularly in the stocks of 'Dahua Shares' and 'Hikvision'.
Instead, he shifted his thoughts to the selection logic of individual stocks within the 'commercial real estate development' theme investment area in the investment strategy report formulated by both parties, asking, "Why were 'Hengda Real Estate', 'Rongchuang Real Estate', and 'Longhu Real Estate' specifically chosen as the core stocks for a breakthrough?"
Hou Baolong said, "Based on our tracking of housing prices in various cities across the country, as well as data tracking of new projects launched and new land acquired by well-known real estate development enterprises, it can be clearly perceived that the real estate markets in various cities nationwide have all entered a bull market phase.
And during the full industry breakout phase... Considering the operating data of various development enterprises within the industry. We believe that 'Hengda Real Estate' and 'Rongchuang Real Estate', these two major companies, currently possess the most explosive potential in terms of land reserves and national strategic layout.
As for 'Longhu Real Estate', it was chosen primarily due to its extensive experience in core commercial development. Moreover, its assets are excellent, and its valuation is the most undervalued. If national housing prices and the real estate market further boom in the future.
The performance growth of these three companies should be the fastest and most aggressive, and among them, I am most optimistic about the explosive potential of 'Rongchuang Real Estate'. Because this company's expansion across various tier cities nationwide has been extremely rapid.
Furthermore, its current market capitalization is the lowest, and it carries no historical baggage; against the backdrop of a major real estate bull market, its growth rate is extremely fast."
"Since you are optimistic about the future market trend of the 'commercial real estate development' sector and believe that it is currently in the midst of a major real estate bull market..." Su Yi paused and said, "Why haven't you made corresponding arrangements for the construction and renovation sector, which is strongly correlated with the real estate market boom, as well as upstream sectors like steel and cement?"
Wang Yifan replied, "Although the real estate market is booming, with a comprehensive explosion of the real estate market and a further great leap forward in 'urbanization construction', which are beneficial to related industrial chains like construction and renovation, steel, and cement, as well as upstream sectors, in terms of performance explosiveness and the depth of market trend extension, I believe that the sectors Manager Su mentioned—construction and renovation, steel, and cement—still have flaws in investment, at least in our current selection."
"Tell me more specifically," Su Yi said with a smile.
Wang Yifan thought for a moment and replied, "Firstly, the construction and renovation market is relatively fragmented, and companies without sufficient competitiveness lack the certainty found in the real estate sector.
Secondly, although the steel sector is also undergoing an industry cycle reversal and is an industry specifically addressed by the national 'supply-side' reform, due to iron ore prices, we do not have dominance internationally.
Furthermore, because national steel enterprises carry too much historical baggage and have very low net profit margins, even if an industry cycle reversal occurs, and even if there is a significant increase in demand from downstream real estate and infrastructure industries, it is difficult to change the current state of the entire industry and give it strong expected upside and market explosive power.
In this regard, the coal industry is completely different. Because we have absolute dominance in coal pricing, and macroeconomic regulation has strong policy-driven characteristics. This allows the coal industry, during an industry cycle reversal, to erode a significant portion of the profits from the thermal power industry, and to possess considerable expected upside and explosive power.
This is similar to the logic behind our investment in the new energy 'lithium battery' sector some time ago. As for the cement sector, although overall demand has seen some growth with the explosion of the real estate industry, the expected upside and explosive power are also slightly insufficient.
Therefore, we ultimately considered the expected upside of the investment and the explosive power of the anticipated market trend. We only locked our target stocks onto a few leading real estate stocks in 'commercial real estate development'. Oh, there's one more question..."
Wang Yifan paused and then said, "Manager Hou and I had some disagreements regarding diversified investment versus concentrated investment, and I'd like to hear Manager Su's advice."
With that, Wang Yifan recounted the argument they had with the person who came at noon to Su Yi.
Su Yi listened to Wang Yifan, pondered for a moment, and replied, "Concentrated investment and diversified investment are relative issues. What we refer to as diversified risk is spreading funds across multiple highly prosperous industries. So-called concentrated investment, on the other hand, is firmly committing to a single highly prosperous industry to obtain excess market returns through concentrated investment. And from what Yifan just said.
It seems your argument has always been about whether to concentrate positions on leading industry stocks, or to make balanced investment layouts by choosing a range of relatively high-quality, undervalued stocks within the industry.
If the argument is about this point... Then I believe it is best to concentrate on leading industry stocks, or potential stocks with huge expected upside and explosive power. I believe our 'Huayi Yuanzheng No. 1' fund product.
The investment strategy that should be adhered to is diversified industry investment, while simultaneously concentrating positions on leading stocks or potential stocks with strong expected upside and explosive power."
"There's one more thing," Hou Baolong thought for a moment and said, "Currently, the new energy sector, especially individual stocks in the 'lithium battery' related industrial chain, has been hyped to high levels by market funds, realizing most of the previous optimistic expectations for the industry.
I think at this point, shouldn't we start gradually building positions in stocks on this investment main theme to realize profits, thereby increasing our allocation in areas such as 'commercial real estate development', 'coal', and 'security camera lens'?
Moreover, I heard that in the past year since the state issued the 'new energy vehicles' subsidy policy, various fraudulent subsidy schemes have emerged. Currently, relevant departments have begun planning to rectify this chaotic situation.
With high probability, next quarter or next year, the corresponding 'new energy vehicles' subsidy policy is very likely to be canceled, or reduced, or made more stringent in its rules. If the market forms this expectation, and subsequently the corresponding policies are implemented.
Then, this will undoubtedly be a major blow to 'new energy industrial chain' companies, which are currently experiencing red-hot investment and fully priced-in market expectations, as well as the demand in 'lithium battery' related fields."
(End of chapter)