Du Kunwei: Is Gem High Valuation Reasonable?

By the end of August this year, the average price earnings ratio of GEM listed companies reached 61.54 times.

What is reasonable is that the gem is a collection of 290 strategic emerging industries, covering a new generation of information technology, energy saving, environmental protection, high-end equipment manufacturing, new materials, new energy and biology and other fields, forming a distinct plate characteristics. Indeed, if the high-tech companies grow better, giving appropriate overvalued values is reasonable, but the people's daily further pointed out that in recent years, the performance of GEM companies has shown substantial fluctuations.

The growth of the GEM companies is also increasing year by year. It is obvious that the growth of the gem is only a month in the water, but it is very unreliable. The reason is that the GEM companies are smaller and have less risk resistance, and at the same time, the new technology is upgrading rapidly. Once the investment is insufficient, they will not be able to catch up with the market and will soon be eliminated by the market, and the risk of operation will be larger. Therefore, in the mature western market, the valuation of small cap companies is much lower than that of large ones, but not much higher. Only the valuation of Chinese stocks is not determined by performance, but by total capital stock, especially in circulating capital stock. The smaller the share capital, the higher the share price, the higher the share price, the larger the capital stock and the lower the share price. This is a distorted value concept. According to statistics, in the 5 years since the establishment of the gem, the overall net profit growth rate in each year has been 43.5%, 31.2%, 19.94%, -6.87% and 10.94% respectively, while the performance has declined.

It is the pursuit of short-term price differentials that do not care about the quality of the company, and at the same time, regulation can not keep pace with the changes in the market. Therefore, agencies, big money holders or private equity chiefs are not pursuing investment returns, but are pursuing stock price manipulation earnings. They hope to rely on their own capital advantages to pull stock prices through various means to attract investors to follow suit and to succeed in their own high position. Investment is not the discovery of value, but rather the strength of capital strength and the skills of trading, and the total share capital of the stock represented by the gem is relatively small. It can tell stories and be more suitable for capital operation, so funds are always addicted to it. This distortion is related to China's investment structure. China is dominated by small and medium-sized investors. Even institutional capital is fully decentralized. It seeks short-term returns rather than long-term gains.

Why do I say so? It is because gem always keeps a high turnover rate. The turnover rate in the daily pactions is always 3-5%, and the turnover rate of stocks is even more alarming. 10% is not unusual at all, 20% is drizzle, 30% is common, and 50% is also not used to blame. This is the case of today's trading. The turnover rate is 37%, which is a normal investment, and is a kind of capital race.

If you look at the investment value of the gem, the value of growth should be valued. It should be a medium to long term holding, enjoying a high growth dividend rather than a few days' handover, which is a game of drumming and spreading flowers, rather than investment, called Bo silly.

It is not scientific to quote the data that the composite growth rate of the growth enterprise market is up to 20%, because 10 years and 11 years are the period of high economic growth in China.

的成长性也非常好，但随着经济下滑，创业板高成长光环也就不再有，出现了明显的下滑，尤其是13年出现了明显的下滑，而主板还是出现正增长，可见创业板也是不能离开宏观经济离开特定环境奢谈成长性的，俗话说黄金最贵也有价，创业板上市公司成长性不怎的，跟主板不相上下，没有明显之差，但价格却是主板的好几倍，笔者纳闷，创业板投资价值好在那里，檀香盒是美丽豪华的，惹人喜爱的，但如果檀香盒装的是破棉絮，价值又该如何衡量，创业板虽然顶着众多光环，符合国家经济转型，是高新公司的代表，看起来是美妙的，但公司质地如何，虽然破棉絮称不上，但黄金也是远远够不上。

The same is the gem, the United States NASDAQ brings together the world's innovative enterprises, the P / E ratio is less than 30 times, and China is 61 times, more than 2 times the NASDAQ in the United States, China's GEM companies are better than the Nasdaq, and why not, so why is the difference between the valuation of the stock price manipulation, capital speculation.

If

Value for money, as a root of the industrial capital should be substantially increased holdings, at least insist on holding, rather than a substantial reduction, or even top cut, according to Tobin Q theory, the direct reason for the reduction of industrial capital is that the stock price deviates from the valuation, the higher the deviation.

The stronger the desire to reduce holdings, according to media reports, this year, the overall direction of change for the reduction of 769 stocks, small and medium board and gem enterprises are the most fierce reduction of executives.

As of October 17th, 769 stocks held by executives were reduced to 75 stocks in Shanghai stock market, 231 in GEM stocks, 383 in medium and small board stocks, and 80 in Shenzhen stock market, accounting for 9.75%, 30.04%, 49.8% and 10.4% respectively.

The total number of gem and small and medium-sized board shares accounted for nearly 80%.

There are less than 400 stock companies in gem. That is to say, 60% of companies suffer from industrial capital reduction. In fact, some companies have not lifted their shares and the actual reduction is even higher.

The large scale cash flow of executives of industrial capital companies even at the expense of years of struggling to get the status of cash withdrawal can only be explained, that is, most of the GEM companies are far from the value of the price, the bubble has been serious.

As of August 31st this year, the gem has announced a total of 118 major asset restructuring programmes, of which 82 are single strategic emerging industries, with a total amount of 50 billion 148 million yuan, covering strategic emerging industries such as information technology and communications, cultural media, energy conservation and environmental protection, which has promoted China's economic restructuring and accelerated the process of industrial upgrading and pformation.

Although there are more mergers and acquisitions on GEM, there are certainly big enterprises to consider themselves, but most of them want to boost their share price by taking part in the hot industry, so that they can reduce their holdings at a high level. M & A is only an important part of the implementation of market value management in the process of reduction.

M & A is not for investors to enjoy the bonus, but to buy a good price for their stock.