In 2017 H1, the power of value investment in China stock market has shown to everyone. “Beautiful 50” market value has grew a lot during this period. As Chinese stock market and the investors become more mature, I believe that the market value of these companies generates real wealth will far exceed other companies in the future.
During 2017 H1, the overall return of my investment in Chinese stock market is 35.66%, in comparison, the Shanghai index increased around 1.8%, “Hushen 300” index increased 10.7%. This record is better than I expected, my idea is that it’s good for me to achieve 20% more return than “Hushen 300” every year. I think that the high return will not frequently appear like 2017 H1, however, I have strong confidence to beat market in the long run.
I will summarize what and why I have invested in just for my records.
- Pingan of China(中国平安). I have invested large part of my cash into insurance business, because I believe that insurance will play more and more important role in everyone’s life in the future. From the financial perspective, once someone have insured in one company, he will make continuous payment to this company in a long time span. The insurance company can take the float money to invest. Pingan of China(中国平安) is the one of the best insurance in my view, it mainly focuses on the personal insurance. It pocesses the largest number of insurance agents and leading management team, the customer base increase much every year. The market value of Pingan of China grew very fast during 2017 H1, the return is around 40%.
- Yili(伊利股份). The second largest part of my investment goes to the milk industry. Comparing to the development country, such as USA, Japan, etc. Chinese drink very few milk every year. With the wealth growing, health becomes more important than ever. Another thing is “Two children policy” will further stimulate the milk industry growing in the future. Yili win largest market share because of focusing on quality and building well known brand. In H1, the return of Yili is around 30%.
- SAGR(上汽集团). With the development of Chinese urbanization and traffic infrastructure, every family wants to own personal car. Although China is the largest car manufacture country, the rate of car owner is still low. The Chinese population is around 1.4 Billion, the number of car utilizing is around 200 Million. In 2016, there is 28 Million cars sold in China, and I believe that the number will still grow in a long time. Especially, car brand is the society status in China, and every Chinese family wants to own new car instead of an old car. The PE and PB of SAGR is very low, and the dividend is around 6%. In H1, the return is around 40%.
- GREE(格力). GREE is an excellent home appliance company in China, especially in Air Conditioner area. GREE takes one third market share of AC in China. Home appliance industry is highly related to Chinese urbanization. With further development of Chinese urbanization and One Belt One Road, GREE will have a more bright future. In H1, the return of GREE is around 40%.
- Hikvision(海康威视). As I discussed before, security is the basic needs, especially in the modern world. Hikvision is the leading surveillence security solution provider globally. Hikvision also invests a lot in AI and Robot, and combine these new technology with security, and develop more sophistic security technology. No matter in the business side or financial side, Hikvison is an excellent company. The stock performance is also very good, and the return in H1 is more than 50%.
These above 5 companies is my major investment in the stock market, these companies continuely creates real values for their customers and shareholders. I will hold and increase their shares in a long time.
I also invest a little in the Daqin Railway(大秦铁路), CMC(招商银行), Wu Liang Ye(五粮液). These are also good companies and have a good market performance in H1.
The noteworthy part is that I have invested a little in Wo Long Dian Qi(卧龙电气) and CRC(中国中车). They have a bad financial result and reflected in the stock performance in H1. Although they didn’t impact the whole performance, I still should take this as important lesson and stick to value investment as displine.