How to closely track the liquor index and even achieve excess returns? How should ordinary investors analyze liquor industry? This issue of Cattle Hunt interviewed Hou Hao, deputy director of the Quantitative Investment Department of China Merchants Fund and manager of China Merchants CSI Liquor Index and China Merchants CSI Biomedical Index Fund, to discuss the investment of liquor industry in The Secret Behind.
Quantitative+research index investment needs a bigger pattern.
The index fund managed by Hou Hao is the biggest participant in the pharmaceutical and liquor sectors. If you just follow the index, quantitative trading is what Hou Hao is good at. For the management of index funds, Hou Hao pursues excess returns by optimizing trading methods on the basis of controlling tracking errors. When trading in the market every day, we should fully understand the reasons for price fluctuations, seize the opportunity actively for each redemption, and minimize the impact cost. Therefore, in-depth study of the industry and company prospects, combined with quantitative timing indicators and algorithmic trading, is the direction that Hou Hao has been working hard in recent years.
After years of experience in managing liquor index funds, Hou Hao believes that a stable ROE track can enjoy a valuation premium. 20 16 Many people may find it hard to imagine the current price of high-end liquor. Therefore, fund managers need to have a larger pattern, a wider and farther vision. There are many hot spots in the market this year, from food and beverage to new energy, to biomedicine and chips. Hou Hao is also constantly learning from each other's strengths, further broadening the breadth and depth of industry research on the basis of quantitative factors, timing and trading, and becoming an expert in liquor, biomedicine and even large consumption industries.
The three camps of price first and quantity second are clearly divided.
Liquor is undoubtedly an excellent racecourse. China has a long liquor culture since ancient times, and the "moat" of domestic liquor enterprises is deep, so liquor as a regional industry will not be impacted by overseas. Whether liquor is expensive at present is a controversial topic. The head enterprise has a high valuation and its share price has risen. They are afraid of missing the market, but they are worried that the stock price will suddenly collapse.
In this regard, Hou Hao believes that the liquor industry is in a mature stage, the pattern is relatively stable, the volume growth is limited or even decreased, and the total volume of the industry is driven by price. The overall price increase rate of liquor always follows the speed of currency issuance, and the growth rate of performance has strong support. However, due to market sentiment, external conditions and other factors, short-term fluctuations are indeed inevitable. In the past, everyone thought that the liquor industry was highly correlated with the economic cycle. In fact, with the increase of the proportion of mass consumption in the demand structure and the refinement of the channel management of liquor enterprises, the periodicity of liquor has been greatly weakened. More importantly, it depends on the consumption upgrading and concentration increasing trend of liquor industry.
If it is difficult for ordinary investors in high-tech industries such as military industry and chips to understand, then the liquor industry is a household name, and maybe everyone can say a few words. But for professional institutional investors, the liquor industry is divided into three camps, high-end, sub-high-end and real estate liquor. For high-end liquor, the brand has been nationalized and the competition pattern is relatively stable; Sub-high-end is still in the situation of competition among major brands, and brand influence has continuously broken through regional restrictions and developed to the whole country; Finally, local wines, that is, regional brands, have relatively limited radiation areas, and these brands are striving to expand their influence in more regions. Then at this time, the focus of the analysis should be how to improve the brand power and occupy a larger market while raising the price. The liquor market is special because it has price first, then quantity. In a certain competitive situation, the key price combined with the accurate card position of products can bring better marketing effect, because drinking is more about "drinking brands". Only in a specific price band can sales be driven, and dealers can be promoted to rationalize the logic of quantity and price and expand new marketing markets.
Some people think that high-end liquor brands are strong. Do you need more products with prices to form a price matrix? Hou Hao said that in fact, it all depends on the price difference. Take a high-end liquor as an example, the retail price of a bottle is close to 3,000 yuan, and the retail price of another high-end liquor is 1000 yuan, so the former can really play a greater role in the difference between 1000 yuan and 3,000 yuan to create new products. The marketing model of liquor is different from mass consumer goods. Only by rationalizing the price band can the performance be improved. Brands with large price differences can have large layout space.
The industry is booming and it is recommended to invest for a long time.
Many ordinary investors like fixed investment, but Hou Hao thinks it depends on the characteristics of the investment target. For industries with high and stable ROE, mature industries and stable cash flow, low-level buy-and-hold and regular fixed investment are good investment tools; For industries with unstable ROE and large fluctuations in valuation, if we can make timely fixed investment in combination with industry cycle and valuation, we can have better investment income.
So how should we invest in the liquor industry? In the medium and long term, with the slowdown of economic growth, emerging industries such as liquor and industries with rising prosperity have obvious comparative advantages and still have structural opportunities. The progress of vaccines in COVID-19 has pushed the low-valued pro-cyclical sector to make up for the increase. In the short term, value stocks are relatively dominant, but in the longer term, industries with smoother growth logic will be better.
From the microscopic point of view, specific to the liquor industry, Hou Hao believes that for high-end liquor, the market demand is far from reaching the ceiling, and the annual income of related enterprises is increasing. The industry still has a certain dividend, which is suitable for long-term holding; For the second high-end, the ROE of these enterprises will fluctuate with the change of market share and competition pattern, and there is more room for band operation. As for China Merchants CSI Liquor Index Fund, Hou Hao suggested that investors take the form of fixed investment to open positions, spread risks, embrace the track and be friends with time on the premise of fully evaluating their risk tolerance.
Hou Hao: Master of Economics, CFA (Chartered Financial Analyst), FRM (Financial Risk Manager). In 2009, he joined China Merchants Fund Management Co., Ltd. and is currently the deputy director of the quantitative investment department of China Merchants Fund. He is also the fund manager of China Merchants CSI Liquor Index Fund and China Merchants CSI Biomedical Index Fund.