Overcapacity has reached the most dangerous moment.
In the past few years, China’s economy, which targets GDP growth, is lacking in institutional construction. The radical investment supported by the huge debt of local governments will inevitably lead to overcapacity, and overcapacity means misallocation of Chinese social resources. Yes, this misconfiguration cannot be corrected by the system. Therefore, overcapacity is rising in the central government's liquidation order.
959 A-share manufacturing listed companies, the total inventory at the end of the third quarter of 2013 reached 1.14 trillion yuan, a record high. According to the statistics of the Bureau of Statistics, this total inventory is almost equal to the total GDP of the five provinces in 2012.
At the same time, the “Investor News†research institute judges whether the inventory size of a company is at a reasonable level by calculating the proportion of inventory to operating income. According to the average value, the inventory of A-share manufacturing listed companies at the end of the third quarter. The income ratio reached 0.24, which also reached a record high. If the calculation is based on the median (note: the middle of the set of data, together with the mean reflects the average level of a set of data), the indicator is as high as 0.33.
At the same time, the inventory turnover efficiency reached a historical low. The average inventory turnover rate of A-share companies in the first three quarters was only 2.76, which was a significant drop from 3.79 in 2012, and the inventory turnover days reached 168 days.
Source of crisis
Since 2008, in response to the global economic crisis, the Chinese government has launched an economic growth model dominated by infrastructure investment. The core issue of this decision is that in the past few governments, both the central government and local governments have used GDP growth data as a basis for considering the success of economic work.
Local governments are the mainstay of infrastructure investment. In the past few years, China’s financial resources have been heavily skewed to local governments, especially bank credit. As a result, this has created heavy local government debt and has formed a huge crisis in the past year. .
A-share manufacturing listed companies are mostly leading companies in local manufacturing industries. They are the core beneficiaries in the government-led infrastructure investment wave.
The so-called benefits, on the one hand, some companies as a local government's debt platform, heavily indebted, invested in infrastructure; on the other hand, some companies get infrastructure-related orders from the government, because the stimulus at the time is unprecedented, the company must rely on financial leverage Expand production capacity.
As a result, the scale of corporate debt in China has risen sharply. At present, the proportion of Chinese companies' debt to GDP is at the highest level in the world. As a whole, the space for Chinese companies to continue to use financial leverage has become very small.
However, strong investment can not sustain GDP. Obviously, this will lead to Qualcomm [microblogging] inflation, which is a serious injury to the economy and people's livelihood.
To make matters worse, with the withdrawal of large-scale economic stimulus, China's ability to digest production capacity is getting weaker. Immediately, investment's pulling effect on GDP is getting weaker and weaker. In other words, the allocation of resources for investment is increasingly inefficient for economic growth.
For the A-share manufacturing listed companies, the inertia of the past few years has kept the inventory growing at a high speed, and the infrastructure investment brakes of the whole society have made the inventory undigestible, even though there are currently stimulus policies for investment, but this is “micro Stimulus, can not be compared with the large-scale stimulus of the past.
The inventory crisis caused by overcapacity is essentially the manifestation of the debt crisis in the real economy. As we all know, in the process of overcapacity, the vague political and enterprise boundaries often lead to the existence of corruption, which will make the market unable to play its due role in eliminating overcapacity and digesting inventory.
Crisis fermentation
At the end of the third quarter of 2013, according to the disclosure data of A-share companies, the inventory balance of 959 manufacturing companies totaled 1.14 trillion yuan, an increase of 6% compared with the end of 2012, compared to the end of 2009 four years ago. It has increased by 61%. Reach a new record high.
To what extent is this inventory size? According to the statistics of the website of the Bureau of Statistics, in 2012, the GDP of eight provinces was below this inventory size (1.14 trillion yuan). The Tibet Autonomous Region with the lowest GDP has a GDP of only 69.558 billion yuan in 2012. The simple conversion shows that the total inventory of the A-share manufacturing industry is equivalent to the GDP of 16 Tibet Autonomous Regions. At the same time, the five provinces with the lowest GDP in 2012 (Tibet Autonomous Region, Qinghai Province, Ningxia Hui Autonomous Region, Hainan Province, Gansu Province) have a total GDP of only 1.34 trillion yuan. This means that the current total inventory of A-share manufacturing has been equal to the total GDP of the five provinces.
We use the proportion of inventory relative to operating income as a basis for assessing whether a company's inventory size is reasonable. We calculated the A-share manufacturing company's data since 2009.
The results show that by the end of the third quarter of 2013, the indicator, that is, the average inventory-to-income ratio of listed companies in the A-share manufacturing industry reached 0.24, and the median value was as high as 0.33, up 32% and 43% respectively compared with 2012.
We noticed that sales of manufacturing companies have experienced growth problems. In 2012, the overall sales of these 959 companies showed a slight decline year-on-year. In the first three quarters of 2013, sales of these companies increased slightly, about 8%.
This shows that the inventory size of these companies is rising, but the sales growth is stagnant, and the inventory cannot be digested, resulting in an imbalance between the inventory and sales ratio.
Excessive inventory means that the funds used cannot be turned over. In the situation of shrinking bank credit, the funds of listed companies will inevitably decrease. Statistics show that the average book capital balance of 959 manufacturing companies to the end of the third quarter is 1.129 billion. Yuan, with a median value of 340 million yuan, fell by 2% and 20% respectively from the end of 2012.
While the inventory income ratio is rising rapidly, it will inevitably lead to a decline in efficiency.
In the first three quarters, the average inventory turnover rate of manufacturing companies after the annualization was only 3.9, which was a significant drop from the average of 4.9 in 2012. If calculated by median, the indicator is only 2.76 times, compared with 3.79 times in 2012.
Correspondingly, the average inventory turnover days in the first three quarters reached 168 days, an increase of 25% over the 135 days in 2012. If the average is calculated, the indicator is 98 days, which is also higher than that in 2012.
These data show that while the inventory size is rising, the inventory turnover efficiency is declining, further indicating that while the resources occupied by inventory are rising, their utilization efficiency is getting lower and lower.
It should be noted that the real estate company is not in the statistics. The reason is that the real estate company will include the real estate project under development in the inventory, and the commercial real estate will also calculate the commercial project in the lease in the inventory, which makes the real estate company's inventory and There are significant differences in general manufacturing companies.
Moreover, in the view of many securities analysts, in the current seller market, the more inventory of real estate companies, the greater the room for growth in the company's performance. More importantly, the real estate company's inventory realizing ability, that is, the realizing ability of real estate projects, is much stronger than the average manufacturing company.
Industry differentiation
At the end of the third quarter, in the manufacturing industry, some industries with small overall market size were abandoned. The three sub-sectors with the highest inventory-to-income ratio were machinery, building materials and electronics, which reached 0.47, 0.37 and 0.35 respectively.
The inventory problem of the machinery and equipment industry is not surprising. This is the industry that the infrastructure investment brakes must first impact. From the financial reports of key companies such as Sany Heavy Industry and Zoomlion, the industry's problem is not inventory growth but sales. Downturn, inventory is difficult to digest.
The core problem of building materials is that it is affected by the downturn in the real estate market, resulting in a significant shrinkage in sales of steel, cement, and sheet metal. In fact, steel, cement and other industries have always been the focus of the country's efforts to clean up excess capacity.
As for the electronics industry, we believe that the growth rate of downstream consumer electronics is slowing down. In recent years, although the consumption of smartphones has grown rapidly, the market for personal computers and digital products has shrunk significantly. In the fields of electronics manufacturers, especially optical optoelectronics, the investment growth in the past few years has led to an excessive expansion of production capacity, which has led to the current state of excess inventory.
Not all manufacturing industries have a crisis, let's look at which industries have the lowest inventory-to-income ratio. The statistical results show that the three industries with the lowest indicators are food and beverage, agriculture, forestry, animal husbandry and fishery, and household appliances, which are 0.09, 0.11 and 0.16 respectively.
The commonality of these three industries is that they all belong to industries with sufficient market competition. At the same time, they are also the industries that benefited the least from the last round of economic stimulus policies.
On the one hand, competition is sufficient for enterprises to independently judge the market and adjust production capacity and inventory reasonably; on the other hand, the consumer market is relatively stable, and the government's stimulus policy does not play much role in this field. Conducive to enterprises to use market-based means to deal with market problems.
Specific to the company level, at the end of the third quarter, the three ST companies, such as *ST Xianglong, ST Mingke, and ST Yizhi, had the highest inventory-to-income ratio in all manufacturing A-share companies, and both of these indicators exceeded 20.
Among the top 50 companies in the list, the company with the largest inventory size is Sinovel, reaching 9.25 billion yuan, followed by China Yizhong and *ST Duo, reaching 8.04 billion yuan and 4.83 billion respectively. yuan.
Sinovel Wind Power is particularly worthy of attention. This is the leading enterprise in China's wind power equipment. China's wind power construction has experienced emergency braking in the past two years. On the one hand, the growth of power generation demand has slowed down due to the slowdown of industrial growth. On the other hand, wind power as a clean energy source. There are still obvious shortcomings in terms of stable transmission and energy storage, but the excessive investment in previous years has covered these problems.
One weight and two weights are the most typical victims of infrastructure investment brakes. From the business structure of the two companies, their downstream industries are mainly metallurgy, power generation, petrochemicals, heavy machinery, etc., and these industries are under the infrastructure. Construction of the industries most influential.
These three companies have a common feature, and their performances are terrible. Huarui Wind Power suffered a huge loss of 700 million yuan in the first three quarters, a loss of 440 million yuan, and a loss of 1.5 billion yuan.
Regarding Sinovel and China, this issue will provide a more in-depth and detailed interpretation of the two companies.
Breaking the problem
How to solve the current problem of overcapacity in China's industrial manufacturing needs to be viewed from the macro and micro perspectives. That is to say, both the government and enterprises need to carefully judge the current economic situation in China and make sound decisions.
The new government leaders have stated that they will no longer focus on GDP growth, but shift the focus of economic work to optimize the structure of economic growth.
In order to avoid aggravating the overcapacity crisis, China’s current investment has shifted from a large-scale stimulus in the past to “micro-stimulusâ€, including micro-stimulus, including tax cuts for SMEs, lowering export costs, and increasing information technology and telecommunications infrastructure. Investment, investment in environmental protection, etc., this series of policies is highly targeted, different from the previous large-scale economic stimulus policies, and the government directly provides funds, not the previous large-scale lending by banks.
This shows that the government has realized that the large-scale economic stimulus policies of the past were only a fierce drug in the midst of a serious economic crisis. In essence, the health growth of economic entities is deeply poisoned. In the foreseeable years, this kind of stimulation will not appear again. .
Specific to manufacturing, the government's economic stimulus should continue to deepen in two areas:
The first is emerging areas, including new materials, information consumption, biotechnology, etc., typically in the field of telecommunications infrastructure. Currently, the Ministry of Industry and Information Technology is deploying 4G licenses. Once 4G is launched, telecommunications infrastructure investment will usher in another peak. period.
The second is to fully release the vitality of the private economy and encourage private capital to enter certain regulatory areas.
From the micro level, that is, the company perspective, on the one hand, we need to weigh the relationship between market demand expectations and capacity inventory; on the other hand, we need to further optimize the industrial structure and accelerate industrial upgrading.
The capacity and inventory scale should match the market demand expectations. In order to meet the short-term gains and expand the production, it will undoubtedly be thirsty and will soon put the company in crisis. Therefore, the company should reasonably evaluate the market demand expectations and adjust the production capacity accordingly. And the size of the inventory.
More importantly, companies need to optimize their industrial structure and accelerate industrial upgrading. China's economy is undergoing rapid innovation and transformation. Enterprises need to adapt to this change. The advent of the era of information consumption requires companies to upgrade themselves in procurement, production, marketing, etc., and use their own advantages to find new areas. opportunity.
In the past few years, China’s economy, which targets GDP growth, is lacking in institutional construction. The radical investment supported by the huge debt of local governments will inevitably lead to overcapacity, and overcapacity means misallocation of Chinese social resources. Yes, this misconfiguration cannot be corrected by the system. Therefore, overcapacity is rising in the central government's liquidation order.
959 A-share manufacturing listed companies, the total inventory at the end of the third quarter of 2013 reached 1.14 trillion yuan, a record high. According to the statistics of the Bureau of Statistics, this total inventory is almost equal to the total GDP of the five provinces in 2012.
At the same time, the “Investor News†research institute judges whether the inventory size of a company is at a reasonable level by calculating the proportion of inventory to operating income. According to the average value, the inventory of A-share manufacturing listed companies at the end of the third quarter. The income ratio reached 0.24, which also reached a record high. If the calculation is based on the median (note: the middle of the set of data, together with the mean reflects the average level of a set of data), the indicator is as high as 0.33.
At the same time, the inventory turnover efficiency reached a historical low. The average inventory turnover rate of A-share companies in the first three quarters was only 2.76, which was a significant drop from 3.79 in 2012, and the inventory turnover days reached 168 days.
Source of crisis
Since 2008, in response to the global economic crisis, the Chinese government has launched an economic growth model dominated by infrastructure investment. The core issue of this decision is that in the past few governments, both the central government and local governments have used GDP growth data as a basis for considering the success of economic work.
Local governments are the mainstay of infrastructure investment. In the past few years, China’s financial resources have been heavily skewed to local governments, especially bank credit. As a result, this has created heavy local government debt and has formed a huge crisis in the past year. .
A-share manufacturing listed companies are mostly leading companies in local manufacturing industries. They are the core beneficiaries in the government-led infrastructure investment wave.
The so-called benefits, on the one hand, some companies as a local government's debt platform, heavily indebted, invested in infrastructure; on the other hand, some companies get infrastructure-related orders from the government, because the stimulus at the time is unprecedented, the company must rely on financial leverage Expand production capacity.
As a result, the scale of corporate debt in China has risen sharply. At present, the proportion of Chinese companies' debt to GDP is at the highest level in the world. As a whole, the space for Chinese companies to continue to use financial leverage has become very small.
However, strong investment can not sustain GDP. Obviously, this will lead to Qualcomm [microblogging] inflation, which is a serious injury to the economy and people's livelihood.
To make matters worse, with the withdrawal of large-scale economic stimulus, China's ability to digest production capacity is getting weaker. Immediately, investment's pulling effect on GDP is getting weaker and weaker. In other words, the allocation of resources for investment is increasingly inefficient for economic growth.
For the A-share manufacturing listed companies, the inertia of the past few years has kept the inventory growing at a high speed, and the infrastructure investment brakes of the whole society have made the inventory undigestible, even though there are currently stimulus policies for investment, but this is “micro Stimulus, can not be compared with the large-scale stimulus of the past.
The inventory crisis caused by overcapacity is essentially the manifestation of the debt crisis in the real economy. As we all know, in the process of overcapacity, the vague political and enterprise boundaries often lead to the existence of corruption, which will make the market unable to play its due role in eliminating overcapacity and digesting inventory.
Crisis fermentation
At the end of the third quarter of 2013, according to the disclosure data of A-share companies, the inventory balance of 959 manufacturing companies totaled 1.14 trillion yuan, an increase of 6% compared with the end of 2012, compared to the end of 2009 four years ago. It has increased by 61%. Reach a new record high.
To what extent is this inventory size? According to the statistics of the website of the Bureau of Statistics, in 2012, the GDP of eight provinces was below this inventory size (1.14 trillion yuan). The Tibet Autonomous Region with the lowest GDP has a GDP of only 69.558 billion yuan in 2012. The simple conversion shows that the total inventory of the A-share manufacturing industry is equivalent to the GDP of 16 Tibet Autonomous Regions. At the same time, the five provinces with the lowest GDP in 2012 (Tibet Autonomous Region, Qinghai Province, Ningxia Hui Autonomous Region, Hainan Province, Gansu Province) have a total GDP of only 1.34 trillion yuan. This means that the current total inventory of A-share manufacturing has been equal to the total GDP of the five provinces.
We use the proportion of inventory relative to operating income as a basis for assessing whether a company's inventory size is reasonable. We calculated the A-share manufacturing company's data since 2009.
The results show that by the end of the third quarter of 2013, the indicator, that is, the average inventory-to-income ratio of listed companies in the A-share manufacturing industry reached 0.24, and the median value was as high as 0.33, up 32% and 43% respectively compared with 2012.
We noticed that sales of manufacturing companies have experienced growth problems. In 2012, the overall sales of these 959 companies showed a slight decline year-on-year. In the first three quarters of 2013, sales of these companies increased slightly, about 8%.
This shows that the inventory size of these companies is rising, but the sales growth is stagnant, and the inventory cannot be digested, resulting in an imbalance between the inventory and sales ratio.
Excessive inventory means that the funds used cannot be turned over. In the situation of shrinking bank credit, the funds of listed companies will inevitably decrease. Statistics show that the average book capital balance of 959 manufacturing companies to the end of the third quarter is 1.129 billion. Yuan, with a median value of 340 million yuan, fell by 2% and 20% respectively from the end of 2012.
While the inventory income ratio is rising rapidly, it will inevitably lead to a decline in efficiency.
In the first three quarters, the average inventory turnover rate of manufacturing companies after the annualization was only 3.9, which was a significant drop from the average of 4.9 in 2012. If calculated by median, the indicator is only 2.76 times, compared with 3.79 times in 2012.
Correspondingly, the average inventory turnover days in the first three quarters reached 168 days, an increase of 25% over the 135 days in 2012. If the average is calculated, the indicator is 98 days, which is also higher than that in 2012.
These data show that while the inventory size is rising, the inventory turnover efficiency is declining, further indicating that while the resources occupied by inventory are rising, their utilization efficiency is getting lower and lower.
It should be noted that the real estate company is not in the statistics. The reason is that the real estate company will include the real estate project under development in the inventory, and the commercial real estate will also calculate the commercial project in the lease in the inventory, which makes the real estate company's inventory and There are significant differences in general manufacturing companies.
Moreover, in the view of many securities analysts, in the current seller market, the more inventory of real estate companies, the greater the room for growth in the company's performance. More importantly, the real estate company's inventory realizing ability, that is, the realizing ability of real estate projects, is much stronger than the average manufacturing company.
Industry differentiation
At the end of the third quarter, in the manufacturing industry, some industries with small overall market size were abandoned. The three sub-sectors with the highest inventory-to-income ratio were machinery, building materials and electronics, which reached 0.47, 0.37 and 0.35 respectively.
The inventory problem of the machinery and equipment industry is not surprising. This is the industry that the infrastructure investment brakes must first impact. From the financial reports of key companies such as Sany Heavy Industry and Zoomlion, the industry's problem is not inventory growth but sales. Downturn, inventory is difficult to digest.
The core problem of building materials is that it is affected by the downturn in the real estate market, resulting in a significant shrinkage in sales of steel, cement, and sheet metal. In fact, steel, cement and other industries have always been the focus of the country's efforts to clean up excess capacity.
As for the electronics industry, we believe that the growth rate of downstream consumer electronics is slowing down. In recent years, although the consumption of smartphones has grown rapidly, the market for personal computers and digital products has shrunk significantly. In the fields of electronics manufacturers, especially optical optoelectronics, the investment growth in the past few years has led to an excessive expansion of production capacity, which has led to the current state of excess inventory.
Not all manufacturing industries have a crisis, let's look at which industries have the lowest inventory-to-income ratio. The statistical results show that the three industries with the lowest indicators are food and beverage, agriculture, forestry, animal husbandry and fishery, and household appliances, which are 0.09, 0.11 and 0.16 respectively.
The commonality of these three industries is that they all belong to industries with sufficient market competition. At the same time, they are also the industries that benefited the least from the last round of economic stimulus policies.
On the one hand, competition is sufficient for enterprises to independently judge the market and adjust production capacity and inventory reasonably; on the other hand, the consumer market is relatively stable, and the government's stimulus policy does not play much role in this field. Conducive to enterprises to use market-based means to deal with market problems.
Specific to the company level, at the end of the third quarter, the three ST companies, such as *ST Xianglong, ST Mingke, and ST Yizhi, had the highest inventory-to-income ratio in all manufacturing A-share companies, and both of these indicators exceeded 20.
Among the top 50 companies in the list, the company with the largest inventory size is Sinovel, reaching 9.25 billion yuan, followed by China Yizhong and *ST Duo, reaching 8.04 billion yuan and 4.83 billion respectively. yuan.
Sinovel Wind Power is particularly worthy of attention. This is the leading enterprise in China's wind power equipment. China's wind power construction has experienced emergency braking in the past two years. On the one hand, the growth of power generation demand has slowed down due to the slowdown of industrial growth. On the other hand, wind power as a clean energy source. There are still obvious shortcomings in terms of stable transmission and energy storage, but the excessive investment in previous years has covered these problems.
One weight and two weights are the most typical victims of infrastructure investment brakes. From the business structure of the two companies, their downstream industries are mainly metallurgy, power generation, petrochemicals, heavy machinery, etc., and these industries are under the infrastructure. Construction of the industries most influential.
These three companies have a common feature, and their performances are terrible. Huarui Wind Power suffered a huge loss of 700 million yuan in the first three quarters, a loss of 440 million yuan, and a loss of 1.5 billion yuan.
Regarding Sinovel and China, this issue will provide a more in-depth and detailed interpretation of the two companies.
Breaking the problem
How to solve the current problem of overcapacity in China's industrial manufacturing needs to be viewed from the macro and micro perspectives. That is to say, both the government and enterprises need to carefully judge the current economic situation in China and make sound decisions.
The new government leaders have stated that they will no longer focus on GDP growth, but shift the focus of economic work to optimize the structure of economic growth.
In order to avoid aggravating the overcapacity crisis, China’s current investment has shifted from a large-scale stimulus in the past to “micro-stimulusâ€, including micro-stimulus, including tax cuts for SMEs, lowering export costs, and increasing information technology and telecommunications infrastructure. Investment, investment in environmental protection, etc., this series of policies is highly targeted, different from the previous large-scale economic stimulus policies, and the government directly provides funds, not the previous large-scale lending by banks.
This shows that the government has realized that the large-scale economic stimulus policies of the past were only a fierce drug in the midst of a serious economic crisis. In essence, the health growth of economic entities is deeply poisoned. In the foreseeable years, this kind of stimulation will not appear again. .
Specific to manufacturing, the government's economic stimulus should continue to deepen in two areas:
The first is emerging areas, including new materials, information consumption, biotechnology, etc., typically in the field of telecommunications infrastructure. Currently, the Ministry of Industry and Information Technology is deploying 4G licenses. Once 4G is launched, telecommunications infrastructure investment will usher in another peak. period.
The second is to fully release the vitality of the private economy and encourage private capital to enter certain regulatory areas.
From the micro level, that is, the company perspective, on the one hand, we need to weigh the relationship between market demand expectations and capacity inventory; on the other hand, we need to further optimize the industrial structure and accelerate industrial upgrading.
The capacity and inventory scale should match the market demand expectations. In order to meet the short-term gains and expand the production, it will undoubtedly be thirsty and will soon put the company in crisis. Therefore, the company should reasonably evaluate the market demand expectations and adjust the production capacity accordingly. And the size of the inventory.
More importantly, companies need to optimize their industrial structure and accelerate industrial upgrading. China's economy is undergoing rapid innovation and transformation. Enterprises need to adapt to this change. The advent of the era of information consumption requires companies to upgrade themselves in procurement, production, marketing, etc., and use their own advantages to find new areas. opportunity.
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