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Recently, the latest second quarter reports of public funds have been released one after another. Among them, Shi Cheng, the fund manager of SDIC UBS, who has attracted wide attention for his bet on the new energy track, also disclosed the second quarter reports of the six products under his management. The reporter noticed that with the continuous adjustment of the new energy sector, these products are still "deeply trapped" in it, and their performance this year has all failed, with a cumulative loss of 2.836 billion yuan in the first half of the year.

With performance drastically declining and product scale shrinking, Shi Cheng's latest managed scale has fallen by 60% from its historical high, and he has now faded out of the ranks of billion-dollar fund managers. Among them, the performance of the four products with a long history has been "halved" in the past three years, and the net value of some products has returned to the level of four years ago.

In July this year, SDIC UBS Fund was involved in a rumor that its "salary cut was rejected by foreign shareholders", which attracted widespread attention in the market. In response, the reporter of China Business Network contacted the company for verification, but the other party did not respond. At the same time, the reporter also contacted the foreign shareholder UBS Group involved in the rumor, and the other party said "no comment".

The scale has shrunk to less than 10 billion yuan

Recently, the six products managed by Shi Cheng have disclosed their latest quarterly data. Since the beginning of this year, due to product redemptions and poor performance, the scale of many funds under his management has declined to varying degrees. In addition to the resignation of the fund, the total shrinkage this year is nearly 3.4 billion yuan.

Data shows that by the end of the second quarter of this year, the size of Shi Cheng's managed funds had fallen below 10 billion yuan, to 9.534 billion yuan. This also means that Shi Cheng has fallen out of the ranks of managers with 10 billion yuan in funds. Compared with 24.716 billion yuan in the same period two years ago, the size is less than 40%.

Behind the decline in scale is a sharp decline in performance. Wind data shows that as of July 12, the cumulative returns of the six products he managed (only Class A) have all lost money this year, with an average decline of 22.33%. Except for the SDIC UBS Industrial Upgrading Two-Year Holding A jointly managed with Li Wei (the cumulative decline from the beginning of the year to date is 18.78%), the declines of the other five products this year are between 22.5% and 24.3%.

From the perspective of business performance, the above six products still did not make money in the second quarter, and the fund profit in a single quarter totaled a loss of 1.75 billion yuan. It is worth noting that the situation of all losses has lasted for four quarters, with a cumulative loss of 7.468 billion yuan. If we extend the time to the last two years, the fund profit of these products has lost more than 17 billion yuan.

Looking back at 2020 and 2021, the new energy track performed sharply, and fund products with heavy holdings in related tracks also achieved good profits. At that time, the three products of SDIC UBS Jinbao, SDIC UBS New Energy A, and SDIC UBS Advanced Manufacturing had cumulative returns of between 220% and 232% in these two years. Shi Cheng has therefore attracted much attention from the market.

From the perspective of net value performance, these products have also fallen back to the level of four years ago as their performance has been adjusted. Taking SDIC UBS New Energy A as an example, Wind data shows that as of July 12, the latest net value of the fund was 1.2672 yuan, which is similar to the net value performance on June 18, 2020 (1.2607 yuan), and has fallen by 70% compared with the middle high point (4.3061 yuan on September 15, 2021).

The situation is similar for SDIC UBS Jinbao and SDIC UBS Advanced Manufacturing, while SDIC UBS Industrial Trend A, which was established in June 2021, has repeatedly set new lows, and its latest net value has fallen to 0.548 yuan.

Today, even if the scale continues to decline, Shi Cheng is still the manager of the largest active equity fund under SDIC UBS Fund Management. Wind data shows that as of the end of the second quarter of this year, the scale of active equity funds under SDIC UBS Fund Management was 31.6 billion yuan, and Shi Cheng's scale under management accounted for about 30%.

The time for market realization is extended

As a fund manager with a heavy position in the new energy sector, the performance of Shi Cheng's products is naturally not optimistic under the continuous adjustment of the track. For example, the four products established before 2022, namely, SDIC UBS Industrial Trend A, SDIC UBS Advanced Manufacturing, SDIC UBS New Energy A, and SDIC UBS Jinbao, have seen their cumulative returns "halved" in the past three years, with a decline of between 54% and 59%.

According to the analysis of China Business News, the similar losses of these products are because their managed products are not limited to a single industry, but the holdings of each product are not much different. From the latest heavy position thinking, Shicheng still continues to stick to the new energy sector, but has made some adjustments to some individual stocks.

Take the longest-managed SDIC UBS Advanced Manufacturing Fund as an example. Half of the top ten holdings of the fund in the second quarter were in the power equipment industry. Compared with the first quarter, the product reduced its holdings of CATL, Kedali, and Tianqi Lithium. Dofluoro and Ganfeng Lithium replaced Huayou Cobalt and Shengxin Lithium Energy and entered the top ten.

The holdings of SDIC UBS Jinbao and SDIC UBS Advanced Manufacturing are very similar, and the top ten holdings are exactly the same. SDIC UBS Industrial Trend A is "copied and pasted" with SDIC UBS New Energy A, and the top ten holdings of the two are the same; at the same time, there are 9 overlapping holdings with the aforementioned two products. In addition, the top ten holdings of these four products account for 71.5% to 72% of the fund's net value.

Wind data shows that as of the end of the second quarter, the above four funds had a total of 11 heavily-weighted stocks. As of July 15, except for CATL, which has risen 11.77% this year, the other 10 stocks have all had negative returns this year, and six stocks, including Tianqi Lithium and Jiangte Electric, have fallen by more than 30% this year.

A reporter from China Business News reviewed the reports of the past three years and found that in the 2022 annual report, Shi Cheng said: "After experiencing the valuation cuts in 2022, the overall market sentiment and expectations of growth industries represented by new energy and semiconductors are at a low point. We are optimistic that the market of growth industries will be realized in 2023."

In last year's annual report, he said: "The performance growth industry represented by new energy has experienced a decline in earnings in 2023 after lowering its expected valuation in 2022. We now believe that the overall decline in industry earnings has come to an end, and some companies may gradually begin to increase unit earnings. We are optimistic about the performance of companies that can realize growth from 2023 to 2025."

At this point in time, Shi Cheng reiterated: "In the performance growth industry represented by new energy, some links have seen a rebound in profits in 2024. The acceleration of new demands such as energy storage and heavy trucks is also on the way. We are optimistic about companies that can realize growth in 2024-2025."

In contrast, against the backdrop of continued adjustments in the new energy sector, although Shi Cheng continues to stick to this track, the time for realizing his optimistic growth outlook is gradually being postponed.

Shi Cheng said that the market has become accustomed to the narrative under the current economic environment, and the expectation for the recovery has been extended. In the future, we still need to observe the progress and strength of the economic recovery to judge the subsequent market. "But we still believe that the current valuation level of high-quality companies is at a historical low. In the next two years, it is expected to gradually get out of the low valuation, and even obtain a certain valuation premium."

Regarding the new energy vehicle track, he analyzed that the destocking cycle has ended, and the sharp drop in prices will stimulate demand in the next 1-2 years. Domestic demand still has potential, and overseas demand has a lot of room, but it needs good market logic to guide it. The mismatch between supply and demand is most likely to occur in the third quarter of this year. Since the supply of some links is no longer growing, and even the production capacity is declining, the probability of price increases in the next year is high.