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things are changing a little fast!

today, stocks with chinese characters in their names have experienced a sharp drop across the board. china shipbuilding fell more than 9%, and china communications construction fell 7.5%. china railway construction, china heavy industry, and china shipbuilding industry corporation all saw a sharp drop of more than 6%. china power, china railway group, china metallurgical group, chalco international, china national chemical corporation, and china railway signal and communication corporation all fell sharply. in the previous few trading days, stocks such as china power construction corporation had already fallen sharply, and they still fell sharply today.

from the chart, these chinese-character stocks performed well in the first half of last week, and were basically in an upward channel. but since the second half of last week, most of them have started to sell off.

so, what happened? obviously, it was affected by the interim report. however, judging from the interim report results in 2024, although the profitability of these stocks has declined, the total net profit is not very bad. however, the cash flow, which measures the quality of net profit, has experienced a rare decline.

a rare scene

in today's a-share market, the rise of agricultural bank of china, sinopec and other stocks has to some extent covered up the embarrassing situation of large-cap blue-chip stocks. in fact, the performance of large-cap blue-chip stocks with chinese characters in their names today was very bleak. the chinese character index once fell by more than 1.3%, but this is not enough to show the full performance of this type of stocks.

since this morning, the atmosphere has become a little wrong. this morning, some stocks with chinese characters in their names fluctuated and fell. china shipbuilding, china communications construction, china railway construction, and china heavy industry fell by more than 6%. cosco shipping development, china galaxy securities, and china railway rolling stock all fell. at the close, the decline of these stocks increased. china shipbuilding fell by more than 9%, china communications construction fell by 7.5%, china railway construction, china heavy industry, and china shipbuilding industry corporation all fell by more than 6%. in the previous few trading days, china power construction and other stocks had already fallen in advance, and they still fell sharply today.

from the news, there is no obvious negative news. however, the industry itself does have some problems. according to data from galaxy securities, the prosperity of the construction industry continued to decline. in july, the business activity index of the construction industry was 51.2%, down 1.1 percentage points from the previous month; the new order index of the construction industry was 40.1%, down 4 percentage points from the previous month; the price index of construction inputs was 50.4%, up 0.8 percentage points from the previous month; the sales price index of the construction industry was 49.3%, up 0.3 percentage points from the previous month; the construction industry employee index was 40.2%, down 2.7 percentage points from the previous month; the construction industry business activity expectation index was 52.9%, down 1.8 percentage points from the previous month. in july, some regions entered the rainy season and the prosperity of the construction industry continued to decline.

in addition, there are rumors that today's stock plunge is related to anti-corruption and auditing. however, no official announcement has been seen.

mid-year report data draws attention

in fact, what deserves more attention is the interim report.

taking china shipbuilding as an example, the company’s 2024 semi-annual report disclosed recently showed that during the reporting period, the company achieved operating income of 36.017 billion yuan, a year-on-year increase of 17.99%, of which the operating income of shipbuilding and marine engineering business was 34.446 billion yuan, a year-on-year increase of 22.39%; the net profit attributable to shareholders of the listed company was 1.412 billion yuan, a year-on-year increase of 155.31%; the non-net profit attributable to shareholders of the listed company was 1.198 billion yuan, turning losses into profits year-on-year.

logically speaking, this is a pretty good interim report, but the stock price fell the most. analysts believe that although the profit level is good, there are certain problems with the quality of profit. the best indicator to measure the quality of profit is the net cash flow from operating activities. in 2024, the company's net cash flow from operating activities was -3.814 billion yuan, a year-on-year decrease of 8.636 billion yuan. at the same time, the company's free cash flow in the first half of 2024 was -3.082 billion yuan, compared with 4.030 billion yuan in the same period last year.

looking at other chinese-character stocks, this phenomenon basically exists in all of them. according to wind data, the net cash flow from operating activities of china construction in this year's interim report was -108.769 billion yuan, while it was only 10.56 billion yuan in the same period last year, and the company's free cash flow this year was -83.2 billion yuan. similarly, china railway construction's operating cash flow and free cash flow also fell sharply. china communications construction, china power construction, china railway group, china metallurgical group, etc. are all like this. although the net profit attributable to the parent company of these stocks remains at a high level, the quality of earnings has obviously declined.

judging from the pmi sub-item data, the construction industry pmi in august fell slightly from the previous month, the new order index rebounded but was still in a relatively low prosperity range, and order expectations and construction rhythm were still weak; the cumulative year-on-year growth rate of infrastructure investment in july slowed by 0.5 percentage points from the previous month to 4.9%. structurally, the investment in water conservancy management, aviation, and railways continued to perform well, with year-on-year growth of 28.9%, 25.5%, and 17.2% respectively. municipal investment performed weakly, and the investment in public facilities management industry fell by 4.7% year-on-year. to maintain the growth rate of infrastructure, projects still need to be implemented and quasi-fiscal tools need to be further implemented.

dongwu securities believes that the political bureau of the cpc central committee held a meeting to review the "several policy measures to further promote the new pattern of western development". it is expected that the subsequent promotion of relevant policy recommendations will accelerate the development of infrastructure and urbanization in the western region and boost investment in engineering construction. the growth rate of revenue of central construction enterprises slowed down significantly in the second quarter of 2024, reflecting the pressure on infrastructure investment and the construction industry in the second quarter, but the share and operating quality of central enterprises continued to improve.