the first market value management guideline for a-shares was issued, and stocks with negative net value collectively rose sharply
2024-09-25
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today, stocks with negative net value collectively rose sharply.
following the "advance announcement" by wu qing, chairman of the china securities regulatory commission, on september 24 that relevant guidelines on market value management would be issued, the csrc officially released the "guidelines for the supervision of listed companies no. 10 - market value management (draft for comments)" (hereinafter referred to as the "guidelines") in the evening of the same day, and solicited public opinions.the "guidelines" mentioned that companies that are components of major indices should formulate and publicly disclose market value management systems, and companies that have been suffering from negative net assets for a long time should disclose valuation enhancement plans.
what is a stock with a negative net value?
"breaking net assets" means that the stock price falls below the net asset value per share of the company, which is an important market valuation indicator. according to the definition in article 13 of the "guidelines", a company with long-term breaking net assets refers to a listed company whose stock closing price on each trading day for 12 consecutive months is lower than its audited net asset value per share in the most recent fiscal year.
on september 25, stocks with negative net assets collectively surged. as of the close of the morning session, more than 10 stocks including financial street (000402.sz), sangang minguang (002110.sz), and zhongnan shares (000717.sz) hit their daily limit, ningxin new materials (839719.bj) rose by more than 9%, and rongsheng development (002146.sz), tianmao group (000627.sz) and many other stocks followed suit.
as of the close of the morning session, there were 694 a-share stocks whose share prices fell below their net assets. among them, in terms of the proportion of stocks, the net asset value-breaking rates in industries such as banking, transportation, steel, real estate, and coal were relatively high.
what does it mean when a stock falls below net value?
wang yaowu, a financial expert, said that if a stock's net value is below the market's level, it means that the market has given a lower valuation to its assets. however, whether it is undervalued or not requires specific analysis. a stock with a net value below the market value does not necessarily have room for appreciation. asset quality and sustainable profitability must also be observed.
"some stocks with negative net assets are greatly affected by the macro-economy and are in industries with relatively long industry cycles, such as banking and steel. because these industries are less likely to experience explosive growth in the short term and may not meet market expectations, they experience negative net assets." he also suggested that if a company's asset quality is not high, such as the existence of inflated financial assets, obsolete and inefficient fixed assets, a large amount of inventory facing impairment, and huge amounts of receivables that are difficult to recover, even if the net asset value is negative, it does not necessarily mean that the company's market price is higher than its actual net asset per share after dehydration.
is the surge in stocks below net value the best choice for positioning for a rebound?
in this regard, zhu qi of china galaxy securities believes that stocks with negative net assets should preferably be companies with relatively high return on investment capital and return on net assets. lin longpeng, chief market analyst of guotai junan securities research institute, believes that technology blue chips are expected to become the main line of later rise. xing xing, director of boxing securities research institute, believes that with the support of policies and the efforts of companies, stocks with negative net assets may continue to rise.
chen li, chief economist of sichuan securities, analyzed that many stocks in the current a-share market are in a state of negative net value, which means that the stock market value of these companies is lower than the sum of their book net assets, which is usually regarded as an opportunity for value investment. for stocks with negative net value, repurchasing and canceling shares will increase the company's net assets, attract more investors, and the company's valuation will also have the opportunity to increase significantly.
(compiled by hu yu, a reporter from dazhong news)
