Rebirth of the Capital Legend

"Old Liang, you think there are still some problems with the trend of the new energy industry chain, right?" Zhao Zhiyuan replied after hearing Liang Jiucheng's words, "But it feels like the various capital groups in the market are still very deeply involved in the new energy industry chain, especially in the lithium battery sector and the corresponding charging pile sector. After the rapid surge in trading volume of stocks such as Tinci Materials, Do-Fluoride Chemicals, Tianqi Lithium, and Ganfeng Lithium, the daily trading volume has basically stabilized."

Moreover, after the trading volume stabilized, the stock price has consistently shown an upward trend with fluctuations.

It seems that the previous decline and adjustment have been clearly corrected, and it appears that major funds have locked up a large number of shares. Under this pattern, the probability of these stocks continuing to rise and break through is still very high, and in terms of potential upside, there is still room for growth.

Given that the government will not only not reduce subsidies for the entire industry next year, but will instead continue to increase them.

I believe the new energy industry is truly seeing a glimmer of hope, and this is no longer just talk. This sector... in my opinion, is definitely worth paying attention to and investing in.

Oh, right, the same goes for energy storage.

If the new energy industry chain and new energy vehicles are to develop, then energy storage is an indispensable part, right?
Electricity is the cornerstone of future economic development and industrial innovation, but my country's current hydropower resources are far from sufficient.

Under heavy pressure from environmental protection.

Thermal power will gradually undergo resource integration and be phased out of the historical stage.

Therefore, in the face of a huge increase in electricity demand, it is imperative to develop new energy sources and the energy storage industry.

In the current energy storage field, China is still in the pioneering stage. There seems to be a lot of opportunity, but there are no suitable targets yet.

At the same time, there seems to be little consensus among various capital groups in the market regarding this line.

There is no consensus on funding.

There was no major capital injection that fully uncovered this trend.

“Speaking of energy storage and new energy power, and the future power shortage…” After listening to Zhao Zhiyuan’s words, Zhang Wei pondered for a while and then said, “I feel that the photovoltaic industry seems to be an opportunity. The country has spent a lot of effort and invested huge amounts of subsidies in this industry before. The situation it faced at that time is somewhat similar to the current situation of the lithium battery industry.”

At that time, with huge subsidies, many companies in the industry chain emerged that were defrauding subsidies.

However, after repeated shake-ups and industry consolidation, the photovoltaic industry now seems to have a chance to be reborn after the cancellation of national subsidies.

Among them are several core leading companies in the photovoltaic industry chain.

Its performance and operations are on a gradual improvement track, and it feels like there is a chance for a turnaround.

In terms of the long-term prospects.

Compare the scale of hydropower with the ever-increasing electricity consumption of the whole society.

The development of the photovoltaic industry is inevitable and an essential path for my country's industrial upgrading.

This presents opportunities for everyone, from upstream equipment manufacturers and inverter suppliers, to midstream operators and manufacturers, and downstream component suppliers.

"The direction you two are talking about isn't logically flawed," Liang Jiucheng said. "But judging from the current market trend, the problem remains: insufficient consensus among investors and the lack of a clear leading theme. For this trend to emerge, or for this expectation to take shape, I feel we need to observe further. Entering the market early, setting aside the costs of capital and opportunity, just the ability to hold on is a real test of one's mentality. I think if you're firmly bullish on this trend... you can actually wait for the corresponding right-side opportunity."

“Waiting for the right-side opportunity to emerge is naturally a strategy with a higher success rate,” Zhang Wei continued. “However, if the signs of industrial development and industry recovery are relatively obvious, entering the market early to position oneself is also a good option. After all, although the certainty of the left-side trading strategy is not high, compared to the relatively low position of this line, I believe that even if it does not come out in the end, you will only lose time, not money.”

Liang Jiucheng nodded and replied, "That's true. If we had enough funds to leverage the energy storage sector like 'Huayi Capital' did with the major infrastructure sector, then we could really make a difference. But right now... with insufficient funds to drive the main trend, I personally think it's more appropriate to follow the trend and look for opportunities on the right side. After all, although the overall position of the energy storage sector is currently very low, even if we make a mistake, we'll only lose time, not money. But time cost and opportunity cost are still costs."

“Old Liang is right,” Zhao Zhiyuan continued, “In trading, time cost and opportunity cost cannot be ignored. You can’t sit in two chairs at the same time. When it comes to seizing opportunities, we must make choices regarding the major themes of the market. I am also very optimistic about the energy storage sector, but just like the new energy and lithium battery sectors before, without the core large institutional funds to leverage and form a consensus expectation, it is still difficult to create a sustained trend based solely on the sentiment and enthusiasm gathered by us small and medium-sized speculative funds.”

Based on the current market situation and the existing power struggle.

In the entire market, the only institution that can truly leverage the main trend and has the ability to achieve significant results with minimal effort seems to be 'Huayi Capital'.

However, this institution seems to be focusing on and holding core positions in certain areas.

The focus remains on major infrastructure projects, major consumer goods, lithium batteries, and a few core stocks in the smartphone supply chain.

It seems that this institution hasn't yet made a large-scale withdrawal from these main sectors, or shown signs of significant portfolio adjustments.

The two main themes are major infrastructure construction, major consumption, and the new energy and smartphone industry chains.

The hype is unlikely to die down.

It is estimated that the market will continue to develop along these main lines for the time being, and will form a trend of further upward breakthrough.

At this stage, a relatively safe trading method.

Personally, I think it would be more prudent to continue trading along these core themes.

Moreover, although the core stocks on these lines have already seen significant gains over this period, compared to future expectations and the current market sentiment and attention from investors, there is still considerable room for further upward movement.

Especially in the lithium battery sector and the smartphone supply chain, particularly the Apple supply chain.

These two lines started relatively late compared to the major infrastructure line, and their overall position is not high at present.

From a technical perspective, it seems that an opportunity has just formed on the right side.

I think focusing on these two lines and continuing to pay attention to the core leading stocks within these two lines is a good choice.

Of course, some of the leading stocks in the energy storage sector are also worth paying attention to.

I believe that there are actually quite a few truly smart investors in the market, and there are certainly many people besides us who have noticed the energy storage sector.

If there are significant institutional investors subsequently establishing positions in leading stocks within the energy storage sector, and these stocks show clear signs of sustained buying activity on their charts.

Therefore, we can enter the market in advance and decisively make early purchases.

Besides energy storage, I believe the energy and power sector, which is fundamental to economic development, also presents medium- to long-term investment opportunities.

"The power sector?" Zhang Wei pondered for a moment and said, "The valuation of the power sector has never been significantly undervalued. Moreover, within the power sector, the core stocks worth investing in, such as Yangtze Power, China Power Investment Corporation, and Sichuan Investment Group, have indeed seen their stock prices rise. As the basic energy source for economic development, these leading stocks have always been the most favored investment direction for mutual funds."

Looking to the future, with economic development...

Electricity consumption will definitely increase, and this sector is indeed a sector with a long slope and thick snow.

However, in terms of a short- to medium-term surge, there is actually not much room for growth.

The electricity sector presents a clear investment opportunity that is logically sound to everyone.

Therefore, this sector has never shown a significant pendulum investment effect, meaning there has been no opportunity for extreme entry.

Looking back now, the really good buying opportunity for this sector actually came during the several stock market crashes last year, when it presented an opportunity for extreme undervaluation.

Later, with the entry of Huijin and China Securities Finance Corporation, this extreme valuation was corrected in a short time.

Currently, I personally believe that the opportunities in this main sector are not as good as those in large-scale infrastructure and consumer sectors.

After all, large-scale infrastructure and large-scale consumption have just transitioned from industry difficulties to industry prosperity, meaning they have just entered a favorable cycle, and the entire industry has strong and clear opportunities for short- to medium-term explosive growth.

The power line, however, has a long cycle of five, ten, or even twenty years.

However, this cycle is relatively stable.

In this investment field, it is very difficult to achieve returns that exceed the market average and significantly outperform the broader market.

Given the current situation, I personally prefer to continue focusing on the major infrastructure, new energy, and Apple concept stocks within the smartphone supply chain.

Of course, the consumer sector is also a good option.

However, the consumer sector has lost some of its cost-effectiveness after many institutional investors and major funds have joined forces to enter the market.

In particular, the liquor sector, in which Huayi Capital has a significant stake.

I think that, given their current valuations, the first- and second-tier liquor stocks like Moutai, Wuliangye, and Luzhou Laojiao are not exactly offering great value for money.

Of course, if the recovery of consumer demand in the whole society exceeds expectations in the future, that would be a different story.

In general, without a clear upward trend and a significant breakthrough of 3100 points, a slightly more conservative strategy might be preferable.

“I think the infrastructure sector is a better option,” Liang Jiucheng continued, picking up where the other two left off. “In terms of the current market trend, the infrastructure sector is one that has completely aligned with the trends in both markets. Look at the Hong Kong stock market; the entire real estate industry chain has only just broken through the bottom and emerged from the consolidation phase. Compared to the future of the domestic real estate market, the market capitalization of companies like Hengda Real Estate, Rongchuang Real Estate, Country Garden, and Longfor Properties should be relatively undervalued.”

Since the sector with the most obvious right-side trend and the strongest combined buying power in the entire market is the real estate industry chain sector.

There's no reason not to pay attention to this line.

However, this is in contrast to the real estate industry chain sector in the Hong Kong stock market.

Within the broader domestic infrastructure sector, there aren't many clearly defined stock picks worth focusing on and investing in.

"If the market continues to develop around the major infrastructure sector..." Zhao Zhiyuan said, "I feel that there will be new leading stocks that emerge. When the real estate industry chain was just starting, the leading stock in both markets was Oriental Yuhong. Then Beijiang Jiaojian took over. I feel that as long as the trend of this sector continues, there will be new leading stocks in the core concept sector that emerge."

Zhang Wei nodded and said, "That's for sure. In fact, there are already some signs of a new market leader emerging."

"Old Zhang, in your opinion, among the current hot stocks in the major infrastructure sector, which one has a higher chance of taking over from Beijiang Jiaojian and becoming the new core speculative leader?" Zhao Zhiyuan asked. "Gemdale Group? Greenland Holdings? Seazen Holdings? Or Shougang Group, or Financial Street Holdings, Chongqing Development Group, etc..."

After pondering for a moment, Zhang Wei said, "Personally, I think the probability of Taihe Group's stock being the better one seems higher."

"Taihe Group?" Zhao Zhiyuan was slightly taken aback and said, "This stock only hit its first daily limit up today, so I can't tell much about it. Moreover, the quality of the limit up seems average. As for the company, this real estate company is not a top-tier company in China. Why are you optimistic about this stock?"

Zhang Wei said: "Generally speaking, the core leading stocks in the market, especially the leading stocks jointly hyped by non-institutional investors, will not be the heavyweight leading stocks with large market capitalization and circulating shares in the industry. After all, the amount of active funds in the market is limited and the flow is restricted. There are not enough funds to make the elephants dance. Therefore, the leading stocks in the market will inevitably appear in the small and medium-sized stocks."

The reason I am optimistic about Taihe Group's stock is...

This stock has been making quite a splash lately. The company is actively acquiring land and has many new development projects. Moreover, the positive signals released by the boss in several speeches and the expectations for future development are significantly higher than the market expectations.

However, this stock is relatively unpopular in the entire market industry chain.

There hasn't been much financial attention on it.

This is why few people delve into the fundamentals and underlying logic of this stock's breakout.

However, this also presents an opportunity for a significant expectation gap in this stock, given the large size and high growth potential of the domestic real estate market.

I believe this company has the potential to grow into a company with a scale of hundreds of billions in the future.

"A potential market size of hundreds of billions?" Zhao Zhiyuan was taken aback by Zhang Wei's expectation and said, "This stock's current market value is less than 130 billion. If it's expected to reach hundreds of billions in the future, doesn't that mean this stock has room for seven or eight times growth? Isn't that a bit exaggerated?" (End of Chapter)