According to the WiseFinance APP, on the evening of November 15, the CSRC officially released the final version of the "Guidelines for the Supervision of Listed Companies No. 10 - Market Value Management", which will be implemented from the date of publication. This is a significant document specifically for market value management published again after the first inclusion of market value management in the top-level design documents of the capital markets in 2014. The "Guidelines" require long-term companies trading below net asset value to disclose a valuation enhancement plan. Long-term companies with a price-to-book ratio lower than the industry average should also provide a specific explanation on the execution of the valuation enhancement plan at the annual performance briefing. Relevant concept stocks: China United Network Communications (00762), China State Construction (03311), China Comm Cons (01800), Avichina (02357).

Industry insiders point out that if long-term companies trading below net asset value utilize the above measures for market value management, it is expected to boost market confidence, thereby enhancing stock prices and shareholder returns. Under these requirements, long-term companies trading below net asset value are expected to see a valuation recovery, which may also provide investment opportunities for investors.

If long-term companies trading below net asset value disclose mid- to long-term dividend plans, increase dividend frequency, optimize dividend pace, and reasonably raise the dividend rate, investors may receive higher cash returns, enhance the company's market attention and investment attractiveness, leading to valuation recovery and stock price increases. If long-term companies trading below net asset value carry out upfront capital planning and reserves, and manage their market value through share buybacks, they may increase their earnings per share, thereby boosting stock prices.

Industry experts also advise that when investing in long-term companies trading below net asset value, it is important to pay attention to their asset quality, profitability, industry prospects, and assess risks such as inflated asset quality and poor profitability. Blindly investing solely based on their long-term trading below net asset value should be avoided.

CITIC Securities pointed out that the CSRC successively implemented guidelines on market cap management, opinions on mergers and reorganizations of listed companies, etc., continuing the policy idea of capital market reform "1+N." On one hand, the documents specifically require major index constituent stocks companies and long-term deep discount companies, considering that the current market cap proportion of long-term deep discount companies exceeds 20%, it is expected that related market cap management actions may continue to accelerate; on the other hand, the documents focus on supporting new quality productivity, industrial integration, and emphasize optimizing payment, pricing tolerance, and other supporting policies. In combination with the requirements for optimizing the layout of state-owned capital by SASAC, it is suggested to focus on the merger opportunities of central SOEs in the new industry duel.

The GTJA strategy team believes that the central bank's innovative structural monetary policy tools for the stock market are expected to lower the risk assessment of the stock market. The establishment of a special re-lending facility for share buyback and holding is of significant importance for central state-owned enterprises with market value management requirements and stable ROE private blue-chip companies, providing them with the ability to increase their stock holdings. However, considering the requirements of the asset-liability ratio, the stock price valuation elasticity of heavily undervalued central state-owned enterprises and small companies with small market capitalization may benefit more.

China Securities Co.,Ltd. stated that the CSRC issued the "Guidelines for the Supervision of Listed Companies No. 10 - Market Value Management" in its final draft, optimizing adjustments in areas such as institutional disclosure, range of companies with long-term share prices below net asset value, index selection, and regulatory measures. The release and implementation of the market value management guidelines will have a positive impact on listed companies in the construction decoration industry with long-term share prices below net asset value, prompting them to use market value management tools to enhance their own value and revert to a valuation close to 1x PB. It is recommended to focus on construction central SOEs that are also main index constituents and companies with long-term share prices below net asset value.

Related concept stocks:

China United Network Communications (00762): In the first three quarters of 2024, the group's revenue reached RMB 290.12 billion, a year-on-year increase of 3.0%; EBITDA reached RMB 80.4 billion, a year-on-year increase of 2.0%; pre-tax profit reached RMB 23.55 billion, and profit attributable to equity holders of the company reached RMB 19.03 billion, a year-on-year increase of 10.3%, maintaining double-digit growth. The internet communication business stabilized and improved. The mobile users reached 0.345 billion households, with a net increase of 11.23 million households in the year, reaching a new record high in nearly 6 years; among them, 5G package users reached 0.286 billion households, and the penetration rate of 5G packages reached 83%, with the user structure continuously optimizing. The number of Internet of Things connections reached 0.594 billion, with a net increase of nearly one billion; fixed broadband users reached 0.121 billion households, with a net increase of 7.12 million households in the year, maintaining a good trend in scale development.

China State Con (03311): Released unaudited financial information for the nine months ended September 30, 2024. The data shows the group's revenue is approximately HK$89.291 billion, and the operating profit is approximately HK$13.036 billion. In addition, as of September 30, 2024, the group's new contract amount is approximately RMB 167.99 billion, and the uncompleted contract amount is approximately RMB 418.26 billion.

China Communications Construction (01800): Urban construction and performance in new business contracts abroad are impressive, with a fast growth rate. From January to September 2024, the company signed new contracts worth 1280.456 billion yuan, an increase of 9.28% year-on-year. Among them, infrastructure construction business, infrastructure design business, dredging business, and other businesses were 1149.45 billion yuan, 38.716 billion yuan, 84.209 billion yuan, and 80.81 billion yuan respectively, with year-on-year changes of +10.04%, +6.74%, +9.28%, and -41.77%. The company has increased its efforts to explore new business markets and achieved new contracts worth 390 billion yuan in emerging business sectors in the first three quarters, a 27% year-on-year increase. New contracts in urban construction and other sectors in infrastructure construction were 612.786 billion yuan, up 20.1% year-on-year. New contracts in overseas areas were 265.162 billion yuan, a 24.66% year-on-year increase, accounting for about 21% of the company's total new contracts. Among them, infrastructure construction business, infrastructure design business, dredging business, and other businesses were 258.979 billion yuan, 1.785 billion yuan, 3.5 billion yuan, and 8.98 billion yuan.

Avichina (02357): The only aviation high-tech industrial group listed in Hong Kong. The company is backed by the Aviation Industry Corporation, with the ultimate controller being the SASAC, and important subsidiaries include Avicopter, Jiangxi Hongdu Aviation Industry, Avic Airborne Systems, avic jonhon optronic technology, etc. From 2022 to 2023, the company continued to promote major asset restructuring, with subsidiary Avic Electronics undergoing a stock swap absorption merger with Avic Electrical Systems; subsidiary Avicopter intends to acquire 100% equity of Hafei and Changfei.