China Merchants Fund Zhu Hongyu's survey: It is very important to further deepen the understanding of the origin of corporate value creation

Question: Mr. Zhu, hello, let me mention two questions first, aside from the methodology and stock selection ideas. Can you talk about the weights of growth, value, and quality when choosing stocks?

Zhu Hongyu: The growth and value itself are more vague, and none of the standards that are placed in all seas. In general, more value stocks may come from history or static value. More value of growth stocks comes from future values. Growth stocks may see more about existing assets or capital expenditures that will invest in the future. Cash flow ability. It is difficult to give a particularly obvious line, so I personally buy stocks without only buying value stocks or only growth stocks, and does not make such a distinction.

As we make a long time, the deeper understanding what value is. The stock price fluctuates every day, and the industry has various fluctuations every day. What do we buy? If you really use a principle to summarize, the value is that the company has created cash flow for a long time. Constantly thinking about this principle. What is the value style? What is a growth style? Why do these two different pricing when interest rates rise and fall? Use this principle to understand what is a good industry, what is a bad industry, and what is a good company. A good company is nothing more than that I can keep the growth cycle extension, so as not to fall into sustainable growth soon. Assuming the sustainable growth in the future, the nominal GDP growth rate to 2%, the sustainable growth rate of about 2%, the cycle of the great company to this trap pulls longer, and maintains a relatively fast growth rate. The difference between an enterprise. I personally don't deliberately distinguish it. Frankly, I have read some basic books so far, in order to further deepen the understanding of the origin of corporate value.

Q: My problem is not an absolute sense. When we evaluate some stocks, it has its growth. It has its valuation. It has its ROE level or profit quality. When you are balanced The weight of the things is higher, and what is the lower weight of the things?

Zhu Hongyu: I give a very high weight to the long -term certainty, placed in the forefront, including the industry's long -term growth space, the industry's competitive pattern, and the change of the company's status in the industry. If you do n’t know, the company ’s position and position in the industry for a long time will not be able to buy it.

Why didn't I buy a special new energy or photovoltaic stock when I built a position at the end of April? It is because for three years, the future competition pattern of this industry is not clear at the supply side, and it seems that the demand seems good, but almost everyone can see this thing, but it is difficult for me to determine the changes in the industry's internal competition pattern. Does its cost curve become steeper or flatter? The probability is more flat, which I see more. I will not blindly predict what demand for tomorrow, what is the demand for next month, and how much demand for next quarter. I will see the industry life cycle and industry cycle. Only on the basis of these variables will be seen.

Question: In other words, the industry's downturn is not so important, or is it not important for you for the short -term prosperity?

Zhu Hongyu: I am not interested in the prosperity of the industry. I do n’t go to see the prosperity of the industry to buy stocks. I may even be too popular in the industry. I will sell this stock all. Now the market is very popular in the so -called industry prosperity investment. I think this method is not suitable for me. I will reverse some industries from a relatively long dimension.

Now forty -two or three years old. If you follow the scenery indicators every day, I do n’t know to what extent to do. Look at the headlines every day. How many? I am not interested in these.

Question: Do you generally like to buy investment on the left side. Buy it when it is poor and left on the left?

Zhu Hongyu: I basically have the left side. For example, some industries built in the second quarter. At that time, no one looked at the industry, and now it generally rose 40%and 50%. There are still many stocks that do not rise, and stocks can be raised. As long as the long -term logic is smooth, the fundamentals can be gradually verified, not afraid that it will not rise in the short term. I never thought that the stock that I bought would rise next week. Many people were anxious when they bought stocks without rising one week. What? Do we have such a cow? Are we so smart? We bought a stock, which can rise next week and next month, and can we achieve 50%of the annualization? If everyone is so awesome, how many people can public funds in the past five, ten, and twenty years of annualized returns can achieve more than 20%? Slowness is fast.

Question: It is very understandable. Congratulations, the current market awareness is getting higher and higher. Everyone thinks that the barriers of these two companies are very good. I took a look at the time you bought. There was no one mentioned at the time before more than a month. At that time, everyone was worried about the problem of shareholders. How did you think about it?

Zhu Hongyu: We do n’t go to bet on this thing. We have never contacted the secretary. Just read the announcement. Many people do not read the annual report, and make various opinions to the listed company. Essence The annual report of the past ten years has been read to see what the company is doing, where the company's risks are, where its balance sheet and cash flow table have problems, and it is probably how to evolve. In the past two or three years, our industry is too competitive, which has led many people to be unwilling to do basic work. In fact, many times we can infer through public information. All inquiries in the exchange, the exchanges are very professional, these can be used as a reference for judgment.

Can we make money for a long time? More importantly, we have to do a lot of basic work, including what is the situation of the world's anesthesia industry, what will happen in the future of Chinese anesthesia, including the competitive pattern and policy impact. Where the position should be very calm, not chopping when the stock price fluctuates, and the stock price rises.

We have to do a lot of work before. There are many companies with defective governance structures. Why do I buy A and why do I buy B? We will never bet on our judgments and companies that have conflicted with our judgment. We will all have a clear problem after the long -term issues that match our judgment logic for a long time. The risks that are assumed are limited, but it may bring a very good return.

In the process of doing a combination, I always adhere to a principle, that is, to bear relatively low risks, to obtain relatively high income, never bear high risks, and then go to Boshi's high income. Things, otherwise it will be in vain for so many years. The true sustainable methodology is to bear limited risks and obtain relatively high returns, rather than bearing high risks to go to the so -called high returns. You may bear high risks. Can bring high returns, even negative income.

Question: Can you understand it so that the stock is best to be low. If you study it, buy it, or do you buy it at the high level. When it falls, buy it?

Zhu Hongyu: This is not all. It is meaningless to see the absolute price. It is not important where the stock price is. According to our thinking, the stocks that usually buy will be at the bottom position, but it does not mean that we can buy it at the bottom of the stock price. Let's not take some specious things as the principle of investment. What does it say? Value and growth are also like the principle of plausible. What is value and what is growth? The broader market and small plate are not principles. What is the principle? The real principle is expensive, cheap, good, and bad. Is value and growth principle? Is the broader market and small plate principle? Is Hong Kong stocks and A shares principles? It is not the principle at all.

Don't take things that seem to be like, as the constraints of investment, say that I must buy large -cap stocks, I must buy small -cap stocks, I must buy value stocks. I must buy growth stocks. I must buy A shares. I must buy Hong Kong stocks. These are all these. These are all these. It is the principle of speculative, and the investment style and judgment of the plausible principles will harm you for a long time, and will limit you to many strips and frames. There are only good companies, bad companies in this world, only good industries, bad industries, and only expensive and cheap, which is so simple.

Question: Mr. Zhu, you have a very rich experience. I have done strategies before. I have done public offering, special accounts in fund companies, and I have also been an investment director at bank wealth management. Especially in financial management, investment director and fund company special accounts. These two sections. What are the help or understanding of the iteration of your investment method?

Zhu Hongyu: I ca n’t say that I have rich experience. I should say a lot of lessons and make a lot of mistakes. As a researcher, or the fund manager, I usually think about a question. Can I find a way? This road can reach the top of the mountain from the bottom of the mountain. Just like I took my son to climb the mountain, starting from the bottom of the mountain, I hope to climb to the top of the mountain soon. In fact, there is no standard answer to investing in this road. This process is you to explore all your life. The process of exploring is the process of making mistakes. The process of making mistakes is to tell you that you have tried this road. Wrong, this road is dead, this road will eventually cause you to destroy people.

It is normal to make mistakes. I told my colleagues in the research department that we encouraged mistakes. We tolerate mistakes, but we do not make duplicate mistakes. Try not to commit two or three times more mistakes. We have to learn from the mistakes. This method is wrong, this method is wrong. We kept trying to try it in five, ten, and twenty years. There are so many ways of ABCDE. We slowly explore a road. This road is probably correct and can slowly reach the top of the mountain along it.

Either do research or investment. We are exploring which way we can reach the top of the mountain we call. It may not be able to reach our lifetime, but it does not mean that we have no value for our mistakes.

From public funding to Sequoia, then private equity, wealth management, and returning to public offering. Most of the fund managers on the market are talking about new energy, landscape storage, and automobile intelligence. How big is it and how big the space is this company and how large is it. In fact, not so many people talk about changes in the industry, its competitive pattern and corporate core change. We discussed the changes in end competition pattern of the automotive industry yesterday. In fact, many people did not even clarify long -term issues. I went to Sequoia, got to private equity, and arrived in wealth management. How is the fat, which is suitable for what time to grow, to master the conditions of climate change, to achieve the status or status we gain, and get a relatively high return rate. Many people only see that you have a good harvest this year. Did you bet on a certain track? Is it a stock? I won't think about how long it takes me to take care of the land before I know how the pH of the land is, how many trace elements are there, what kind of crops are suitable, how should I combine with weather conditions, how to irrigate, how to raise fat, etc. Wait. The previous work is very important for us to do long -term and avoid repeating mistakes, so now I value the long -term certainty of the industry and the company. When I study the long -term confirmation issues of the industry and the company, I have a little bit about the prosperity. There is no interest. If you ask our researchers, I rarely care about data next week, next month, and next quarter. I think it is very clear that the capital market is becoming more and more rule -of -law and more and more standardized. We must not violate the long -term development trend of the market. Border and physical health, you are getting older and slower and slower. Do you go to invest with young people with PK prosperity? Can I still move my forty or fifty years old? We must think about how to invest in long -term.

Question: Mr. Zhu, do you feel if you go to financial management?

Zhu Hongyu: Including China Merchants Fund and China Merchants Bank, most colleagues are very dedicated, serious, and diligent.

As an asset management company in the true sense, management must be independent and make decisions from the perspective of customer interests, instead of making decisions from the perspective of shareholders or other related interests. I think the first company that puts the interests of shareholders or related parties in the first place is not a true asset management company that really qualified. We often talk about "customer interest priority". I think as an asset management company, we should be supreme.

Question: Mr. Zhu, we have observed some of your more special points. You have done a lot of households, first -level, private equity, and have a lot of investment products. From the perspective of the second quarter report, the proportion of nearly half of it is allocated on Hong Kong stocks. Most of the fund managers of A shares are not very good at Hong Kong stocks. They are not familiar with the valuation system of Hong Kong stocks. Most of the fund managers are more cautious about Hong Kong stocks. Are you good at Hong Kong stocks? Or is it more optimistic about Hong Kong stocks at the moment, or is it from bottom up to constitute such a combination?

Zhu Hongyu: I can't say that they are good at, whether in A shares or Hong Kong stocks, I think I am still a primary school student.

We invest more Hong Kong stocks. There are a few considerations. First of all, it is the most important point. Fund managers should learn for life. They cannot be complicated because Hong Kong stocks will be impacted by many geographical politics, domestic and overseas funds flowing and other external variables. Hiding by yourself, putting it in A shares, only playing with A shares, this is not what the fund manager should do for a long time to expand its ability boundary and constantly learning.

In the long run, I will always pay attention to Hong Kong stocks. We have to understand the Hong Kong market. How does international investors prize for many industries and many stocks, and why is it so priced? I did n’t understand in the past, I did n’t understand the day before yesterday. I did n’t understand yesterday. I will learn it today. Even if you pay tuition fees. Just like we are engaged in reform and opening up, what else is there if we close the door? We want to open the door to see what the outside world looks like. After the overseas capital market has developed for so many years, how do they pricing in so many industries? What is the rule? Don't you think we want to learn? If we can learn more than many domestic fund managers, we may make more money than them when the opportunity of Hong Kong stocks comes in the future. If I do n’t go to study and do not experience it because A -share is better than Hong Kong stocks now. Do I go to study again when Hong Kong stocks have a big chance in the future?

Second, we go to buy Hong Kong stocks. A considerable part of the industry is only available in Hong Kong. For example, technology, the Internet or part of it are not only available in Hong Kong. Indeed, some stocks Hong Kong is much cheaper than A shares. A shares do have increased faster than Hong Kong stocks, but the risks they bear are different. I hope to bear a limited risk to get a good return. The higher returns are usually difficult to achieve.

Question: Let's take a look at your quarterly report and public interview. You said in the interview that you attach great importance to people and have characteristics. It may have some relationships with your work. For example, when choosing stocks What kind of person is important to know people? You are responsible for this team in China Merchants, and it is also meaningful to how to know people and how to train people in the team. As a fund research institution, in fact, our understanding of fund managers is also the work process of people. What kind of person, personality, and style of fund managers are, and may determine what investment style he will present. Can you tell us about the aspect of the person, what kind of investor are you? Do you understand the people at the level of research team and listed company management at work? Zhu Hongyu: I joined the industry and used to investigate often, so I ca n’t talk about any experience to share. There are only a lot of lessons because I have made a lot of mistakes. Do not think that investigations can solve problems. Surveys are important, but it does not mean that we can solve the problem when we investigate.

The so -called knowledge, I understand this way, you have a deal with someone, and you can't judge what he is. Many people say that it is not reliable to see how this person is. We judge how a management section, judging how a person is, and tracing for a long time. Without a long dimension, you can't identify what he said is to lie to you. Only after a long comparison, what he has talked about, what he said for the second time, what he said for the third time, what he has talked about in the past three, five, and ten years Why is it not fulfilled, not fulfilled, or subjective reasons?

It takes time to verify whether a person is reliable. There are two dimensions in it. One is how this person's character is, how morality is, and the other is what is the ability. Buffett once said a word, I specifically agreed that he could not reach a good deal with a person with harsh people. I firmly believe this. This person is unreliable. To what extent the basic moral literacy of this person is verified by time.

We judge a person, when can we verify that this person is reliable? When the industry is very bad, you can see what he has done. When the industry and the company are facing difficulties, the first thing he thinks is whether his own interests or customers' interests. Just when the industry is very difficult and critical, you can see the values ​​of the company. What is the use of values ​​on the wall? Values ​​are what you think first when you make decisions, when facing the temptation of interests, and when facing difficulties. The values ​​are from top to bottom, from high -level to employees to do business and do things first.

Behind many issues is human nature. How to understand people as social animals is very important to do research and investment. We live for decades for a lifetime, and there are very few things that know the surrounding world and the society. Even ourselves and people can not understand the nature. Do not think that we know a lot. It is very few comparison of it.

Question: You mentioned in the quarterly report that it may be a relatively core investment logic, that is, adhere to the principle of long -term high winning percentage and medium -term high odds, and obtain stable returns with the weaker industry correlation and lower stock concentration. I understand whether this is your core principle. Long -term high winning percentage and medium -term high odds are not the highest odds in the medium term.

Zhu Hongyu: I don't want to take over high risks to get general returns. I wonder if you have seen "Anti -fragility" by Nicholas Talbu? Investment and research must constantly make mistakes, it doesn't matter if you make mistakes, but you can't make fatal errors. I can make a lot of small mistakes. This small error will not destroy my group and fund. My method. In other words, I can get a high risk and get a relatively high return. This is asymmetric risk. The asymmetric risk of Tellerb also has other meanings. He most look down on the people who take the money of others to gamble, gamble right, take a high bonus himself.

You are right, this paragraph is basically the generalization of my investment methodology. The long -term high winning rate is at the forefront, but how does the long -term high win rate come? Long -term high winning rate comes from our long -term persistent research and in -depth research. Now the industry is talking about in -depth research. The so -called in -depth research is step by step. It requires long -term accumulation and long -term mistakes. This is a very long process. On this basis, we must seize the opportunity of the so -called medium and high odds according to the market fluctuations. The opportunity of relatively high odds in the medium cycle. These are all results, a phenomenon, but not principles. We can't summarize some of the phenomena in this market as a principle. It is concluded that what is the broader market, what is small plate, what is growth, and what is value? These are not the principles of our investment.

Question: Mr. Zhu, learn your public interview information, you mentioned that there is an opportunity 4-5 years ago. The previous methodology is very different from now. Can you introduce the differences?

Zhu Hongyu: The previous methodology may have a little more odds, and he can persuade himself or convince himself in this industry. The company can turn it 1, 3 times, and 5 times. Regarding the requirements of certainty, the so -called long -term high winning rate requirements were not so harsh and not so high. This is the biggest difference. At that time, there was also a little impression of this methodology at that time. I watched many primary market projects with them. The first -level markets used high odds to compensate for the low win rate. How do you know that this company will definitely become the industry boss in the future. This industry will definitely get out of a good company? It is unclear, so they use high odds to compensate for a relatively low winning percentage. The secondary market cannot be like this. How many people tell stories from 2013-2015, and many junk stocks have risen 5 times, 10 times, and 20 times. These companies are gone. At that time, some people went to buy these stocks. The logic, let's talk about this company's trillions and 500 billion yuan. What about the result? So in the process of investment selection, I am very harsh on the long -term high win rate. Question: How does the long -term goal of this product of China Merchants' core competitiveness be positioned? What are the income risks you want to present to customers? Is there any other product layout plan in the future?

Zhu Hongyu: Frankly, I really don't know what kind of expectations should be given to customers, because I am also a customer of this product. Many students, old leaders, and colleagues trust me. They trust me not because my performance can do more. Okay, but I think I am quite reliable. I do n’t talk about empty words and words. How many performances can be done.

I think the nominal return rate of the future stock market is going down. In the past ten years, China's nominal GDP growth rate is 12-13%. For the past two decades, the fund manager with a little better fund is good at 15%annually. To do it for a long time, I think that in the future, I can achieve a return of 10-15%. Do not fluctuate too much. It is a successful fund manager. I can try to do it as much as possible.

Question: I agree with the view of the blue ocean of China asset management companies, but this matter is not only the efforts of fund managers and investment managers, what are the advantages of China Merchants, or what are the worries that make you feel that you can do this?

Zhu Hongyu: I just went to a state -owned enterprise for investigation two weeks ago. I quite agreed that the chairman of that state -owned enterprise told me. He said that as a state -owned enterprise, he really wanted to do things well. Employees at different levels should adhere to three principles:

The first principle is to get enough incentives to front -line business personnel and front -line employees. The front -line business personnel and front -line employees are suffering and bear various business indicators and pressures. Usually, the income of these employees is not so high. Many people are younger. Buy a house, give birth to children, raise children.

The second principle is to talk about responsibility for mid -level employees. As a link to undertake, middle -level cadres must speak responsibilities, do a good job of business, stabilize the team, and feed the problem.

The third principle is to talk about feelings for senior cadres. The culture of a company is up and down. If a company's shareholder and the highest decision -making layer require a short -term KPI every day, and the short -term interest is required every day, this company must not do well.

Q: Mr. Zhu, do you also manage the time of the work of research, management, and roadshow work?

Zhu Hongyu: A bit recently, it's okay before. In the future, I hope that most of the time will be placed in investment and research work, management work, and the authorization of this authorization, isn't we have a special research department director? Through the observation of more than half a year, the talents with management capabilities have been dug out, such as the fresh graduates of the interview, the first and second levels let them check it. I cannot get everything. Available, by mobilizing internal resources and internal manpower and material resources, you are liberated by fully authorization.

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