Let's take China Shenhua as an example to make a real dry goods. I will try my best to make all the concepts clear. Note that this series of articles does not pay attention to timeliness, but to analysis, in order to tell you how I think and think through actual combat analysis. Another thing to be reminded is that there may be hundreds of ways to analyze a company. If I don't mention this series of analysis methods, I will insert them later when analyzing another company. All right, let's start now. (dry goods begin, everyone takes notes)
For a company, I am used to having a general understanding of the company's introduction first (especially for companies I don't know, I need to know more). For example, China Shenhua, we can look at the company introduction in Baidu or the annual report.
We only talk about the moat today. And use Shenhua to do a real battle.
Anyone who is studying value investment must know that the word "moat" was first put forward by Buffett. In a word, simply put, this company has no industry barriers compared with companies in the same industry. Whether his moat is wide or not means whether companies in the same industry can surpass him in a short time. So it is very important to find a company with a moat. Buffett once said that if you don't plan to hold a company for ten years, don't even hold it for ten minutes. Therefore, for a company without a moat, holding for ten years is undoubtedly on the cutting edge.
In ancient times, the wider the moat, the less likely it was to be conquered by the enemy.
Since the moat is defined as having a competitive advantage in the same industry, we can say that the company that owns the moat is more profitable than another company. Of course, we can't jump to a conclusion on one thing at once. We should use quantitative standards to judge the moat.
A company has only two kinds of profitability. One is more expensive than others, and the other is that the cost is lower than others, so there is more room for profit. So we can use the following two indicators for quantitative analysis.
Gross profit margin = (operating income-operating cost)/operating income
The formula of the proportion of the three expenses is (sales expenses+management expenses+financial expenses)/operating income.
Simply put, the gross profit margin is to see if it is more expensive than others, and the ratio of three fees is to see if it is lower than others.
I think many friends will be very clear when these two pictures are put here.
Let's talk about gross profit margin first:
First, the conversion cost, what is the conversion cost? Alipay, for example, now binds everyone's mobile phone number and bank card. If you change another software with the same function as Alipay at this time, you will want to unbind your mobile phone number and rebind your bank card. It's too much trouble. Let's use Alipay. This is the switching cost.
Second, intangible assets.
1, Hermes, Rolex, you are willing to pay several times more for his brand, this is the brand moat.
2, pharmaceutical companies, if you have patented technology, you will have a steady stream of cash income. This is the patent moat.
3. Coal is actually a resource monopoly industry, so the coal industry itself has a moat of resources since its birth.
Third, the network effect, for example, there is a software of the same type as WeChat, the interface and settings are 10,000 times better than WeChat, but because all your friends are on WeChat, you can't register this software yourself, and you can't find friends, even if the software is done well, I don't think you will use it, so at this time WeChat has a moat of network effect.
All right. Let's take a look at China Shenhua.
{Data can be searched on some data websites. Here is a reminder: no matter which website you use, you should compare the data with the annual report to see if the data are consistent. }
Any data comparison, everyone should choose as many companies in the same industry as possible for horizontal comparison. I only chose six companies here.
Shenhua's gross profit margin is still relatively high. From the comparison of gross profit margin in previous years, it can be found that the gross profit margin of the coal industry has declined to varying degrees. But it is obvious that only China Shenhua 20 14 has the highest gross profit margin. China Shenhua is also the highest average in the last three years. We should know that the last three years are an underestimation period for the coal industry. Why is China Shenhua ahead of other companies? Let's analyze them one by one.
China Shenhua's main business is to produce and sell coal-fired electricity, railways, port and ship transportation, coal-to-olefins and other coal-related chemical processing businesses. Moreover, as a coal enterprise, coal revenue only accounts for less than half of the operating income. Compared with most coal enterprises, this is an advantage in itself, because coal itself is a cyclical industry. If we rely solely on coal, there will inevitably be a trough. As you can see, China Shenhua has been profitable for the past three years. This is completely balanced by other businesses and can help enterprises tide over the difficulties.
Why is China Shenhua's gross profit margin ahead? Because Shenhua has transportation business besides coal business (railway). Port. This business is very powerful. There is a high gross profit margin, which has boosted the overall gross profit margin. Generally speaking, when there is coal, it is transported by its own mode of transportation, and when there is no coal, it can provide transportation to a third party to earn profits. Of course, it is precisely because Shenhua has its own transportation routes that transportation costs can be kept to a minimum, which is also the main reason for the lowest proportion of the three expenses (mentioned below).
Let's go back to the gross profit margin chart above. Because of its particularity, coal has the only monopoly advantage, but if placed in the same industry, Shenhua itself does not have much advantage, because everyone has it. However, it is necessary to mention that Shenhua is a central enterprise, and central enterprises and state-owned enterprises are different. I remember that Tongmei Group built a coal mine in other places, but it was difficult to manage because of the long distance, and it needed to coordinate with the local government constantly, which in itself made it inefficient. But Shenhua is different, because it is a central enterprise, supported by the state and supported by local governments, so can it be considered as an advantage?
Summary:
Coal Branch: Shenhua not only produces coal by itself, but also purchases coal (including coal purchased around its own mining area and along the railway, coal for domestic trade and coal for import and re-export). Maybe I don't produce much, but I can buy back coal cheaply by outsourcing. This is much more flexible than most enterprises that only produce their own coal.
Power Generation Division: 1 Clean coal-fired power generation technology is at the international advanced level, which can well cope with the increasingly strict environmental protection policy. 2. Purchase coal from the Coal Division and external suppliers, generate electricity with coal, wind power, hydropower and gas, and sell them to external power grid companies and the Coal Division. Moreover, Shenhua has been laying out electricity recently, which is undoubtedly building a stronger moat. Electricity and coal are two negatively related industries, so it is more likely that Shenhua will stabilize in the future.
Transportation business: As mentioned above, some enterprises that do not have their own modes of transportation can only rely on renting a third-party transportation company, which invisibly increases the cost. Shenhua is the so-called third party, which has its own railway transportation, its own port and its own air transportation, and this cost is definitely the lowest. The big deal is that I have nothing to transport myself. I ship it to other companies that need it and earn freight. The key is to take railway transportation as an example. Shenhua involves many railways, and also has many of its own railways. The most important ones are around Shaanxi, Shanxi and Inner Mongolia. This route. These three provinces are all major coal-producing provinces, which can not only earn considerable freight for Shenhua, but also buy back the purchased coal cheaply. This is killing two birds with one stone.
Coal Chemical Branch: When other coal enterprises are happy at the peak of coal, Shenhua silently invests the money earned at this peak in coal chemical industry. This shows how far-sighted this is. As for the effect, no one could say for sure at that time. 20 15 the latest environmental protection law was promulgated to strictly control environmental pollution discharge. Most companies are dumbfounded, but Shenhua has already laid out.
Next, let's look at the proportion of the three expenses.
According to the data, the myth of the "three fees" problem has always been very low-controlled, which we have also said above. But suddenly, the three expenses of 20 15 suddenly increased. What is the reason? At this time, it is necessary to find out the annual report and take a closer look at the reasons. )
The formula of the proportion of the three expenses is (sales expenses+management expenses+financial expenses)/operating income. If you look at three expenses alone,
In fact, the data has not changed much, and the biggest change is operating income. Oh, then we know that the ratio of three expenses affecting 20 15 is operating income.
Obviously, there is something wrong with the income. So I looked and looked.
Oh, I see. From this, it is concluded that this is not a problem of the company's own operation, but a problem of the whole environment. Moreover, Shenhua itself is too big. Unfortunately, in 20 15 years, it encountered a decline in income from various businesses. Therefore, the overall revenue has dropped significantly. So to put it bluntly, it is caused by external factors and has nothing to do with the company itself.
To sum up, the three fees still have certain advantages. Although 20 15 suddenly rose, it is still relatively low compared with the same industry. What's more, Shenhua's stall is too big and happens to be depressed. So I think there is still a moat.
Moat summary
Then I continued to look through the annual report and found it.
Then, according to the annual report, "the main operation mode of the Group is the integrated industrial chain of coal production → coal transportation (railways, ports, shipping) → coal utilization (power generation, coal chemical industry), and there are business contacts between branches." I don't know. Have you read this sentence? In other words, the integrated industrial chain of Shenhua can be well digested. This is unmatched by other coal enterprises.
To sum up, the myth has a moat, and in his analysis of the moat, the advantages of the three fees are relatively stronger. Because Shenhua is expanding its territory step by step, I conservatively temporarily set it as a moat, not a strong moat.
note:
1 quantitative analysis is needed to analyze the moat.
2 depends on the ratio of gross profit margin to three expenses.
3. If you encounter data changes in a certain year, you must dig out the reasons from the depth of the annual report.
Be sure to choose more companies in the same industry, so as to be convincing.
5 quantification is not only data, but also your own thinking.
The main purpose of this article is to teach you the most basic moat analysis method. There is also logical thinking. If you learn this, I think everyone can analyze every company. Of course, the analysis of different companies and industries will be adjusted. I will insert this for you later. Remember, today's content does not represent the whole methodology.
Thinking:
1 What are the two main indicators for analyzing the moat? Why? What do these two indicators include respectively?
2 If you analyze a company's moat?
China Shenhua, what moats are there?