Ceiling means that the products (or services) of enterprises or industries tend to be saturated, reaching or approaching the state of oversupply. Before investing, we must make clear which of the following situations the enterprise belongs to, and give corresponding investment strategies according to different situations. When judging, we should not only pay attention to the industry prospects, but also pay attention to the quality of enterprises.
1) has reached the ceiling of the industry-extremely saturated industries (such as steel industry). Investment opportunities come from the low-cost merger of enterprises with monopoly operation ability with inferior enterprises, which can expand market share and reduce the marginal cost of product production and sales, thus further building market barriers and gaining the pricing power of products. If M&A can't reduce the marginal cost, it can't be regarded as a good investment target. For example, the merger and expansion of state-owned enterprises promoted by administration is not carried out in accordance with the principle of market pricing, so political significance is greater than economic significance, and such state-owned enterprises do not have investment value.
Those enterprises with good cash flow and strong competitiveness at the end of the industry recession have great potential investment value when a large number of similar enterprises are in trouble. Judging the inflection point of industry or demand is the key, focusing on M&A opportunities of large enterprises, such as the four major domestic steel enterprises.
2) Industrial upgrading creates new demand, the old ceiling is deconstructed, and the new ceiling board has not yet been or is being formed. Such as automobile industry and communication industry. These industries are usually mature, and their investment opportunities lie in the new demand brought by technological innovation. "Innovation"-will break the original industry balance and create new demand. Paying attention to the balance between old and new forces, enterprises representing new technologies and new productivity will stand out, and their products and services will gradually or even completely replace old products, such as the impact of innovation of Tesla Electric Vehicle (TSLA) and Apple (AAPL) on their respective industries.
3) The ceiling of the industry is still unclear. These industries either belong to emerging industries, the demand is forming, and the future market capacity is difficult to estimate, such as new energy-saving materials; Either it belongs to "fast-disappearing" products, such as pharmaceutical products and services that improve the quality of human life and prolong human life. This kind of industry has always been the cradle of great enterprises, and bull stocks emerge one after another. We should pay attention to those outstanding enterprises that are in the leading position in sub-sectors-that is, large companies in small industries.
Through the above three points, we can fully understand the industry status and future imagination of a company from the company and industry reports. The point is clear: 1. Is there a ceiling? ; 2. Facing the ceiling, what did the enterprise do?
1.2 business model
Business model refers to the products or services provided by enterprises, and the ways or means by which enterprises charge fees to earn commercial profits. Manufacturing, for example, makes profits by providing customers with products with practical functions. Sales companies make profits through various sales methods (direct sales, wholesale, online shopping and other business models) and so on.