Greenwoods Asset Management successfully held the Greenwoods China Investment Forum on July 25 in Shanghai to celebrate the 5th anniversary of Greenwoods and Golden China Fund.
Nearly 300 guests, including investors of Greenwoods funds and officers from over 30 listed Chinese companies (e.g. Alibaba, Mindray Medical, Tsingtao Beer, Home Inn, e-House, Zijin Mining, etc.) and financial institutions (e.g. Bank of Communications, China Merchants Bank, and Ping An Insurance, etc), with combined market cap over US$70 billion, as well as over 100 large private companies attended the forum. Mr. Zhang Yujun, CEO of Shanghai Stock Exchange, made a greeting speech to Greenwoods.
The forum provided a great platform for business leaders and investors to brain storm and share views on the Chinese economy, sector outlooks, and investment opportunities. At the dinner after the forum, Greenwoods Chairman & CEO George Jiang announced that Greenwoods will donate Rmb10 million to Chinese students who are from disadvantageous areas and not able to afford going to schools.
Panelists spoke at the Greenwoods forum include:
Mr. David Zhe Wei, CEO, Alibaba.com (1688 HK, with market cap of HK$70 bn)
Mr. Xu Hang, Chairman, Mindray Medical International Ltd. (MR.US, with market cap of US$3 bn)
Mr. Yang Wenjun, CEO, Mengniu Diary (2319 HK, with market cap of HK$30 bn)
Mr. Jin Zhiguo, Chairman, Tsingtao Brewery (168 HK, with market cap of HK$30 bn), one of the largest beer breweries in the world
Mr. Zhou Chengjian, chairman, Meters Bonwe (002269 CH, with market cap of HK$20 bn), one of China’s largest apparel makers and retailers
Mr. Peng Xiaofeng, Chairman, LDK Solar (LDK US, with market cap of US$1.25 bn)
Mr. Shou Bainian, CEO, Greentown China Holdings (3900.HK, with market cap of HK$19.5 bn)
Mr. Fan Wei, Chairman, Shanghai Forte Land ( 2337.HK, with market cap of HK$7 bn )
Mr. Lv Xiaoping, CEO, Jiangsu Future Land (900950.CH, with market cap of US$930 mm)
Mr. Zheng Yonggang, Chairman, Shanshan Group (the parent co of Ningbo Shanshan, 600884.CH, with market cap of Rmb5.53 bn)
Mr. Hou Songrong, Chairman, Konka Group (200016.CH, with market cap of HK$3.32 bn)
Mr. Dai Zhikang, Chairman, Shanghai Zenda Properties (755.HK, with market cap of HK$2.78 bn)
Mr. Chen Jinsong, Chairman, World Union, a large real estate consultant/agent in China (private)
Mr. Joe Zhang, Deputy Head of China Investment Banking, UBS AG Dr. Gao Shanwen, Chief Economist, China Essence Securities 3
The panel consists of three sessions:
(1) China’s macro overview and investment strategy: In this panel, Dr. GAO Shanwen, the Chief Economist of Essence Securities, reiterated his well known “Two-staged bull market” theory initially established in 2007. He believes that underpinned by the easing monetary policy and expansionary fiscal policy, the valuation of stock market will start an upward cycle again, leading to a stage of the market driven by abundant liquidity, i.e. the second stage of the bull market.
Mr. Joe ZHANG of UBS, pointed out that although the underlying businesses of Chinese companies have not yet fully recovered from the impact of financial tsunami in 2008, the stock market and property market are good parking space of excess capital. Entrepreneurs including Mr. ZHENG Yonggang, the Chairman of Shanshan Group and a renowned PE investor, Mr. JIN Zhiguo, the Chairman of Tsingtao Brewery, and Mr. JIANG Xipei, the Chairman of Far East Holding Group, which owns a listed company specializing in cable manufacturing, shared their views on how to take advantage the rising asset price in the capital market to further expand their business.
(2) New business models and new areas of growth:
In the panel, Mr. David Zhe, CEO of Alibaba, the largest B-to-B merchants network in the world, indicated that as Internet has become an essential part of Greenwoods daily life, companies operating Internet platforms will likely be the winners, in which you may find the next Alibaba. His advice to investors: If you missed Alibaba, you should not miss Taobao and Alipay, the two businesses in Alibaba Group and not in the listed company.
Mr. PENG Xiaofeng, Chairman and CEO of LDK Solar listed in the US, shared his strongly positive view on the outlook of solar energy in China, and discussed the wide applications of solar power technology in both China and overseas markets.
Mr. XU Hang, Chairman and CEO of Mindray Medical International, shared his views on how to use service to help products gain market shares.
Mr. HOU Songrong, Chairman of Konka, a large TV and LCD screen maker in China, discussed how manufacturing companies in China can extend its business to the upstream of the value chain, and accelerate the industrial upgrade under the financial crisis. 4
Mr. YANG Wenjun, CEO of China Mengniu, saw huge potential in the PRC diary market through a comparison of dairy consumption per capita in China with that in developed countries.
Mr. ZHOU Chengjian, Chairman of Meters Bonwe, a popular fashion for youth in China, talked about its unique business model in China – unlike Zara, Meters Bonwe keeps assets light, lowers the portion of manufacturing and retail business, which accounts for only 30% of the retail, and focuses on brand name building (Meters Bonwe is the first company adopting this business model in China). He emphasized the creation of new value in a traditional industry through a new operating model.
(3) Properties Market outlook:
In this panel, Mr. DAI Zhikang, the Chairman of Shanghai Zendai Property, agreed to the view that in the real estate sector, state-owned enterprises (SOEs) are getting stronger and more market driven, imposing great threats for non-SOE developers.
Mr. SHOU Bainian, the Executive Vice-Chairman of Greentown China, does not believe the Chinese government will start levying property tax, in view of the mobility of the population, and as it can be passed to buyers, launching of this tax won’t help the government suppress property price.
Mr. FAN Wei, the President of Shanghai Forte and Mr. LU Xiaoping, the President of Jiangsu Future Land, agreed to Mr. Dai that they saw more high-price lands being acquired by stated-owned enterprises than private companies.
Mr. CHEN Jinsong, the Chairman of World Union, a consulting firm advising developers on properties sales, has a long-term bullish view on China’s property market due to demographical changes and liquidity. Also, given the rental yield of residential properties got lower as the price went up, he saw good potential in the commercial properties, whose price has not gone up so far.
In conclusion, despite the potential tightening policies such as tightening of second home mortgage and possible launch of new type of taxes, the continuation of urbanization process and acceleration of consumer upgrade make the future of PRC property market promising.
During the post-forum dinner, on behalf of institutional investors of Greenwoods funds, the founder of a US asset management company, which was the first US investor of Golden China Fund in 2009, made a speech about his experience of investing into Greenwoods’ Golden China Plus Fund, and expressed his appreciation on the extraordinary returns of the funds.
George Jiang, Chairman & CEO of Greenwoods, appreciated the supports from all investors, executives of listed companies, and guests attending the forum and dinner, and shared his outlook on China equities market with all guest:
“Today is the end of the 5th anniversary of Greenwoods, and it is also the beginning of the next decade and even centennial. Though China equities are more and more important in the world, I feel that they still under-owned by global investors – as you can see from the attached data, China’s GDP accounted for around 7.9% of the world’s GDP in 2008, while the current weight of China equities in MSCI World Index is only 2.4%, lower than each of the countries such as Canada, Swiss, and Australia, whose GDP contributions in combination account for only 5.4% of the world’s GDP, and their combined weights is 10.4%, over four times of China equities’ weight.
This is also the case for MSCI Emerging Market Index: China’s GDP accounts for 28.7% of the world in 2008, while the weight of its equities in the EM index is only 19.4%, substantially lower than the sum of the other three BRIC countries (Braizil+India+Russia) of 27.8%, while the combined GDP contributions of the three BRIC countries is 29.0%, or just slightly higher than China’s. So if MSCI rebalances its indices to increase the weight of China equities, there could be trillions of dollars of new fund inflows into China equities”.
(For more information about Greenwoods Asset Management or funds under its management, please contact Greenwoods Hong Kong Office at + 852 2907 6278 by phone, or email@example.com by email)