The chips are the most attractive assets in this year’s A-shares.Supported by domestic alternatives and the explosive growth of AI computing power, along with expectations for the implementation of AIoT.Looking at the entire industry in the long term, the potential is undoubtedly vast.However, we must also recognize that this year’s significant price increase is largely due to the previous low prices; before this surge, a certain optical module company’s PE was only 12 times.In the second half of the year, there have been occasional articles repeatedly boasting about some “old news,” indicating clear signs of hype.Village Dragon’s expansion, the two major expansions, and the domestic GKJ verification are all progressing steadily and are not unexpected surprises.Aside from the slight over-expectation of XJ process technology advancements and the severe shortage of memory chips, there is no significant deviation from expectations.At this point, the price increase is mostly due to valuation enhancement, with very few instances of fundamentals exceeding expectations; the risks are clearly greater than the opportunities. There may be fluctuations in the short term, but the odds and win rates will not be high.The two major expansions are believed to only start receiving orders next year, but many equipment companies have already filled their expectations.With a market value of 200 billion, Zhongwei has already set its valuation for the next one or two years; to maintain this valuation, there can be no mistakes in the next one or two years. There is no need to take this risk, so I cleared my holdings by the end of September.Once Village Dragon starts to rise, everyone forgets that its annual capital expenditure is nearly equal to its revenue and that its depreciation continues to climb.Carrying the hopes of the entire village, we cannot demand short-term financial performance, but there should be a limit. The expansion of XJ process is not an unexpected surprise, but a necessary development. Otherwise, the gap with TSMC will only widen, making future performance projections impossible.In some companies, major shareholders have sold off their holdings; no one knows the company’s prospects and valuation better than the major shareholders, and they must have deemed it significantly overvalued to sell off their holdings.In some companies, the equity is dispersed, and they offer high equity incentives to a few executives, which is less favorable compared to certain past companies.In some companies, transitioning to chip business, the market expects that within three years, the chip business will be several times that of traditional business, leading to endless imagination.However, the company has placed the chip business in a subsidiary where it only holds 60%; the remaining 40% of minority shareholders are neither state-owned platforms nor downstream customers, but merely the chairman and an employee stock ownership platform.It can be anticipated that this company will try to make the profits of this subsidiary look good while pushing costs onto the parent company.As a small investor, being in an information asymmetry situation, why put oneself on the “chopping board”?By the end of September, I basically cleared my chip stocks, leaving some Anji, and in October bought Midea and CNOOC H, then switched toBubble,ZTE.With nearly half of my cash, I am at the lowest position in the past two years. Holding cash is also a choice.There is no rush; I will buy when it drops to the previously set target price, otherwise, I will just stay put.Why worry too much about profits and losses? Ultimately, small gains are better than complete losses.
The market’s enthusiasm far exceeded expectations, and stock prices surged; recently, I cleared my holdings in Zhongwei, and only a final batch of SMIC H remains.
Boatman, WeChat public account: Boatman Buffett has cleared his holdings in BYD in the first quarter.
The A-share sectors of chips, robots, optical modules, etc., have seen huge increases in the past two months, with many companies’ stock prices already overestimating their performance for the next one or two years.
This trade war is likely just the trigger for the decline and adjustment of these sectors; do not rush to “bottom fish.”
Boatman, WeChat public account: Boatman The tariff war is rising again; do not easily “bottom fish.”
Let’s see how the market trends; HAN Wang, Anji, and Village Dragon H have not yet dropped to the buying point, so I will continue to wait.
Boatman, WeChat public account: Boatman Stay patient.