CITIC SEC: Currently, Chinese A-share companies are focusing on two global brands, "Made in China" and "Chinese infrastructure", there is still great growth potential in the future.

CITIC SEC released a research report stating that after nearly two decades of rapid development, the total overseas revenue of A-share companies exceeded 7 trillion yuan in 2022. The interim report for 2023 showed that over half of A-share companies have overseas revenue, with the technology, manufacturing, cyclical, and basic industries having relatively high overseas revenue. Both mature and emerging markets abroad are important destinations for A-share companies. Industries with heavy assets and manufacturing have lower profit margins overseas compared to industries with lighter assets, and their advantages in domestic operations are not yet clear. Overall, current A-share companies mainly focus on two global brands when going global: "Made in China" and "China's Infrastructure," and there is still a large room for growth in the future, but attention should also be paid to the slowdown in growth in certain industries and regions in recent years. Key Points from CITIC SEC: - In 2022, the overseas revenue of A-share companies exceeded 7 trillion yuan. - Long-term trend shows steady growth in the total overseas revenue of A-share listed companies, reaching over 7 trillion yuan in 2022 according to Wind data. The interim report for 2023 was 3 trillion yuan, with a year-on-year increase of 6%, showing a decrease in growth rate compared to historical averages. - Over half of A-share companies have overseas revenue, with high overseas revenue scales in technology, manufacturing, cyclical, and basic industries. - In terms of industry classification, the overseas revenue of the consumer electronics components, white goods, and CECEP Solar Energy industries ranked top three in terms of total overseas revenue in the first half of 2023, with each contributing over 30% of the total revenue. - From 2021 to the first half of 2023, the top three industries with the fastest compound annual growth rate in overseas revenue were electrical equipment and new energy, automotive, and defense industries, with changes in revenue along the automotive industry chain ranking high. - In terms of destination, Europe and the Americas have been frequent destinations for industries such as consumer electronics and automotive. The Americas are already a major source of overseas revenue for some companies, while Asia and Latin America contribute significantly to industries like electronics and basic chemicals. Industries Going Global: - Technology Industry: Overseas revenue stable, mainly focused on the European and American markets. Maintaining an annual revenue scale of around 1.6 trillion yuan in recent years. - Manufacturing Industry: Leading new energy companies accelerating their overseas expansion. While current revenue mainly comes from Europe and America, growth is faster in regions like Japan, Korea, Asia, and Africa. - Cyclical Industry: Expanding strongly in Asia, Africa, and Latin America markets, with outstanding revenue performance by leading companies in the petroleum and petrochemical industries. - Infrastructure and Real Estate Industry: Overseas revenue proportion comparatively low, with Europe, the Americas, and Asia and Africa being key areas of operation. Leading infrastructure companies have shown outstanding performance in overseas revenue recently. - Consumer Industry: Some small and medium-sized companies have a leading position in overseas revenue. - Health Industry: Leading companies are driving the expansion of overseas operations. Conclusion and Investment Suggestions: - A-share companies have achieved remarkable success in overseas business development over the past two decades, with great potential for further growth in the future. - The current industry structure focuses on the two global brands of "Made in China" and "China's Infrastructure" when going global. - The further development of overseas business in the technology and manufacturing industries may come from non-European and non-American regions like Japan, Korea, Asia, and Africa, with significant room for improvement in overseas profit margins. - The cyclical, infrastructure, and real estate industries need to seize the geographical window of opportunity. - Industries such as consumer and health are still in the early stages of going global, mainly focusing on mature market consumption capacities. Risk Factors: - Exchange rate fluctuation risk. - Deterioration in geopolitical situations. - Trade barriers arising from restrictions in overseas policies. - Trade tensions between China and the U.S.