tech

In 2024, it should be a year when the A-share market is rife with sudden explosions.

Perhaps many people do not believe it, but it is highly likely that there will be at least dozens of unexpected ST stocks this year, which are hiding mines that have not yet been detonated.

The reason for saying this is actually based on a major logic.

The year before any bull market is a year full of sudden explosions, releasing the worst expectations.

It has been mentioned before that there are many ST stocks everywhere this year, and they are already on the way.

The fundamental reason for so many mines is actually a matter of cycles.

What is the problem of cycles can be understood as an economic issue or a financial issue of listed companies.

The deterioration of the financial situation of listed companies has a cyclical pattern.

The last time the situation was bad was in mid-2018, which was the time when Kangmei Pharmaceutical and Kangdexin had sudden explosions.

Even if there is financial fraud, there will be a situation that cannot be covered up, because the days of robbing Peter to pay Paul cannot last long.And 2024 marks a new cycle, and some listed companies that have been making ends meet by tearing down walls should be on the verge of a financial explosion.

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In fact, many financial explosions have early signs, and many anomalies can be detected from financial statements.

1. Decrease in cash flow.

If a listed company experiences a continuous decrease in cash flow, there must be a problem.

If there is a significant decrease, the problem is even bigger.

There are also cases where the cash flow seems to have not decreased, but the short-term borrowing has increased.

If the short-term borrowing has increased but the cash flow has not, where has the money gone?

Cash flow is the lifeline of a company. Some companies have particularly good cash flow, with tens of billions of dollars lying in their accounts, so encountering some risks and minor losses are not a problem at all.

But if the cash flow is only a few hundred million, less than the short-term borrowing, such a company has long entered the stage of robbing Peter to pay Paul.

Once a company enters the borrowing cycle, the risk is very high.Apart from some enterprises in cyclical industries, after getting through the trough, they have returned to the favorable cycle and can solve problems.

There are also some listed companies for which a financial crisis is just a matter of time.

The money earned every year is not enough to repay the interest on loans.

2. Having money but not distributing dividends.

If a company does not distribute dividends for a long time, especially if the performance is good and the dividends are very few, there is a problem.

When a company makes money, the major shareholders also want to make money.

Some listed companies seem to report no profits, but it is the major shareholders who have transferred the net profit in certain ways.

Those profitable listed companies, the major shareholders will also think about giving themselves some money.

Especially now, under the market guidance of the dividend system, many listed companies have been talked to.

Some companies that have not distributed dividends for a long time have also taken out the money at the bottom of the box to distribute dividends.Listed companies that prefer to be ST (Special Treatment) rather than distributing dividends are definitely problematic.

This measurement standard will become the mainstream in the market in the future, and investors should pay special attention to the dividend situation of a listed company.

3. High debt ratio.

Companies with a high debt-to-asset ratio should be avoided.

Why do real estate companies collapse in large numbers? Because they have a high debt-to-asset ratio.

Remember this: assets can be discounted, but liabilities are real and must be repaid.

Depreciation of many assets, including inventory, accounts receivable, and even goodwill, may be discounted.

However, liabilities are clear and must be repaid.

Companies with a debt-to-asset ratio exceeding 50% should be vigilant, and it is recommended not to invest in those with a ratio exceeding 70%.

Except for some companies that really need a large amount of capital turnover, the debt-to-asset ratio of the vast majority of listed companies should be between 20-30%.If a listed company's cash assets can cover all its liabilities, that is the safest.

Because cash is tangible and truly effective.

Some high-quality companies have also been stockpiling in the past two years, and have already reduced the debt-to-asset ratio.

4. Increase in inventory.

Inventory is also a major pitfall.

If you look closely at some companies, the inventory has been growing.

For example, some chip companies.

The increase in inventory means that the assets are "growing", and it also means that the products are backlogged and unsellable, or that there is overcapacity.

The best way to reduce capacity is to reduce prices and promote sales, which means that the inventory needs to be discounted.

If the situation is not very good and there are not enough orders, even with discounts, it is impossible to clear the inventory.In other words, inventory itself carries the risk of a sudden collapse in value, or the risk of a significant discount.

If the value of this physical asset is volatile, it could potentially create a financial hole at any time.

Therefore, listed companies with increasing inventory actually face a very high risk because they cannot sell their products.

It is better to be a company that reduces net profit margins in the short term and clears most of the inventory.

5. Increase in accounts receivable.

Another common pitfall is accounts receivable.

Accounts receivable refers to the part of the payment that the downstream party needs to make.

But the current economic situation is not very good, and a lot of accounts receivable are actually bad debts that cannot be collected.

It is very normal for accounts receivable to be in the billions, with tens of millions of bad debts.

Some companies like to write off all bad debts at once when preparing financial statements.It means making a little money in three years, and then suddenly in one year, there is a huge loss.

This is a financial trick, and when it reflects on the stock price, it's like a huge thunder.

But because the bad debts are cleared at once, taking advantage of the bad news, the main force will collect chips again and push the stock price up again.

This situation where the listed company cooperates with the main force to manipulate the market is actually very common, and we must pay special attention to it and not step on the thunder.

The thunder is not a bad thing, hiding the thunder is the big problem.

If the market can clean up the thunder in a centralized way, it will be a light load.

In fact, looking back before each bull market, there are similar actions, cleaning up the thunder, and solving the remaining problems through reorganization, mergers, and so on.

It's just that now is the era of the registration system, and most of the time, it can solve the problem by improving the delisting system.

Survival of the fittest has become the most direct way at present.The market also encourages this survival of the fittest approach, which will accelerate the process of clearing out the weak.

However, for investors, if they step on a mine, the loss is definitely not small.

The countermeasures that can be thought of are to try not to buy some listed companies that may have risks.

Even if you want to buy, you must strictly control the position and do not have all-in actions and thoughts.

There are 5,000 listed companies in A-shares, among which there are many high-quality blue chips and white horses. Since there are high-quality companies, why choose some risky ones for investment.

Keep up with the pace of the times, make the best choices, and strive for greater returns while ensuring that risks are controllable.

As for those mines, let them explode. This is also a part of market progress.