(Yicai Global) March 15 -- Covid-19 vaccine maker Shanghai Junshi Biosciences, artificial-intelligence chipmaker Cambricon Technologies and three other Chinese firms have been included for the first time in the Star 50 Index, which comprises the 50 largest stocks on the Shanghai Stock Exchange’s Nasdaq-style Star Market, in the index’s first adjustment this year.
Cyber security software developer Qi An Xin Technology Group, lithium-ion battery maker Farasis Energy and solar panel manufacturer Trina Solar were the other three to make the index today. The average market value of the five companies was CNY61.2 billion (USD9.4 billion) as of March 14, 15 times that of the firms they replaced.
Measurement equipment maker Suzhou TZTEK Technology, lens manufacturer Fujian Forecam Optics, biodiesel producer Longyan Zhuoyue New Energy, photoinitiator maker Tianjin Jiuri New Materials and enterprise management software developer Beijing Seeyon Internet Software departed. Their stock value had fallen an average of 22 percent since the fourth quarter last year, as compared to a gain of 6.95 percent by the newcomers.
The Star 50 Index, which was launched in July last year, is readjusted and reweighted each quarter. Only a maximum of five companies can be added and removed each time.
The steady updating of the Star 50 Index will improve the index’s quality and performance as well as increase its investment value, said Wang Delun, a team leader at China Industrial Securities.
For the first time, companies in the energy-saving, environmental protection and new energy automobile sectors have been included, giving the index a more balanced coverage, according to Guosheng Securities.
The proportion of stocks tracked with a market capitalization of tens of billions of Chinese yuan, equivalent to billions of US dollars, has risen to 82 percent from 70 percent, the brokerage added.
As a result, the price-to-earnings ratio of these firms is concentrated in the range of between 50 and 100 times, it said. The proportion of constituent stocks with a PE ratio of more than 100 times has fallen to 28 percent from 36 percent in the previous quarter, and the valuation structure has returned to a reasonable range.
The companies on the latest Star 50 Index saw profit grow by an average of 43 percent last year from the year before, as compared with 30 percent before the adjustment, according to Wind data. Their average growth rate was 33 percent in the fourth quarter, while that of those excluded was 8.29 percent, according to Tianfeng Securities.
Editor: Kim Taylor