Source: Deep Blue Finance

Written by Yang Bo

In the past two days, Cambrian (SH688256) has been transferred to the Shanghai Stock Exchange 50 Index, which has caused a lot of controversy, and experts and netizens from all walks of life have quarreled.

The controversy is mainly focused on two aspects:

First, Cambrian, as an enterprise with a revenue of more than 700 million yuan and losses every year, has a market value of more than 230 billion yuan, is it a huge bubble?

Second, Cambrian will be transferred to the SSE 50 Index at this time, so won't the ETF fund become Cambrian's "high-level pick-up"?

　　1

Cambrian was transferred to the SSE 50 Index

The reason for the incident is that on November 29, 2024, the Shanghai Stock Exchange issued an announcement announcing the adjustment of index samples such as SSE 50, SSE 180, SSE 380, and STAR 50. Among them, the SSE 50 Index replaced 5 samples, such as Cialis, CRRC, Beijing-Shanghai High-speed Railway, and China Molybdenum, Cambrian transferred, TBEA, SAIC, Pien Tze Huang, China Power Construction, GigaDevice was called out.

It is reported that the adjustment will officially take effect after the market closes on December 13.

That is, it has not yet taken effect.

According to the relevant rules, the SSE 50 Index is based on the sample of the SSE 180 Index, and selects the 50 most representative securities with large scale and good liquidity in the Shanghai securities market as a sample, comprehensively reflecting the overall performance of a group of leading enterprises with the most market influence in the Shanghai securities market. Sample stocks are adjusted semi-annually.

On the basis of determining the sample space, the SSE 50 Index comprehensively ranks stocks according to the total market capitalization and turnover value, and takes the top 50 stocks to form a sample, except for stocks with abnormal market performance that are determined by the expert committee to be unsuitable as samples. In addition, the reference basis also includes the trading data and financial data of the stock in the past 1 year.

The controversial Cambrian, based on the closing price on December 2, has a total market capitalization of 234.6 billion yuan, ranking 35th on the Shanghai Stock Exchange. In terms of market capitalization, Cambrian meets the conditions of the SSE 50 Index.

The expansion of Cambrian's market value is mainly due to the fact that this round of market trends is unbeatable. According to statistics, Cambrian's stock price has risen by more than 150% since September 27. In just over two months, the market value has risen from 93.4 billion yuan to 234.6 billion yuan.

The core factor driving Cambrian's surge is the concept of the first AI chip on the Science and Technology Innovation Board. It is also considered by investors to be the first stock of A-share benchmarking Nvidia [NVDA], a leading AI chip in the United States.

At least for the time being, the future of the Cambrian is still in the imagination stage.

In fact, investors who are familiar with A-shares know that there is still a period of "black material" on the SSE 50. At that time, Xinwei Group had a market value of more than 200 billion yuan at its peak and was transferred to the Shanghai Stock Exchange 50 constituent stocks. Later, it was investigated for financial fraud, and after the suspension of trading in 2016, it was removed from the 50 constituent stocks of the Shanghai Stock Exchange. After more than 2 years, Xinwei Group resumed trading, and directly 42 one-word drop limits....

　　2

The revenue is 700 million and the market value is 234.6 billion

Cambrian, is it a huge bubble?

According to the data, Cambrian was established in 2016. The main business belongs to the direction of artificial intelligence chips in integrated circuit design, and belongs to the technology-intensive industry with dual technical thresholds in integrated circuits and artificial intelligence.

This industry is destined to belong to the stage of huge R&D investment and making ends meet for a long time in the early stage.

Cambrian's performance is like this.

In 2023, the revenue will be 709 million yuan, and the net profit will be -848 million yuan.

In the first three quarters of 2024, the operating income was 185 million yuan, an increase of 27.09% year-on-year. The net profit attributable to the parent company was -724 million yuan, and the non-net profit attributable to the parent company was -862 million yuan. Cash flow from operating activities in the first three quarters was -1.809 billion yuan.

Among them, the revenue in the third quarter of this year was 121 million yuan, an increase of 284.59% year-on-year. From the perspective of profitability, the company achieved a net profit attributable to the parent company of -194 million yuan in the third quarter, narrowing the loss from the previous quarter and narrowing the loss from the same period last year.

In terms of technological achievements, as of June 30, 2024, Cambrian has applied for a total of 2,689 patents. A total of 1,369 patents have been granted. Among them, there are 1,296 invention patents, 37 utility model patents and 36 design patents. From the perspective of technical reserves, there is still a certain strength.

According to the statistics of Deep Blue Finance, from 2017 to 2023, Cambrian has a cumulative net loss of about 4.95 billion yuan. Combined with the losses in the first three quarters of this year, the cumulative net loss may reach 5.68 billion yuan.

Cambrian's latest net worth is only 5.649 billion yuan. In such a company, its total market value has reached 234.6 billion yuan!

People who are optimistic feel that the future is promising, the next NVIDIA!

People who are not optimistic think that this is a huge bubble, and if the company's AI chips cannot succeed, the value may return to zero.

Last year, the company suffered a large group of venture capital speculation collective reduction, such as Nanjing Zhaoyin, Hubei Zhaoyin, Ningbo Hangao, Paleozoic Venture Capital, and SDIC Venture Fund. As of the end of 2023, Cambrian's five venture capital shareholders have basically cleared their positions, and they have reduced their holdings and cashed out more than 4 billion yuan. When the stock price was once in jeopardy, the company's founder Chen Tianshi stood up and said that he was resolutely optimistic about the company, did not reduce his holdings in any form, and did not make any pledges. That's pretty good.

Another very controversial place, such a company that relies heavily on R&D-driven, a company that wants to PK with the world's AI chip giants, has fewer R&D personnel in the first half of this year. According to the interim report, in the first half of 2024, the total number of Cambrian R&D personnel will be 727, compared with 980 in the same period last year; This equates to 253 fewer people, or 25% less.

In the first half of this year, the total salary expenditure of R&D personnel was 226 million yuan. With such a small amount of money, can we make a world-class AI chip? Indeed, the reasonable doubts of many netizens are not unreasonable.

In addition, Guosheng Securities recently published an interesting point of view. They believe that the current Cambrian period is similar to the Oriental wealth of 2013-2015. Guosheng Securities believes that in 24Q2 and 24Q3, Cambrian purchased goods and accepted labor payments of 614 million and 1.128 billion respectively, a year-on-year increase of 1077% and 588% respectively; At the end of 24Q3, the company's inventory was 1.015 billion, a new high since its listing. At present, Cambrian's revenue has been initially increased, and the forward-looking indicators of revenue such as inventory and cash payment are performing well, and the company may soon enter a cycle of rapid revenue expansion and become the protagonist of this round of AI wave.

So, Cambrian, is it believed that the power of belief is supporting?

　　3

The controversy over the "high-level pick-up" of the SSE 50 Index

In fact, the controversy over the value of Cambrian investment is not something that the SSE 50 Index can solve.

The adjustment of the SSE 50 Index is based on a series of quantitative indicators and does not represent a prediction of the future trend of individual stocks. When a stock is removed from the SSE 50 index, it does not mean that these companies have lost their investment value. In the same way, if a stock is added to the index, it does not mean that it has investment value.

Indexes, in themselves, are "passive". If there is a human intervention, it is not an index, but an index of "active management".

As a single stock, Cambrian's weight in the SSE 50 index is estimated to be no more than 2%. Even if the SSE 50 ETF index fund is passively bought, the active buying brought by it is limited.

For example, some "investors" said that in the history of the A-share market, there have been many cases where index constituents have been accepted by high-valuation stocks, which is often accompanied by sharp fluctuations in stock prices and long-term sluggish performance. In 2007, PetroChina was transferred to the Shanghai Composite Index at a high price of nearly 70 yuan, and then its stock price almost continued to fall, becoming a classic case of "high-level pick-up" in the A-share market.

This line of thinking clearly confuses cause and effect. It wasn't because PetroChina was transferred to the Shanghai Composite Index that led to the peak of the broader market, and passive ETF funds were not popular in 2007.

In fact, in U.S. stocks, most indices are also based on market capitalization as the standard for transferring in and out. For example, on December 21, 2020, S&P Dow Jones Indices announced that it would transfer Tesla shares to the S&P 500. At the time, there were also many Wall Street analysts who believed that Tesla would pose a greater downside risk to the S&P. In fact, Tesla's stock was $649 per share at the time of the transfer, and Tesla's stock rose as high as $1,200 per share a year later.

Finally, in light of the current controversy in Cambrian, will the above-mentioned "stocks not suitable as samples" clause be triggered?

What do you think?

*The cover is from the official website

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