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Apple's share price is plunging into a long and short battle: Wall Street is generally bearish Management's big repo

November 08, 2018 15:09
source: First Financial Network
edit:Eastern Fortune Network

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On November 7, Apple Inc. (AAPL) soared 3.03% to $209.95, once again approaching the market value of trillions of dollars. The first financial reporter is combing the key information of Apple’s financial report and relatedresearch reportAfter discovering that Apple, which once fell below the average price of repurchase in the third quarter, recently launched a "long and short battle" between Wall Management and Wall Street.

Apple announced its earnings report on November 1st, announcing that the company will no longer announce sales of its products. Apple said that sales are far less important for today's Apple than it used to be.

However, investors do not agree with this statement, which means that the decline in sales of luxury jewelry is inevitable. After Apple fell 6.63% on November 2, it fell below $200 on November 5, a high level from a month ago. The price fell more than 15% and fell below the market value of trillions of dollars.

  Is the $200 apple overvalued?

After the sharply adjusted Apple, the price-earnings ratio of about 16 times, the price-to-book ratio of about 9 times, is it underestimated or overestimated? This shows a very different view on the actions of Wall Street and Apple management.

Bank of America Merrill Lynch downgraded Apple's rating from buy to neutral. The four reasons given by Bank of America Merrill Lynch are: application store revenue growth slows down, especially in Greater China; sales guidance for the fourth quarter of this year's natural year implies that iPhone sales will be lower than expected; investors may think iPhone This year's sales will show negative growth, and due to the strength of the US dollar, Apple's performance will be weak in emerging markets.

In addition, well-known institutions including Morgan Stanley and Bank of Montreal have lowered Apple's target price, and Wall Street's views on Apple have turned negative, which has led to a sharp correction in recent stock prices. However, from the case of Apple's own big repurchase, Apple management does not agree with the mainstream view of Wall Street, management seems to think that the stock price is not overvalued.

Apple’s financial report released at the end of September 2018 showed that in the third quarter, a total of 92.5 million shares of common stock were repurchased, with an average price of between US$192.5 and US$222.07 per share. The current share price is lower than Apple’s average repurchase in the third quarter. price.

Ping An (601318.SH), which has a market value of more than one trillion yuan, announced a repurchase plan of 100 billion yuan after the announcement of the third quarterly report. However, in fact, in the early days of the US market, Apple already had a repatriation plan of 100 billion US dollars, and it has already implemented nearly 30%.

On May 1 this year, Apple’s second quarter earnings reportAnalystThe conference call announced that it will invest about $100 billion to buy back shares. As of September 29, Apple has repurchased more than $29 billion in common stock, and the remaining $70 billion repurchase program will be completed.

In the past few years, in support of the rise in Apple's stock price, in addition to its own earnings growth, which is a large number of repurchases supported by sufficient cash flow, Apple's total share capital decreased from 6.085 billion shares at the end of September 2014 to 4.955 billion shares at the end of September 2018. The total share capital has fallen by nearly 20%, which has also increased earnings per share from $6.49 in 2014 to $12.01 in 2018, almost doubling in four years.

The massive repurchase of index stocks is a phenomenon accompanied by the slow-moving US stocks in recent years. In the past four years, it has repurchased nearly 20% of the shares. Apple, the world's number one company, has its large-scale repurchase. It is a representative of the long-term bull market of US stocks. It is based on years of profit guarantee and operating cash flow. The net cash flow from operating activities in 2018 reached US$77.434 billion, much higher than the net profit of US$59.531 billion.

Li Jinfeng, a strategist at Guojin Securities, told the First Financial Reporter that for the US stock market, the strong fundamentals of listed companies and the spontaneous large-scale repurchase of enterprises are still the core advantages of their own operations.

  Shipment fell from second to third?

Apple, whose price has gone to "luxury", where will the future go? From the market share data of the last two quarters, Apple's shipments have lagged behind Huawei, ranking third in the world.

From the current product structure of Apple, the iPhone 7 launched in 2016 has become the lowest-end product, starting at $449, and the most expensive mobile phone is the iPhone XS Max, which was launched in September this year and sold for $1,449. Ten thousand yuan.

The 2018 financial report shows that of the $265.6 billion in net income, $166.7 billion came from the iPhone, accounting for more than 60% of Apple's total revenue. In terms of total sales, the sales of 218 million iPhones are also much higher than the 43.53 million iPads and 18.21 million MAC computers.

Huixin quoted Apple CEO Cook as saying on the November 2nd conference call that the change in the disclosure method was mainly due to the fact that the correlation between sales volume and the company's revenue growth has been greatly reduced. Apple Chief Financial Officer Mestri also explained: "Apple's sales data can not fully reflect the company's potential business value. The relationship between the sales of a single product and the company's business is not as important as before, because we now have a wider Product line and larger price range."

Huang Leping, a technology analyst at CICC, believes that the biggest disappointment of Apple’s performance is that Apple has stopped reporting shipments of all major products such as iPhone and iPad. This is interpreted by the market as Apple’s lack of confidence in its future shipment growth. . This means that as the mobile phone market becomes saturated, Apple has shifted from its past pursuit of shipment growth to a strategy of pursuing profit growth.

In the short term, shipments of smartphones may also continue to weaken. The mobile phone market in developed countries and China is saturated and enters the era of stock competition. The market power of emerging countries is affected by the depreciation of the exchange rate. Apple has built a relatively stable customer base through the iOS ecosystem. The customer replacement cost is high, and the high price strategy may cause the replacement cycle to slow down, but the impact of customer outflows (to Android phones such as Huawei) is relatively small, Huang Leping said.

Ping An Securities analyst Liu Yifeng said that the iPhone sales in the third quarter was 46.89 million (lower than the previous market forecast of 48.4 million), slightly higher than the 46.68 million in the same period of last year; but the average selling price of the iPhone (ASP) came. $ 793 (more than $751 expected by analysts).

According to Huixin data, Apple's shipments in 2017 are still second only to Samsung in the world, but in the second quarter of 2018, Huawei's smartphone shipments have already led Apple, which is also Samsung and Apple for 7 years. For the first time, it failed to occupy the first and second positions on the list. In the third quarter, Huawei once again surpassed Apple, with market shares of 14.6% and 13.2%, respectively. In the full year of 2017 data, the two were 10.4% and 14.7% respectively.

(Article source: First Financial Network)

                (Editor: DF207)

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