Introduction

The Discovering “SV 99” in China 2018 was published following the debut edition in 2017.

SV 99, or SV 99 Companies, refers to China’s top 99 A-share listed companies based on SV performance. The ranking is created on the basis of quantified assessment of the comprehensive economic, social and environmental performance of selected CSI 300 constituent companies using the SV Assessment Model for Listed Companies.

Discovering “SV 99” in China aims to achieve the followings: first, to identify companies that are excellent at both DW & DG-the Chinese criterion for corporate SV by using the SV Assessment Model listed companies; secondly, to prove through back-testing that companies doing both well and good often demonstrate better and more stable market performance; and thirdly, by profiling SV 99 constituent companies, to identify important characteristics of these leading companies for the benefit of other businesses.

All these targets serve an overarching goal: to make more companies aware of the feasibility and future necessity of a DW & DG balanced development model, and more investors aware of SV-based investment decision making.

The annual report mainly comprises two sections: first, the ranking and analyses of SV 99 companies presented in “Discovering SV99”, “Analysing SV 99” and “Insights from SV 99”; and secondly, the SV 99 Index and its back-testing analysis. The SV 99 Ranking focuses on the static performance of selected companies at a specific time, while the SV 99 Index examines the dynamic development of these companies over an extended period.

Unlike the 2017 version, this year’s report consists of three independent but interrelated parts. Part I “Beyond Growth” addresses the fundamental rationale and theories of the models used; Part II “Back to Value” is the core of the 2018 report; and Part III “Sustainable Development” contains an outlook on the new business culture. Readers may start with any part based on their knowledge of and interest in SV and SV 99.

It is particularly noteworthy that among the companies listed on the 2018 ranking, 64 are state-owned enterprises (SOEs), 5 more than 2017, including 40 central government-led SOEs and 24 local SOEs, while the number of private-owned enterprises (POEs) remains at 25, accounting for just over 25% of the total listed companies. The gap between SOEs and POEs can be attributed to a number of reasons, including the influences of history and government policies. However, the 25 POEs shall be highlighted for the following reasons: first, they are important service or product providers related to people’s livelihood; secondly, they are long-lived enterprises-average age 19 years-that have participated in China’s reform and opening-up; and thirdly, these companies continue to excel even in highly competitive markets, with an average net profit margin of 8% and an average tax contribution of RMB 2.2 billion. The 25 POEs demonstrate great show cases in spite of various on-going challenges to the private sector.

Despite successfully returning for a second year, Discovering “SV 99” in China is supposed to keep exploring and iterating. We believe that as more investors focus on SV, more publicly traded companies focus on information disclosure, and the concept of SV is more widely recognised by society, SV 99 will extend beyond the CSI 300 to wider assessment targets.

Signs of new civilisation keep emerging: diversification, exclusiveness, and sharing have become major economic topics; social connection, ethnic integration and mutual aid have pervaded society; new technologies such as artificial intelligence, big data and blockchain are reshaping the credit systems of the world in a way that disrupts the relationships between governments, markets and society; and complexity theory is challenging all scientific theories based on binary cognitive models. A multi-dimentional civilisation is emerging to replace the existing binary black-and-white world.

Just like the butterfly effect, Discovering “SV 99” in China is one of the signals of this new civilisational wave.