“At the current time node, whether from the perspective of GDP growth or macroeconomic structure, the digital economy will become the protagonist in the future, and the socio-economic structure will move from manufacturing and industry to digital economy. From the perspective of informatization itself, the world is moving from informatization and networking to digitization and intelligence.”
On February 5, Wu Chao, director of China Securities Co.Ltd(601066) Securities Research Institute and head of international business department, managing director and chief analyst of TMT industry, interpreted the investment opportunities of digital economy in the 14th five year plan online.
there is great room for the development of China’s digital economy
Recently, the State Council issued the 14th five year plan for the development of digital economy, which is a new major strategic deployment to promote the healthy development of digital economy at a new historical starting point. It is the first national special plan to systematically plan the development of China’s digital economy.
what is digital economy? Digital economy is the main economic form after agricultural economy and industrial economy. It is a new economic form that takes data resources as the key element, modern information network as the main carrier, the integrated application of information and communication technology and the digital transformation of all factors as the important driving force to promote a more unified fairness and efficiency.
As for the digital economy, Wu Chao believes that, in a narrow sense, technology industries such as TMT, such as 5g, Gigabit broadband, data center, electronic information technology, etc. In a broad sense, it may be integrated with traditional industries in the future, such as Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) and digital industry.
“From the perspective of investment in information infrastructure, in 2019, the capital expenditure provided by the United States to Internet operators such as Google, Amazon, Microsoft and Facebook reached US $100 billion, and the capital expenditure provided to communication operators such as Verizon and at & T was about US $60 billion. Overall, the investment in infrastructure in the United States was nearly RMB 1 trillion.”
“From the perspective of the Chinese market, investment in communication operators is the main force. The annual capital expenditure of China’s three major operators is about 300 billion yuan, and the capital expenditure on Internet companies such as Alibaba, Tencent and byte jump is about 230 billion US dollars, which means that there is more room for growth in this area in the future.”
Referring to the industrial Internet, WuChao believes that it can be divided into different development stages:
The first stage is information factory or unmanned factory. As the name suggests, machines replace people, which is the calculation between cost and return on assets. The increasing cost of human resources has become the core factor to promote development. Therefore, machines replace people with sufficient motivation, so that people can do more technical work, such as manipulating machines, analyzing data, etc.
In the second stage, the foundation of industrial Internet is to solve the intellectualization of machines and terminals. In industrial production, equipment is connected through terminal sensors, resulting in a large number of data, that is, codes. The essence of digitization is not only to connect the business Wuxi Online Offline Communication Information Technology Co.Ltd(300959) , but also to analyze the completely unknown data in the past and improve production efficiency, including process optimization. These data will be a new means of production in the future.
“Industrial digitization can be more accurately transformed into a distributed intelligent network, which can be perceived at any time. The distribution of raw materials and production capacity in the supply chain will be more scientific, which is also what the industrial Internet will achieve in the next stage.” Standing at the current node, Wu Chao believes that compared with the consumer Internet of to C, the industrial Internet has more space to be transformed.
Satellite Internet and 5g network are complementary
Over the past year, Satellite Internet has attracted increasing attention. With its inclusion in the scope of “new infrastructure”, satellite production has moved from the era of “customization” to the era of “industrialization”.
So, what is the relationship between Satellite Internet and existing networks?
Wu Chao believes that the communication network is a relatively market-oriented industry, and the C-end users pay the bill, so the cost performance is the key factor to be considered.
“In the past, WiFi developed better because the traffic was very expensive. Now 5g network is cheap and fast enough, so the demand for WiFi has weakened. In contrast, the future satellite Internet is the same. When its cost performance has not developed to a certain extent, it will still focus on the existing 4G and 5g networks for a long time.” Wu Chao said that from the perspective of the whole communication industry, about 1.4 million base stations will be built in 2021, which is equivalent to all prefecture level cities covering 5g networks; In terms of permeability, the terminal permeability will reach about 60% in 2022.
When it comes to the advantages of satellites, WuChao believes that it lies in wide coverage, including literacy in no man’s land and applications in ocean crossing, sea crossing, aircraft and other scenes. In the future, it will gradually cover with the improvement of cost performance, forming a complementary role with the existing 5g network, and cannot replace the commercial network in the short term.
Internet of vehicles has long-term investment opportunities in the future
In 2021, China’s Internet of things ushered in a new peak of industrial development.
Wu Chao bluntly said that the Internet of things market has erupted. the Internet of things has two characteristics: one is to connect a large number of things together; The second is passive perception, which is different from the active input . For example, the application of cameras was mostly used in the security industry in the past. Now more and more family cameras are put into use.
When talking about the application scenarios of the Internet of things, she is more optimistic about smart home. Now the intelligent level of household appliances has been greatly improved, such as sweeping Siasun Robot&Automation Co.Ltd(300024) , air conditioning, rice cooker and camera. There are more and more things that can surf the Internet at home.
With regard to the investment opportunities in the industrial chain of the Internet of things, Wu Chao proposed that first, relevant sensors, including cameras, radars, connectors and modules, are growing rapidly; Second, focus on the Internet of vehicles, that is, the intellectualization of single vehicles. “In the past, everyone used to use mobile phones for navigation. Now electric vehicles have smart cockpits, and large screens can realize the interconnection of vehicles and machines. In the future, there will be a long-term investment opportunity for the Internet of vehicles,” Wu Chao said. Internet of things devices will be in the order of 100 billion in the future, that is, one person will have more than 10 terminals, including mobile phones, computers, cars, cameras, televisions, wearable devices, etc.
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