Industry core view:
The last trading week was the fifth trading week of A-Shares in 2022. The CSI 300 index rose 0.82%, and 25 of the 31 industries in Shenwan class rose and 6 fell. The overall trend of the communication industry in the last trading week was stronger than the market, up 2.53%, ranking 20th and second in the TMT industry. There are about 200 optical transmission equipment enterprises in China, among which Huawei, ZTE and Fiberhome rank first, second and fifth in the global optical equipment market with 24.6%, 13.5% and 6.5% respectively, and the total share of the three enterprises is close to half of the global market. Huawei has ranked first in the world in the field of optical equipment for many years, and is in a leading position in frontier technology fields such as 800g. The latest market report of lightcounting further points out that the market share of Chinese optical module suppliers has increased from 15% in 2010 to more than 50% in 2021. This means that China’s optical module industry has also followed the footsteps of optical equipment, optical fiber and optical cable and successfully achieved transcendence. The first place of optical module is the American enterprise, which is the result of the integration of two giants Finisar and II-VI. therefore, it continues to maintain its super strength and remains to be pursued by the subsequent “Chinese Legion”. In terms of technology, Chinese enterprises have no obvious technical weaknesses in the field of optical equipment and optical fiber and cable, and are in an advantageous position in some subdivision technologies. However, in the field of optical chips at the bottom, Chinese enterprises still have a large gap. For example, in the development of high-speed (50g and above) components, they still lag behind western competitors for 2-3 years. Especially in the field of optical chips, this is also a key short board, which needs the concerted efforts of the industry. We believe that in the short term, it is difficult for the Chinese Legion to make a greater breakthrough in share in the field of optical communication as in previous years, but it can obtain greater value through the expansion of upstream high-speed components. It is suggested to pay attention to upstream enterprises with high technical barriers in the optical communication industry chain.
Key investment points:
One week industry news: (1) the Ministry of industry and information technology plans new regulations: implement hierarchical protection for all kinds of data; (2) More than 181 operators submitted reimbursement applications, and the cost of replacing Huawei ZTE equipment in the United States soared to $5.6 billion; (3) China Mobile launched the centralized acquisition of base station antennas in 2022: the scale is 486000, and the budget is 590 million yuan; (4) Hytera Communications Corporation Limited(002583) : strongly opposed the accusation of the US Department of justice, which has no factual basis; (5) World Intellectual Property Organization: Huawei ranks first in PCT patent applications for five consecutive years; (6) Lightcounting: in 2021, Chinese optical device manufacturers accounted for half of the country; (7) In 2021, the total global PC shipments increased by 9%.
With the gradual advancement of 5g construction and the continuous high growth of cloud computing construction scale, the fundamentals of the communication industry may continue to improve in 2022. In terms of 5g construction, with the implementation of the “14th five year plan” for the development of information and communication industry, the goal of 5g construction in the future is clear. In the next three to five years, 5g construction will also maintain a stable pace of construction investment. However, with the gradual progress of construction, the downstream supporting applications will gradually mature, thus driving the relevant construction of 5g again.
In the future when the structural market in the communication industry continues to evolve, we suggest paying attention to four investment tracks in the communication industry: (1) operators & equipment manufacturers: 5g construction continues to promote, and the prosperity of traditional communication business is rising. With the expansion of 5g construction, the performance of communication construction, operation and maintenance industrial chain has increased significantly, The cloud network construction of data center and 5g 2B service also opens new growth space for operators & communication equipment manufacturers. (2) Optical module: with a new round of demand growth and the promotion of optical module technology, the industry is expected to usher in a new round of double clicking in 2022. It is suggested to pay attention to the leading optical module enterprises on the digital communication side. (3) Internet of things module: in the next two years, the Internet of vehicles module will still be one of the main directions of the future market growth of the Internet of things module. It is suggested to pay attention to the leading enterprises with deep layout in the Internet of vehicles industrial chain. (4) Temperature control: it is suggested to pay attention to some leading temperature control enterprises that have the ability to transplant the original data center liquid cooling technology to the energy storage system.
Risk factors:
Price fluctuation of upstream raw materials
