This week, the market continued to be depressed in differentiation, the traditional defense sectors represented by banks and insurance continued to rise, and the high valuation sectors represented by new energy and medicine continued to kill. From the perspective of communication sector, operators, as a representative defense sector, ushered in the “giant elephant dance” market this week, and China Mobile rose by more than 15% this week. We believe that at present, the rise of defensive sectors, including operators, is not only the fundamental factor, but also the interpretation of market risk aversion. From a longer perspective, the midstream industries such as Internet of things and optical module cloud video that we continue to track have come out of the trough brought by the rise of upstream costs in the second and third quarters of 2021, In the fourth quarter of 2021, it achieved better cost transfer and profit release. We believe that in the process of market sentiment recovery in the future, such companies that achieve sustained profit release and performance growth are expected to take the lead in repairing. We suggest investors to actively pay attention to high-quality midstream manufacturers such as Meig Smart Technology Co.Ltd(002881) , Yealink Network Technology Co.Ltd(300628) , Eoptolink Technology Inc.Ltd(300502) , Suzhou Tfc Optical Communication Co.Ltd(300394) .
Core recommendations after the festival:
\u3000\u30001. High quality leading companies on the flow bearing side: Eoptolink Technology Inc.Ltd(300502) 300502, Suzhou Tfc Optical Communication Co.Ltd(300394) 300394
\u3000\u30002. High quality companies with steady growth performance: Meig Smart Technology Co.Ltd(002881) 002881, Fibocom Wireless Inc(300638) 300638, Yealink Network Technology Co.Ltd(300628) 300628
Continue tracking: (1) green communication: Jiangsu Zhongtian Technology Co.Ltd(600522) 600522, Hengtong Optic-Electric Co.Ltd(600487) 600487, Shenzhen Envicool Technology Co.Ltd(002837) 002837, Shenzhen Cotran New Material Co.Ltd(300731) 300731. （2）IDC： Guangdong Aofei Data Technology Co.Ltd(300738) 300738、 Kehua Data Co.Ltd(002335) 002335、 Beijing Sinnet Technology Co.Ltd(300383) 300383. (3) Optical module: Zhongji Innolight Co.Ltd(300308) 300308. (4) Communication infrastructure: Zte Corporation(000063) 000063. (5) Military communication: Tianjin 712 Communication & Broadcasting Co.Ltd(603712) 603712. (6) Industrial Internet: Nengke 603859.
Focus on elephant dancing and midstream recovery. This week, the market continued to divide. From the perspective of the communication sector, operators, as a representative defense sector, ushered in the “giant elephant dance” market this week, and China Mobile rose by more than 15% this week. We believe that at present, the rise of defensive sectors, including operators, is not only the fundamental factor, but also the interpretation of market risk aversion. From a longer perspective, the midstream industries such as Internet of things and optical module cloud video that we continue to track have come out of the trough brought by the rise of upstream costs in the second and third quarters of 2021, In the fourth quarter of 2021, it achieved better cost transfer and profit release. We believe that in the process of market sentiment recovery in the future, such companies that achieve sustained profit release and growth are expected to take the lead in the repair.
Dell’Oro report: global data center capital expenditure will reach $350 billion by 2026. Dell’Oro group said: by 2026, the global data center capital expenditure is expected to reach 350 billion US dollars. The company predicts that the data center expenditure of super large-scale cloud service providers will double in the next five years, thus driving market growth.
Risk tip: trade friction intensifies and 5g progress does not meet expectations.
