Key investment points:
Industry market review: the performance of the electronic sector was poor in January. The electronic (Shenwan) sector index fell 13.39% in January, underperforming the Shanghai and Shenzhen 300 index (- 7.62%) in the same period, ranking 27th among the 31 Shenwan industries. In terms of sub sectors, all sub sectors fell in January, among which led, optical components and semiconductor equipment fell significantly, down 18.01%, 18.81% and 18.94% respectively.
In 2021, the indicators of electronic information manufacturing industry showed a high Outlook: the growth rate of added value of electronic information manufacturing industry hit the bottom and rebounded in 2021. According to the data of the Ministry of industry and information technology, in 2021, the added value of electronic information manufacturing industry above designated size increased by 15.7% over the previous year, ranking sixth among 41 major industries, with a growth rate of 8.0 percentage points higher than that of the previous year. In 2021, the revenue and net profit of electronic information manufacturing industry achieved high growth, with an operating revenue of 14128.5 billion yuan, an increase of 14.7% over the previous year, and the growth rate increased by 6.4 percentage points over the previous year; The total profit was 828.3 billion yuan, an increase of 38.9% over the previous year, and the growth rate was 4.6 percentage points higher than that of Industrial Enterprises above designated size.
The trade deficit of integrated circuits expanded, and the global chip sales reached a new high in 2021: China’s trade deficit of integrated circuits continued to expand in December 2021. According to the data of the General Administration of customs, in December 2021, the import volume of China’s integrated circuit industry was US $44.275 billion, a year-on-year increase of 27.2%, the export volume was US $16.31 billion, a year-on-year increase of 21.0%, and the trade deficit was US $27.965 billion, an increase of about 31.2% over the same period in 2020. The trade deficit was the highest in the whole year. According to the American Semiconductor Industry Association (SIA), global chip sales reached a record $555.9 billion in 2021, an increase of 26.2% over the previous year. By region, the sales volume of the American market increased the most in 2021, with 27.4%. China remains the largest semiconductor market, with total sales of US $192.5 billion in 2021, a year-on-year increase of 27.1%.
China’s mobile phone market warmed up in the fourth quarter and the global mobile phone market was cold in the second half of 2021: benefiting from the high growth in the first quarter and the fourth quarter, the overall shipments of mobile phones in the Chinese market totaled 351 million in 2021, with a year-on-year increase of 13.9%, including 266 million 5g mobile phones, with a year-on-year increase of 63.5%, accounting for 75.9% of mobile phone shipments in the same period. According to the statistical report on global smartphone shipments in 2021 released by omdia. The global smartphone shipments in 2021 were 1.339 billion units, an increase of 3.4% year-on-year, of which Samsung ranked first with a 20% market share, with a year-on-year increase of 5.9%; Apple ranked second with an 18% market share, with shipments up 15.6% year-on-year.
Downgrade the industry to “synchronous market”: as of February 15, 2022, the PE of SW electronics sector (excluding negative value) was 32.6 times, significantly lower than the valuation of gem index (46.4x) and science and Innovation Board (44.5x). From the valuation trend in recent three years, the current valuation is lower than the average level (41.6x). At present, under the background of rapid rotation of industry hotspots in the secondary market, the performance of sub sectors in the electronics industry is also relatively differentiated. There are many theme hotspots in the industry, such as “folding screen”, “Automotive intelligence”, “continuous penetration of VR” and “domestic substitution of Semiconductors”. At the same time, the external environment, such as US science and technology sanctions, potential conflicts between Russia and Ukraine The risk factors such as the Fed’s expectation of raising interest rates are also. The tightening expectation of this risk preference will have a certain negative impact on the technology industry. From a long-term perspective, under the background of the global epidemic, the demand in 5g + alot, new energy vehicles, smart home, telecommuting, PC and other fields has been directly or indirectly boosted, and the electronic sector has long-term growth momentum. The electronic industry was downgraded to “synchronous market” investment rating.
Investment suggestion: focus on the four main lines of semiconductor, consumer electronics (VR, folding screen), automotive electronics and PCB. Recommended targets: (1) semiconductor: Semiconductor Manufacturing International Corporation(688981) (688981. SH), Advanced Micro-Fabrication Equipment Inc.China(688012) (688012. SH), China Resources Microelectronics Limited(688396) (688396. SH), National Silicon Industry Group Co.Ltd(688126) (688126. SH), Maxscend Microelectronics Company Limited(300782) (300782. SZ); (2) Consumer electronics: Shenzhen H&T Intelligent Control Co.Ltd(002402) (002402. SZ), Goertek Inc(002241) (002241. SZ); (3) Automotive electronics: Will Semiconductor Co.Ltd.Shanghai(603501) (603501. SH), Ofilm Group Co.Ltd(002456) (002456. SZ); (4) Copper clad laminate and PCB: Shengyi Technology Co.Ltd(600183) (600183. SH), Shennan Circuits Co.Ltd(002916) (002916. SZ), Wus Printed Circuit (Kunshan) Co.Ltd(002463) (002463. SZ), Olympic Circuit Technology Co.Ltd(603920) (603920. SH).
Risk warning: the game uncertainty in the field of science and technology between China and the United States; The cost of upstream raw materials remains high; The development of advanced technology of Chinese manufacturers may not be as expected; Systemic risk.
