Core view: through risk preference and return to fundamentals
We observed the quantiles of Pb and PE in Shenwan electronics industry from 2017 to now. At present (February 25, 2022), the overall Pb of the industry is 4.42, which is about 42.8% in five years. At present, the overall PE of the industry is 64.52, which is about 19.1% in five years. Roe is equal to Pb / PE. PE is at a historically low level relative to Pb, that is, the industry roe is improved. We need to find subdivided industries with roe improvement space and logic. Relatively optimistic about the passive component sector with little valuation pressure and room for industry growth, as well as popular industries such as logic chip design, analog chip design and discrete devices where roe and EPS are in the high-speed rising channel.
Under the pressure of PE growth in the industry and the gradual maturity of the Chinese market, we believe that EPS will become the main reason to promote the rise of share prices in the industry, rather than the change of valuation logic. From 2016 to the first half of 2017, the EPS of the industry increased rapidly, digesting the PE at the high level of the last bull market; When EPS slowed down from the second half of 2017 to negative growth in 2018, PE could not maintain support and began to decline; The industry began to recover in 2020, and EPS showed a high growth trend, but the pulling effect on PE was weak (pe59.4 in January 2020, pe64.5 at present). We judge that the market risk appetite is returning to rationality, so we need to pay attention to the molecules of roe, that is, the opportunities brought by the rise of EPS.
We believe that the segment industries with high roe and growth last year meet the standards of strong profitability and room for improvement. From the 16 three-level segments of Shenwan electronics, we selected eight industries with an average roe of more than 5% and a year-on-year growth in the third quarter of 2021, namely: brand consumer electronics, analog chip design, printed circuit board, passive components, electronic chemicals III, digital chip design, semiconductor equipment and discrete devices.
Focus on suggestions: it’s the leader of the high boom industry, the leader of the high boom industry, the leader of the high boom industry, the leader of the high boom industry, and the targets of performance growth: 60074 Wingtech Technology Co.Ltd(600745) \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ Shenzhen Kinwong Electronic Co.Ltd(603228) etc.
Risk warning: risk of deterioration of the international situation, unexpected epidemic development and liquidity risk
