The 14th five year plan for the development of digital economy proposes to accelerate the digital transformation and upgrading of enterprises. In January 2022, the 14th five year plan for digital economy development was released. The plan proposed to comprehensively deepen the digital transformation of key industries, including agriculture, water conservancy, industry, finance and other industries. Based on the characteristics and differentiated needs of different industries, promote the all-round and whole chain digital transformation of traditional industries and improve total factor productivity.
AI industrialization continues to accelerate, enabling thousands of industries, strengthening income resilience + undervalued value, and bringing medium and long-term investment opportunities. AI has entered the growth period and naturally has scale advantages. It can empower thousands of industries and achieve cost reduction and efficiency increase for manufacturing, tourism and other industries. 1) Hangzhou Hikvision Digital Technology Co.Ltd(002415) : the performance of the annual report slightly exceeded the market expectation, reflecting its strong revenue toughness. The year-on-year growth rate of revenue and profit in a single quarter is expected to bottom out, and the revenue and profit data in a single quarter in 2022 are expected to rise month on month. 2) Iflytek Co.Ltd(002230) : the business in the base area continues to accelerate its penetration. According to the guidelines given by the company in the investor exchange minutes, the company’s major businesses will still grow rapidly in 2022. The expected revenue growth rate of teaching students according to their aptitude / learning machine / intelligent medical / vehicle business in 2022 is as high as 80% / 200% / 100% / 70% respectively. 3) AI Baima shares have entered the area with low valuation. At present, the PE (2022e) of Haikang / Dahua / iFLYTEK is only 23 / 10 / 47 times, which is expected to show medium and long-term investment opportunities following the performance verification.
The transformation and upgrading of intelligent manufacturing and the dual carbon policy will continue to boost the long-term certainty of the industrial software track. Driven by the industrial trend of intelligent manufacturing transformation and upgrading, there is huge room for the penetration of digital economy in China’s secondary industry. At the same time, industrial manufacturing is related to the national economy and the people’s livelihood. Industrial intelligence can realize “carbon peak and carbon neutralization”. The superposition of the two brings long-term certainty to the industrial software track. 1) The market is booming and the performance of the supermarket is expected to exceed the expectations in the future. The company took shares in PCCW to strengthen synergy. 2) Zwsoft Co.Ltd(Guangzhou)(688083) : the performance express meets the expectations and reaches the target value of equity incentive. In 2021q4, the revenue has improved significantly month on month. China’s education business has made great efforts, the 3D business has gradually entered the harvest period, the overseas business is expected to recover gradually, and continue to strengthen R & D investment and sales channel expansion.
Cloud computing is the main line of growth in the ten year cycle, and the sustainability of growth is constantly verified. 1) Cloud upstream: Industrial Recovery signals are frequent, and the project of “counting from the east to the west” is fully launched, and the promotion speed of new infrastructure of digital economy is expected to exceed expectations Inspur Electronic Information Industry Co.Ltd(000977) is the core of digital economy it infrastructure. The prosperity of the industry may be repaired. The company’s valuation is at the bottom of history and the margin of safety is sufficient Dawning Information Industry Co.Ltd(603019) is the core leader of digital economy + information innovation. The performance in 2021 exceeded expectations, and the long-term value is still underestimated. 2) SaaS: the ten year cycle represents the main line, and the three laws of cloud computing bring continuous verification of growth sustainability. Since 2021, China’s cloud computing valuation has experienced a certain correction and digestion, and gradually entered a relatively stable range Beijing Kingsoft Office Software Inc(688111) 2021 performance is in line with expectations, revenue and non net profit deduction grow steadily, and the long-term growth of domestic cloud office continues to be verified Glodon Company Limited(002410) 2021 witnessed rapid growth in performance, strong verification of the long-term logic of cost cloud transformation, and building digital transformation continued to exceed expectations.
The marketization of electricity price is the inevitable trend of smoothing supply and demand in the medium term. The “double carbon” goal accelerates the demand for energy Internet, and Longshine Technology Group Co.Ltd(300682) strategy, barriers and market space are underestimated. The trend of power marketization is obvious, which is expected to drive the construction of digital platform for energy enterprises and support the marketization and normalization of demand side response. According to the function reconstruction of the market subject of the power supply and demand value chain, China’s power system reform can be roughly divided into three stages: 1) before the implementation of the power system reform plan in 2002, the first stage is the stage of integration of power generation, transmission, distribution and supply; 2) From 2002 to 2015, the second stage was the separation of power plant and power grid. After the implementation of the power reform plan in 2002, five power generation groups and two power grid companies were established; 3) The release of several opinions on further deepening the reform of power system in 2015 marked the third stage, that is, the separation stage of power generation, transmission and distribution. “Controlling the middle and liberalizing both ends” has become the general idea of power market-oriented reform. The market-oriented trend is expected to accelerate. According to the data of the national development and Reform Commission, in 2021, all power trading centers across the country organized and completed 377874 billion kwh of market trading electricity, with a year-on-year increase of 19.3%, accounting for 45.5% of the electricity consumption of the whole society, with a year-on-year increase of 3.3 percentage points. Previously, the construction of power transmission and transformation system did not consider the large-scale consumption of renewable energy, which is more similar to the construction and operation idea of “determining sales by production”. With the large-scale centralized grid connection on the supply side and the significant increase in the proportion of electrification on the demand side, the power grid investment will undergo structural changes: first, the power grid investment will continue to tilt towards the distribution network; Second, the proportion of intelligent and information investment related to the construction of power Internet of things will increase significantly. The problem of “entropy increasing and entropy reducing” of the power grid is solved through the “entropy increasing and entropy reducing” of the digital power grid, and the “entropy reducing” of the multi-source energy system is solved through the “entropy increasing and energy reducing” of the power grid.
Investment suggestions: 1) AI: Hangzhou Hikvision Digital Technology Co.Ltd(002415) , Zhejiang Dahua Technology Co.Ltd(002236) , Iflytek Co.Ltd(002230) . 2) Industrial software: Zhejiang Supcon Technology Co.Ltd(688777) , Zwsoft Co.Ltd(Guangzhou)(688083) . 3) Cloud Computing: Inspur Electronic Information Industry Co.Ltd(000977) , Dawning Information Industry Co.Ltd(603019) , Beijing Kingsoft Office Software Inc(688111) , Glodon Company Limited(002410) . 4) Dual carbon it: Longshine Technology Group Co.Ltd(300682) .
Risk warning: the economic downturn exceeded expectations; Financial expenditure is lower than expected; Trade frictions intensified.
