Core view
The main A-share indexes rose and fell this week, fluctuated slightly, and the machinery industry ranked well. We believe that China’s economic growth continued to slow down in the fourth quarter of 2021, and the performance of export-oriented manufacturing industry was better than expected, but the boom fell month on month. From the perspective of fundamentals, in 2021, we will still focus on the new infrastructure of China’s digital economy, advanced manufacturing special equipment such as new energy and semiconductors, the performance recovery exceeding expectations and the related targets of domestic alternative basic parts that will continue to be strengthened in the 14th five year plan.
This week is the second week of December 2021. Social services, food and beverage, building materials, non bank finance and other sectors strengthened. Affected by the relaxation of purchase restriction policies of local governments and the expectation of relaxation of bank mortgage policies, the real estate industry chain continued to rebound. This week, the sectors of defense and military industry, mining, power equipment, automobile and building decoration performed the worst, but the sectors of defense and military industry, mining and power equipment decreased significantly. In the conceptual sector, consumer industries such as household light industry, white goods, Baijiu, brand leading and medicine business are best performing, mainly due to stable consumer news and expectations. Lithium positive electrode, charging pile, photoresist, optical module fast and semiconductor led the decline in the concept plate. We believe that it is mainly the strong hyperinflation plate in the early stage to make up for the decline. This week, the technology and manufacturing sectors made up for the decline, led by the military industry and power equipment sectors, and the cycle sector was in a sideways trend.
Short term capital behavior does not change the medium-term trend. Investors should choose appropriate strategies and investment cycles according to the nature of funds. December is a relatively empty window period. The news surface was originally relatively flat, but emerging virus variants have become the biggest hot spot on the news surface. China’s green development concept and strategy are determined, followed by the implementation of the dual carbon strategy in all parts of the industrial and energy system. Double carbon is still the focus of the capital market, and the relevant benefit tracks will still be the focus of capital allocation. Commodity prices have stabilized, liquidity is expected to improve, market risk appetite is good, and market activity continues.
Hot spots continue to rotate rapidly this week, and the downside systemic risk is limited. For fundamental investment, we still suggest that those specialized special new sub industries with 20-year performance exceeding expectations and 21-year industry prosperity should be preferred for allocation over the medium term. Focus on allocating oversold stocks with good fundamentals, and pay attention to sectors with strong certainty and reasonable valuation. Next week, new energy, military industry and third-generation semiconductors will remain the focus of capital, focusing on growing technology manufacturing enterprises with matching growth and valuation, as well as new high-quality track plates under the dual carbon background, We still maintain the investment logic related to the import substitution logic of relevant advanced manufacturing sectors such as aerospace military industry sector (civil military participation, missile body structure), new energy (wind power, energy storage, hydrogen energy and nuclear energy) supported by performance or growth expectations. At the same time, we continue to moderately hold the science and technology sector at the inflection point of prosperity (third generation semiconductor, big data, miniled and VR) subject matter.
Related targets include: Zhejiang Fenglong Electric Co.Ltd(002931) , Chengdu Shenleng Liquefaction Plant Co.Ltd(300540) , Sichuan Crun Co.Ltd(002272) , Chengdu Leejun Industrial Co.Ltd(002651) , Kunshan Kinglai Hygienic Materials Co.Ltd(300260) , Tongyu Heavy Industy Co.Ltd(300185) , Shanghai Hugong Electric Group Co.Ltd(603131) , Sinoseal Holding Co.Ltd(300470) , Dongfang Electric Corporation Limited(600875) , Houpu Clean Energy Co.Ltd(300471) , Anhui Yingliu Electromechanical Co.Ltd(603308) , Zhonghang Electronic Measuring Instruments Co.Ltd(300114) , China Oilfield Services Limited(601808) , Jiangsu Hengli Hydraulic Co.Ltd(601100) , Wus Printed Circuit (Kunshan) Co.Ltd(002463) and Shenzhen Fastprint Circuit Tech Co.Ltd(002436) .
Market performance
This week, the Shanghai stock index rose 1.82%, the Shanghai and Shenzhen 300 rose 3.63%, the gem composite fell 1.38%, and the China Securities 1000 fell 1.15%. The wind tertiary industry index machinery industry fell 0.65%, ranking 51 / 62 in the industry growth week, outperforming the Shanghai Composite Index by 2.47 percentage points. In the machinery industry of the wind tertiary industry index, the top five stocks in the week were Beijing Jingcheng Machinery Electric Company Limited(600860) , Sijin Intelligent Forming Machinery Co.Ltd(003025) , Hunan Yujing Machinery Co.Ltd(002943) , * ST Baoshi and Zhejiang Chunhui Intelligent Control Co.Ltd(300943) , with an increase of + 46.44%, + 27.25%, + 25.53%, + 20.69% and + 17.16%. The top five stocks with declines were Anshan Heavy Duty Mining Machinery Co.Ltd(002667) , Zhejiang Yonggui Electric Equipment Co.Ltd(300351) , Jiangsu Tongli Risheng Machinery Co.Ltd(605286) , Suzhou Harmontronics Automation Technology Co.Ltd(688022) and Zhejiang Jinggong Science & Technology Co.Ltd(002006) , with declines of – 28.87%, – 14.84%, – 13.30%, – 12.10% and – 12.04% respectively.
The market index rose slightly this week, and the performance of the machinery sector was average. The top four companies rose by more than 20%, and the top ten companies fell by more than 10%. The overall rise of individual stocks in the industry was more or less.
Industry dynamics
1. Q3 global mobile Internet of things module shipments increased by 70% year-on-year, and China Mobile ranked third (c114 communication network)
2. STMicroelectronics launched the third generation of silicon carbide products, which can be used in electric vehicles and industrial markets (c114 communication network)
Risk statement
The promotion and implementation of industrial policies were lower than expected, the change of market style brought down the valuation center of the machinery industry, continued downward pressure on profitability caused by rising costs, and systemic risks caused by the spread of epidemic diseases abroad.
