Event overview: on March 5, 2022, Premier Li Keqiang delivered a government work report to the fifth session of the 13th National People’s Congress on behalf of the State Council.
The core of the report emphasizes promoting the development of digital economy.
The government work report mentioned the information and communication industry in many places and proposed to strengthen the overall layout of Digital China Construction, including three levels: (I) infrastructure level: build digital information infrastructure, promote 5g large-scale application, promote industrial digital transformation, and develop smart city and digital village. (II) industrial level: accelerate the development of industrial Internet, cultivate and expand digital industries such as integrated circuits and artificial intelligence, and improve the innovation and supply capacity of key software and hardware technologies. (III) application level: improve the governance of digital economy, release the potential of data elements, better enable economic development and enrich people’s lives.
No longer mention “raising speed and reducing fees”, promote the digital transformation of the industry, and the operator’s revenue is positive.
From 2017 to 2021, the government work report deployed “network speed up and fee reduction” for five consecutive years to fully benefit the people. According to Zhang Yunyong, party secretary and general manager of Yunnan Unicom, in the past five years, the average tariff of fixed broadband unit bandwidth and mobile network unit traffic in China has decreased by more than 95%, and the cumulative profit of “speed up and fee reduction” has exceeded 700 billion yuan. The ARPU of Chinese mobile communication users is only equivalent to 18% of that of the United States and 26.7% of that of South Korea. This government work report will no longer mention “raising speed and reducing fees”. On the one hand, it proves that the previous policy implementation has achieved remarkable results, on the other hand, it is also conducive to the release of the profitability of the C / h end of operators. At the same time, the report further emphasizes promoting industrial digital transformation and accelerating the development of industrial Internet (written into the government work report for five consecutive years). As a core participant in production, operators have leading cloud resources and 2b channel advantages, and their revenue is expected to grow rapidly. The core beneficiaries are: [China Mobile], [ China Telecom Corporation Limited(601728) ], [ China United Network Communications Limited(600050) ].
In the context of steady growth, new infrastructure is still the focus, and attention is paid to the construction of digital countryside.
The report mentioned the need to “build digital information infrastructure”, “develop smart cities and digital villages”, and “start rural construction action and strengthen infrastructure construction such as water, electricity, gas, letter and mail”. Superimposed on the previous policy traction of “counting from the east to the west” and “digital village”, we judge that the new infrastructure landscape such as 5g, F5G and IDC will continue. The core beneficiary objects are: 5g [ Zte Corporation(000063) ], [ Unisplendour Corporation Limited(000938) ], [ Fujian Star-Net Communication Co.Ltd(002396) ], [ Huagong Tech Company Limited(000988) ]; F5G Zhongji Innolight Co.Ltd(300308) 、 Eoptolink Technology Inc.Ltd(300502) 、 Sichuan Tianyi Comheart Telecom Co.Ltd(300504) 、 Hangzhou Anysoft Information Technology Co.Ltd(300571) ； IDC Guangdong Aofei Data Technology Co.Ltd(300738) 、 Kehua Data Co.Ltd(002335) ； Smart city and digital village [ Shenzhen Neoway Technology Co.Ltd(688159) ]. At the same time, it is mentioned that “we should maintain the basic stability of the RMB exchange rate at a reasonable and balanced level”. In the past 21 years, affected by the sharp appreciation of the RMB exchange rate against the US dollar, companies with high overseas revenue have suffered a relatively adverse impact. We believe that the reporting end of such companies may usher in a more obvious marginal improvement in 22 years. The relevant targets are: [ Yealink Network Technology Co.Ltd(300628) ], [ Queclink Wireless Solutions Co.Ltd(300590) ].
Risk warning: policy promotion is not as expected; Downstream demand was lower than expected.
