The performance of the industry is weak, and the valuation is at a historical low since 2016. From the beginning of 2021 to December 24, the Shanghai stock index rose by 4.17%, the Shanghai and Shenzhen 300 index fell by 5.56%, the gem index rose by 11.15%, the small and medium-sized board index rose by 2.78%, and the Shenwan computer index fell by 0.30%, 4.47 percentage points behind the Shanghai stock index, 5.26 percentage points ahead of the Shanghai and Shenzhen 300 index, ranking 21st in the Shenwan class I industry. The computer index PE (TTM, excluding negative value) is 43.97 times, which is 13.73% after the history since 2016; PE (TTM, median) is 48.61 times, which is 20.59% after the history since 2016; The valuation (median) relative to the CSI 300 index is 4.63 times, which is 2.51 times higher than the historical median since 2016.
The revenue growth of the sector has recovered, and the valuation is in a relatively reasonable range. The overall revenue growth of the computer sector has basically recovered, the overall growth of the sector is slightly higher than the average growth rate of individual stocks, and the performance of large companies in the sector during the year is relatively better. Affected by the decline of gross profit margin and expense growth, the year-on-year growth rate of deduction of non net profit in the computer sector has recovered, but the compound growth rate in the past two years has been poor, and the overall scale has only recovered to the same period in 2019. The R & D expenses of the sector keep growing rapidly. Considering the increase in cash paid to employees, the number of R & D personnel in the sector may be expanding.
Policy promotion is intertwined with market demand. At the policy level, the outline of the 14th five year plan puts forward that the added value of China's core industries in the digital economy accounts for an important proportion of GDP, which will be increased to 10% in 2025. The outline also focuses on the construction of digital economy with the chapter of "accelerating digital development and building a digital China". At the market level, due to the significant increase in the number of smart terminals, the total amount of data expands, and the proportion of data stored in the core is expected to exceed the proportion of data created in the terminal around 2021-2022, which will mark the complete formation of the data transmission chain generated by the terminal and collected to the central node for storage. Since the construction of IT system usually lags behind the accumulation of data, we expect a larger demand for government and enterprise services to come.
Investment perspective. The computer industry is expected to recover its growth momentum from the dual drive of top-down policy promotion and endogenous demand brought by data expansion. Therefore, we suggest paying close attention to the industrial chain standing at the forefront of Digital China Construction and expected to make a solid contribution to building a digital economic base in this round of digital economy construction, As well as the fields with future attributes representing the long-term development direction, it is recommended to focus on the following two core tracks: Xinchuang and Wangan, and automatic driving. Maintain the rating of "synchronous market" in the industry.
Risk warning: macroeconomic risk is less than expected; The policy is less than the expected risk; The shortage of upstream supply such as chips leads to the risk of rising costs.
