Weekly report of communication industry: pay attention to the investment opportunities of submarine cable and operators

This week, affected by the periphery, the market continued to be volatile. We believe that in the turbulent market environment, we should pay attention to two main lines. The first is stocks with strong performance support and good industry prospects and competition pattern. The second is defensive stocks with high stability and stable dividends. Corresponding to the communication industry, it is submarine cable and operators. The submarine cable industry benefited from the continued boom of offshore wind power bidding and the strong announcement of industry leaders Zhongtian and Hengtong, and walked out of the adverse trend driven by fundamentals. Although the operators have fallen down with the general trend, we believe that at the current position, with the subsequent annual reports and dividends of operators being announced one after another, the high dividend rate is expected to become an important support for the stock price in the turbulent market. At the same time, with the slowdown of Speed-up and fee reduction, the large-scale exploration of 5g applications and the construction of digital economy, The fundamentals of operators’ bottom recovery are also expected to open long-term space for valuation repair. Investors are advised to pay active attention to the investment opportunities of cable Shuangxiong Jiangsu Zhongtian Technology Co.Ltd(600522) , Hengtong Optic-Electric Co.Ltd(600487) and the three operators. Core recommendation: 1 Submarine cable Duo: Jiangsu Zhongtian Technology Co.Ltd(600522) Eoptolink Technology Inc.Ltd(300502) , Hengtong Optic-Electric Co.Ltd(600487) Hengtong Optic-Electric Co.Ltd(600487) 2 High quality companies with steady growth performance: Meig Smart Technology Co.Ltd(002881) Meig Smart Technology Co.Ltd(002881) , Eoptolink Technology Inc.Ltd(300502) Eoptolink Technology Inc.Ltd(300502) , China Mobile 600941, Yealink Network Technology Co.Ltd(300628) Yealink Network Technology Co.Ltd(300628) pay attention to the investment opportunities of submarine cable and operators. In the turbulent market environment, we should pay attention to two main lines: the first is stocks with strong performance support and good industry prospects and competition pattern; the second is defensive stocks with high stability and stable dividends. Corresponding to the communication industry, it is the submarine cable industry and operators. This week, industry leaders Jiangsu Zhongtian Technology Co.Ltd(600522) and Hengtong Optic-Electric Co.Ltd(600487) both issued important announcements. Among them, the revenue of Jiangsu Zhongtian Technology Co.Ltd(600522) from January to February was 6 billion yuan, a year-on-year increase of 17%, mainly benefiting from the high growth of sea breeze and new energy. The net profit attributable to the parent company from January to February was 800 million yuan, a year-on-year increase of 300% and the net interest rate reached 13.3% Hengtong Optic-Electric Co.Ltd(600487) announced orders, sea breeze and supporting facilities totaled 1.443 billion yuan. In terms of operators, although it has been adjusted with the market recently, in the current position, with the subsequent annual reports of operators and the announcement of dividends this year, the high dividend rate is expected to become an important support for the stock price in the volatile market. At the same time, with the slowdown of speed-up and fee reduction and the construction of digital economy, operators are expected to open the space for valuation repair. Global data center switch revenue hit a record in 2021. According to Dell’Oro, the global data center switch revenue achieved double-digit growth for the second consecutive quarter, driving the annual sales revenue of the market to a record level. 400gbps port shipments more than doubled in 2021, and sales revenue accounted for 10% of the overall market. IDC: the global enterprise WLAN market grew by 20.4% in 2021. According to the latest report of IDC, in the fourth quarter of 2021, the global enterprise wireless local area network (WLAN) market continued to grow strongly, with revenue increasing by 21.8% year-on-year to US $2.3 billion. For the whole year of 2021, the revenue of enterprise WLAN market increased by 20.4% over 2020, reaching US $7.6 billion. Risk tip: trade friction intensifies and 5g progress does not meet expectations