Today (March 14), the Shanghai and Shenzhen stock markets opened low across the board, once pulled up in the session, and then weakened rapidly to maintain the low-level shock pattern, especially the decline of the gem index.
From the disk point of view, the “taking medicine” market of A-Shares is staged, while the rest of the industries and concept sectors are more or less down, and the local profit-making effect is poor. It is noteworthy that the concept of electronic ID card has sprung up with a sudden rise, Hangzhou Everfine Photo-E-Info Co.Ltd(300306) “20cm” limit, Tungkong Inc(002117) , Linewell Software Co.Ltd(603636) “10cm” limit, Shenzhen Emperor Technology Company Limited(300546) , Hengbao Co.Ltd(002104) , Beijing Certificate Authority Co.Ltd(300579) , Xiamen Meiya Pico Information Co.Ltd(300188) , etc. In addition, there are frequent changes in military industry, securities companies, assisted reproduction and other sectors.
China International Capital Corporation Limited(601995) believes that the supply risk caused by short-term geopolitical events and other factors may continue to ferment, and the probability of overseas “stagflation” increases. It is still necessary to closely track the progress of geopolitical situation and the risks of supply shortage and liquidity. The impact of these factors on market sentiment may still need to be further digested, The market turnaround may occur after the marginal easing of macro risks such as inflation and geopolitics.
At present, under the background of scattered A-share hotspots and intensified sector rotation, possible investment opportunities are hidden. Select some institutional research reports. Let’s see what themes are available for reference.
[subject 1] electronic ID card
China International Capital Corporation Limited(601995) mentioned that the electronization of ID card does not simply convert the physical ID card into digital form, but needs to ensure that the electronic identity information can be marked with the corresponding subject and distinguished from other subjects without being intercepted, tampered with and forged with the support of cryptography, identity authentication and other technologies. According to the white paper on Eid digital identity system issued by the Third Research Institute of the Ministry of public security, digital identity is a mark representing the set of identity attributes of the subject. Considering the similar functional attributes of digital ID and electronic ID card, we believe that electronic ID card is expected to continue the PKI technology context of Eid.
The agency further analyzed that there are many relevant sectors of the digital ID card industry chain, and the core track manufacturers are expected to benefit from resonance. (1) Manufacturers of core technologies of identity authentication and recognition, including intelligent information collection and identity recognition manufacturers such as face recognition and fingerprint recognition, password solution manufacturers such as PKI, CA certification manufacturers, electronic signature manufacturers, etc; (2) construction of digital management platform for identity cards in public security departments, such as the Ministry of public security’s citizen network identity recognition system, the Internet plus trusted identity authentication platform (CTID platform), etc. (3) Other auxiliary technology manufacturers, including smart chip hardware manufacturers, QR code recognition module manufacturers, and data security solution suppliers.
Everbright Securities Company Limited(601788) pointed out that in the early stage of the construction of digital identity infrastructure, there were scenes of tens of millions of terminals. The offline application of digital identity can be divided into three levels: the first level is the function of ID card, which is used to replace ID card, passport and residence permit in government affairs, hotels, airports and other places; The second level is the comprehensive replacement of various legal documents based on ID cards, including student cards, old-age cards, social security cards, etc; The third level, broad identity authentication and record, involves all access and authority related occasions, such as exhibition, home stay, public rental, etc.
It is conservatively estimated that only in the fields of medical treatment, finance, hotel and home stay, the realization of the first level application can bring the magnitude space of more than 13 million devices: 1) at the end of medical institutions, there are 1.02 million medical and health institutions in China, including 35000 hospitals. Assuming an average of 3 devices per medical institution (in fact, the magnitude of hospital demand is larger), the total demand is more than 3 million; 2) On the financial institution side, there are 220000 bank outlets, 10000 securities business departments and 6.4 million insurance salespeople across the country. Assuming that the average number of equipment for each bank outlet / securities business department / insurance salesperson is 10 / 5 / 1 respectively, the total demand is more than 8.5 million units; 3) There are 280000 hotels and 500000 home stay hotels in China. Assuming that each hotel has 2 home stay equipment, the total demand exceeds 1.5 million. The above is only the first stage of ID card level calculation. The space of level II and level III generalized authentication applications is at least one order of magnitude larger than that of level I applications.
[Topic 2] covid-19 test
Everbright Securities Company Limited(601788) said that the normalization of epidemic prevention should grasp the investment opportunities of antigen self-test and covid-19 oral drug industry chain. On March 11, the covid-19 epidemic prevention and control group of the State Council issued the notice on printing and distributing the application scheme for covid-19 virus antigen detection (Trial), adding antigen detection as a supplement to covid-19 detection. On March 12, the State Food and Drug Administration approved the application for self-test application of five covid-19 antigen products for listing. We believe that we should pay attention to China’s antigen self-test market after the implementation of the policy. Antigen detection has the advantages of high efficiency, quickness and low cost. China’s ten billion level antigen detection market is about to be opened.
Huaan Securities Co.Ltd(600909) mentioned that in the long-term perspective, assuming that the society under the normalization of covid-19 is open, it can be divided into static self-test and dynamic large-scale test according to the application scenarios of covid-19 antigen detection. In a comprehensive view, the market scale of antigen detection in the long-term perspective is 270 billion yuan.
The agency further pointed out that the upstream, middle and downstream industrial chain has great potential. The industrial chain can be divided into upstream raw materials, midstream product manufacturing and production and downstream terminal sales. The gross profit distribution of the industry is calculated according to the relevant gross profit margin level of the industry. After the calculation, the gross profit of the upstream, middle and downstream accounts for 14%, 24% and 60% respectively based on the terminal sales price.
Main raw materials and auxiliary materials for upstream production: main raw materials and auxiliary materials. Referring to the cost splitting of representative antigen listed companies, the sales cost rate of antigen detection is about 40%. In terms of specific splitting, antigen antibody accounts for 27%, NC film and PVC rubber sector account for 5%, auxiliary materials account for 34% and packaging materials account for 12%.
Manufacturing of midstream products: China’s covid-19 antigen detection and self inspection products are ready to be issued. As of March 12, 2022, five covid-19 antigen detection products have been approved in China. It is expected that more manufacturers will get product registration certificates in the future. Considering the potential demand for antigen detection in China, it is expected that companies that have obtained CE certification and US EUA certification in China will also accelerate their registration applications in China.
Downstream terminal sales: the downstream terminals represented by different scenarios and different groups of people in antigen detection are different. According to the current situation of nucleic acid detection, it is inferred that the detection purchaser of grass-roots medical institutions and self-test isolation observers should be government medical insurance through bidding, while it is clear that self-test of community residents at their own expense is personal consumption.
In terms of retail, it is stipulated that it can be purchased through retail pharmacies, online sales platforms and other channels.
[Topic 3] military industry
Dongguan securities mentioned that the valuation of the military industry and aviation sector has fallen below the average value of nearly a year, so it can be arranged at an appropriate time. In the short term, the global interest rate increase cycle may have an impact on companies with high valuation. Superimposed on the fact that the performance growth rate of some military industrial groups is lower than expected, the industry may have great volatility in the short term, but the short-term volatility will not affect the high prosperity of the industry during the whole “14th five year plan” period. In the long run, geopolitical events are becoming more and more complicated. The United States and its allies are showing signs of shifting their strategic focus to the Asia Pacific region. The emergence of the US Navy in the South China Sea has become a norm. The number of global military exercises is becoming more and more frequent. Only by improving their military strength can they better cope with the increasingly complex world situation.
Capital Securities pointed out that by grasping the main line of aviation equipment investment, military electronics has high independent and controllable growth: 1) contract liabilities of main engine manufacturers + verification of advance receipts, and the growth of aviation industry chain will continue to be realized. The performance transmission is effective. From the main engine plant and engine system, to the body system and parts, and then to the upstream raw material sector, the whole industry chain has strong momentum and certainty. The main engine manufacturer pays attention to Avic Shenyang Aircraft Company Limited(600760) , Avic Xi’An Aircraft Industry Group Company Ltd(000768) , Jiangxi Hongdu Aviation Industry Co.Ltd(600316) , Avicopter Plc(600038) , Aecc Aviation Power Co Ltd(600893) ; The body system pays attention to Avic Electromechanical Systems Co.Ltd(002013) , China Avionics Systems Co.Ltd(600372) , Aecc Aero-Engine Control Co.Ltd(000738) , Beijing Beimo High-Tech Frictional Material Co.Ltd(002985) ; Aviation parts focus on Avic Heavy Machinery Co.Ltd(600765) , Wuxi Paike New Materials Technology Co.Ltd(605123) , Guizhou Aviation Technical Development Co.Ltd(688239) , Chengdu Ald Aviation Manufacturing Corporation(300696) ; Metal materials focus on Western Superconducting Technologies Co.Ltd(688122) , Baoji Titanium Industry Co.Ltd(600456) , Gaona Aero Material Co.Ltd(300034) , Jiangsu Toland Alloy Co.Ltd(300855) , etc. 2) The certainty of missile weapons and equipment benefits from actual combat military training. The independent control of military electronics in the field of high-end equipment brings high growth. We pay attention to Chengdu Tianjian Technology Co.Ltd(002977) , Chengdu Rml Technology Co.Ltd(301050) , Avic Jonhon Optronic Technology Co.Ltd(002179) , Guizhou Space Appliance Co.Ltd(002025) , China Zhenhua (Group) Science & Technology Co.Ltd(000733) , Beijing Yuanliu Hongyuan Electronic Technology Co.Ltd(603267) , Beijing Fjr Optoelectronic Technology Co.Ltd(688272) , etc.
Minsheng Securities said that it is optimistic about the performance of the military industry in the aftermarket of 2022 based on the following points: 1) in the “three cycle superposition” proposed by our system, the industry gradually entered the “high growth” stage of supply-demand resonance during the 14th Five Year Plan period, and 2022, as the second year of the 14th five year plan, will still maintain high growth; 2) The company’s performance confirms the high prosperity of the industrial chain. The contract liabilities disclosed in the 2021 interim report once again verify the sustainability of the high prosperity of the industry; 3) Since 2022, the sector has experienced a correction due to the impact of the market and some events, but the current position is at the bottom of the historical valuation. We expect the net profit of the industry to increase by more than 35% in 2022, with higher growth in the middle and upper reaches and high cost performance of the current configuration.
[theme 4] securities companies
BOC International securities mentioned that the deepening reform of the capital market continued to advance, the undervalued value was more firm and bullish on securities companies. The recent decline of securities companies is mainly affected by overseas tightening expectations, the instability of the international situation, and the cooling of the A-share market and public fund market. Despite the emotional fluctuations caused by changes in the external environment, the continued deepening reform of the capital market is good for securities companies in the long run.
Recently, the measures for the implementation of listing and transfer of delisted companies in the delisting sector was publicly solicited for opinions, strengthened the cooperation mechanism of all institutions in the delisting process, and unblocked the delisting channel by simplifying the listing requirements of delisted companies and establishing the undertaking mechanism of host securities companies. The smooth delisting channel helps to optimize the capital market ecology of “in and out, survival of the fittest” and is the cornerstone of the full implementation of the registration system. With the continuous pace of favorable policies, securities companies still face broad development space. Under the undervalued value caused by changes in the external environment, they are more determined to look at the future trend of securities companies. If the overseas situation eases and the market valuation repair drives the trading activity again, it is expected to help the valuation repair of the sector.
The agency further analyzed and continued to recommend the trademarks of leading and financial management characteristic bonds in combination with favorable policies, performance differentiation and long-term growth drivers: 1) the reform of registration system is imminent, improve the marketization level of capital market, and bring more opportunities to head investment banks with strong comprehensive ability and their direct investment and follow-up business. Market fluctuations will lead to significant differentiation of investment business, and the trading mode of head securities companies is expected to bring more stable performance.
2) although market fluctuations may lead to a temporary decline in the scale of public fund management business and consignment business in the wealth management industry chain, residents’ wealth continues to accumulate, the policy of “housing without speculation” is unswerving, and the growth trend of wealth management demand for maintaining and increasing residents’ wealth remains unchanged, which can still bring long-term growth contributions to securities companies.
Northeast Securities Co.Ltd(000686) pointed out that the securities sector adheres to the valuation logic from cycle to growth. With the deepening reform of the capital market, the sector may welcome valuation repair. Recommend Citic Securities Company Limited(600030) , a leading securities firm that goes out of the bear market structure and continues to benefit from the improvement of the capital market environment; Recommend companies with flexible performance in asset management and wealth management, such as Orient Securities Company Limited(600958) , China Industrial Securities Co.Ltd(601377) ; It is suggested to pay attention to the progress of Beijing Compass Technology Development Co.Ltd(300803) becoming an investor in the bankruptcy reorganization of wechat securities; It is recommended to pay attention to China Securities Co.Ltd(601066) (H shares), and the insurance sector is recommended to pay attention to Ping An Insurance (Group) Company Of China Ltd(601318) .
