Key investment points
Industry review: the overall growth of the sector ranks first, leaping from valuation driven to performance driven
As of December 31, 2021, the cumulative increase of the electronics industry index (Shenwan) was 16.04%, which was much stronger than the annual increase of – 5.20% of the CSI 300 index. According to the horizontal comparison of the whole industry (Shenwan), the rise and fall of the electronics sector ranked 11th in 2021, which is above the median level. The top industries are power equipment, coal, non-ferrous metals, basic chemical industry and iron and steel. At present, the P / E ratio of the electronic sector is 38 times, which is 43 times lower than the average p / E ratio in the past decade. At the same time, the overall operating revenue and parent net profit of the industry have reached a record high. We believe that with the continuous high growth of the performance of Companies in the electronics industry, the current growth logic of the sector has shifted from relying on Valuation in the past to the resonance leap of performance + valuation.
Semiconductor: the lack of “core” superimposes the wave of domestic substitution, and the high outlook of the industry continues
According to WSTS data, it is estimated that the annual growth rate of the global semiconductor market will reach 25.6% in 2021, and the market scale will reach US $552.9 billion, a record high. At the same time, it is estimated that the market scale will reach US $601.5 billion in 2022. In terms of segmentation, the IC design field has benefited from the development wave of three modernizations of automobile, and the industry has ushered in a broad incremental market. At present, electrification has entered the rapid development from 0-1 to 1-10, and intelligence is also in the stage of gradual penetration from 0-1. In the future, the application of superimposed automatic driving networking will open a wide market space for power semiconductors, digital chips and sensors, RF chips, analog chips and storage chips. At the same time, the layout of photovoltaic industry will be accelerated The gradual advent of new wearable consumption such as VR / AR and the gradual recovery of 5g replacement demand have played a positive role in promoting the whole industry. In the field of IC manufacturing and packaging testing, under the condition that the capacity is in short supply, the price rise effect is superimposed, and the expansion of foundry is in full swing, which is expected to promote the prosperity and development of wafer foundry. At the same time, with the rapid growth of demand in new energy vehicles, automatic driving, household appliances and other fields, the most scarce supply of mature process chips of 28nm and above has become the focus of attention. In this wave of production expansion, adding 28nm mature process has become the main theme. In the field of equipment and materials, as the cornerstone of the semiconductor industry, the market scale of equipment and materials is expected to continue to increase under the background of high capital expenditure under the tide of advanced process iteration and OEM expansion. We believe that at present, China has the largest semiconductor market in the world, but the industrial trade deficit is still large and the self-sufficiency rate is low. In the future, with the continuous technological breakthrough of Chinese high-quality enterprises and the gradual increase of market share, domestic substitution will be the general trend.
Consumer electronics: folding screen mobile phones and VraR products have attracted great attention, and application innovations emerge one after another
In 2021, due to the shortage of 4G chips and other parts and the logistics difficulties caused by the epidemic, the growth rate of global smartphone shipments was lower than expected. IDC expects the global smartphone shipments to be 1.35 billion in 2021. With the continuous implementation of 5g network commerce, 5g mobile phone shipments will account for 60%. Terminal manufacturers push through the old and bring forth the new, and successively cut into the field of folding screen mobile phones. The era of folding screen will open, which will increase the demand of UTG, hinges and other industrial chains. In terms of wearable devices, the concept of meta universe broke out in 2021, and the shipment scale of VR devices increased. It is expected that the consumer end ar explosion will be born in 2022. In addition, the improvement of automobile electronization rate promotes the automobile to enter the era of change again. The great change of automobile will bring the revolution of supply chain. A large number of consumer electronics companies have entered the field of automobile electronics and bloomed in the fields of vehicle optics, vehicle components, intelligent cockpit, structural parts and so on. We believe that the volume of folding screen mobile phones is imminent. We will pay long-term attention to XR products to lead a new round of growth in the consumer electronics industry. At the same time, we are optimistic about the suppliers who take the lead in the automotive electronics field.
Industry rating and investment strategy
Looking back on 2021, the lack of core in the industry has brought great challenges to the semiconductor industry, but also created good opportunities for excellent local companies. On the one hand, the rise in prices after tight supply has significantly improved the gross profit margin, on the other hand, the shortage of goods has brought opportunities for local enterprises to enter major customers in the industry. Looking forward to 2022, we believe that the semiconductor supply is still tight, mainly due to the limited capacity expansion of wafer factories. The demand side carbon neutralization strategy brings about the energy revolution, and new energy brings a large number of demand for power electronic chips. In the future, it will last for a long time, and will run through the whole carbon neutralization cycle. The demand for power semiconductors will maintain a steady growth for a long time. Power semiconductors are the “water sellers” of carbon neutralization era, which we continue to value and recommend. The demand for automotive semiconductors will explode due to the intellectualization of vehicles. The value of semiconductor single vehicle of new energy vehicles is several times that of traditional fuel vehicles. With the continuous improvement of the penetration rate of new energy vehicles, the demand for automotive semiconductors will also maintain rapid growth. We suggest paying attention to the development and mass production of vehicle specification products such as power, storage, RF and MCU.
In the field of consumer electronics, folding screen mobile phones have solved a large number of industry pain points and officially entered the era of mass production. With the appearance of scale effect, ASP of folding screen mobile phones will gradually decline in 2022, consumption of folding screen mobile phones will gradually become civilian, and shipment is expected to rise rapidly. It is suggested to pay attention to relevant industrial chain companies. In the long run, the ecology of AR / VR is being gradually established. Metauniverse will drive AR / VR to become the mainstream track of consumer electronics in the future. The shipment of VR equipment is expected to rise further in 2022. We suggest paying attention to the whole machine manufacturing, parts and chip companies in the industry.
In addition to a large increase in the demand for automotive semiconductors, automotive intelligence will also increase the demand for intelligent cockpit and on-board entertainment system. Large screen, multi screen and interaction have become the mainstream trend. It is expected that consumer electronics companies will gradually cut into automotive related tracks. We suggest paying attention to manufacturers of Automotive electronic parts, passive components and corresponding structural parts in 2022. Give the electronics industry an “overweight” rating.
Risk statement
The economic boom is declining, the foundry capacity of wafers is insufficient, the progress of raised investment projects is not up to expectations, overseas policy risks, sharp fluctuations in raw material prices, focusing on the risk that the company’s performance is not up to expectations, etc.
