Industry core view:
The last trading week was the tenth trading week of A-Shares in 2022. The CSI 300 index fell 0.94%, and 4 of the 31 industries in Shenwan class rose and 27 fell. The overall trend of the communication industry was weaker than the market last week, down 1.36%, ranking 12th and third in the TMT industry. With the withdrawal of 2G and 3G networks becoming inevitable, several core Internet of things technologies based on Nb IOT + 4G + 5gnr will play the role of opening the interconnection of all things. Module products are also arranged around the above three technologies, among which the most expected is the most popular 5g module at present. 5g has more extensive, advanced and complex application scenarios, and the needs from different industries are diversified and fragmented. Therefore, in addition to the most basic connection functions, 5g modules should also be combined with aiot, i.e. artificial intelligence internet of things and other technologies. Obviously, a single type of module can not meet the connection needs of thousands of industries, which requires more platforms and richer product portfolio of module manufacturers. It is suggested to continue to pay attention to the performance growth logic brought by the expansion of the product line of IOT module manufacturers.
One week industry news: (1) Ministry of industry and information technology: promote the construction of new infrastructure and accelerate the industrialization and large-scale application of digital technology; (2) This year, the electronic ID card will be implemented. The Ministry of industry and information technology: make every effort to promote it; (3) 6 Lvjing Holding Co.Ltd(000502) 021 revenue 327.9 billion, net profit 14.4 billion, an increase of 15%; (4) LV Tingjie: 5g messages cannot compete with wechat, so we need to explore differentiated applications; (5) China Telecom Corporation Limited(601728) 2022: 5g network capital expenditure was 34 billion yuan, a year-on-year decrease of 10.5%; (6) With a total scale of 500000, China Mobile started the centralized purchase of 444 antennas and single 4 antennas (including 700m); (7) China Telecom Corporation Limited(601728) Tiantong satellite service users exceeded 110000; (8) China Mobile opened the centralized procurement of g.654e optical fiber and cable for the first time: with a scale of 332400 core kilometers; (9) Cisco ranked first! The router and switch market of global service providers rebounded in 2021; (10) Dell’Oro report: in 2021, the global telecom equipment market revenue was US $100 billion, and Huawei remained in the lead; (11) Dell’Oro report: Global PON equipment expenditure hit a record high in 2021, with a year-on-year increase of 32%.
Investment suggestions:
With the gradual advancement of 5g construction and the continuous high growth of cloud computing construction scale, the fundamentals of the communication industry may continue to improve in 2022. In terms of 5g construction, with the implementation of the “14th five year plan” for the development of information and communication industry, the goal of 5g construction in the future is clear. In the next three to five years, 5g construction will also maintain a stable pace of construction investment. However, with the gradual progress of construction, the downstream supporting applications will gradually mature, thus driving the relevant construction of 5g again.
In the future when the structural market in the communication industry continues to evolve, we suggest paying attention to four investment tracks in the communication industry: (1) operators & equipment manufacturers: 5g construction continues to promote, and the prosperity of traditional communication services is rising. With the expansion of 5g construction, the performance of communication construction and operation and maintenance industrial chain has increased significantly, and the cloud network construction of data center and 5g2b business also opens new growth space for operators & communication equipment manufacturers. (2) Optical module: with a new round of demand growth and the promotion of optical module technology, the industry is expected to usher in a new round of double clicking in 2022. It is suggested to pay attention to the leading optical module enterprises on the digital communication side. (3) Internet of things module: in the next two years, the Internet of vehicles module will still be one of the main directions of the future market growth of the Internet of things module. It is suggested to pay attention to the leading enterprises with deep layout in the Internet of vehicles industrial chain. (4) Temperature control: it is suggested to pay attention to some leading temperature control enterprises that have the ability to transplant the original data center liquid cooling technology to the energy storage system.
Risk factors: increased trade friction, China’s 5g construction does not meet expectations, the slowdown of global cloud computing construction, and the price fluctuation of upstream raw materials.
