In March, the PMI fell back to 49.5%, and the steady growth may exceed expectations
China’s PMI in March was 49.5%, down 0.7pct from the previous month, below the critical point. At present, the regional spread of the epidemic has impacted the economy, resulting in the decline of downstream demand. At the same time, the tense relations between Russia and Ukraine have led to the rise of upstream raw material prices, and the overall prosperity level of the manufacturing industry is facing significant downward pressure. Combined with the recent relaxation of real estate policies in many places, including the relaxation of purchase / sale restrictions, the reduction of down payment ratio, the increase of loan amount and the reduction of loan interest rate, we expect that the strength of steady growth policy may exceed expectations, some infrastructure investment will be carried out moderately in advance, and accelerate the improvement of general equipment and other industries.
The increase of capital expenditure is good for equipment enterprises, and domestic substitution is the general trend
According to the prediction of WSTS at the end of November 2021, the growth rate of the global semiconductor market has increased from 6.8% in 2020 to 25.6% in 2021, which is the largest growth since 2010 (a year-on-year increase of 31.8%). It is expected to continue to grow by 8.8% in 2022, and the demand boom of the semiconductor industry continues to rise. The continuous shortage of chip supply has driven wafer manufacturers to further increase capital expenditure and promote production expansion to meet production capacity. According to the latest report of semi3, it is expected that the equipment expenditure of global front-end wafer factories in 2022 is expected to reach US $107 billion, with a year-on-year increase of 18%, realizing three consecutive years of growth since 2020. In 2021, the Asia Pacific region has the strongest growth rate in the semiconductor market, and is expected to grow by 26.7%. According to SEMI statistics, from September 2021 to 2024, 25 8 inch wafer fabs will be put into use, 14 of them are located in mainland China, and the Chinese mainland semiconductor market is growing at a high speed. China’s IC self sufficiency rate is only about 15.9% in 2020. We believe that in addition to the impact of the overall business cycle of the global semiconductor industry, the semiconductor manufacturing transfer under the semiconductor industry transfer (the capital expenditure growth rate of Chinese IDM manufacturers and wafer foundry is higher than the international average), the necessity of self-control and the development dividend of domestic substitution under the shortage of equipment supply may accelerate the performance improvement of domestic equipment enterprises, With the diversification of the product layout of China’s leading semiconductor equipment enterprises, the performance has more flexibility to improve. It is suggested to focus on Advanced Micro-Fabrication Equipment Inc.China(688012) , Naura Technology Group Co.Ltd(002371) , shengmei Shanghai, etc.
Industry rating and opinion update this week
China’s manufacturing industry is in a period of continuous transformation and upgrading, which will bring broad market space to the high-end equipment industry and maintain the industry’s “overweight” rating. It is recommended to focus on industrial automation, self controlled semiconductor equipment, carbon neutralization, accelerating new energy industry and benefiting photovoltaic equipment and lithium battery equipment, urban rail equipment benefiting from new infrastructure, and oil service industry gradually recovering under the promotion of energy security.
This week’s core recommendations
Advanced Micro-Fabrication Equipment Inc.China(688012) : the leading position of the company in the etching field of semiconductor equipment and the gradual large-scale production of the company’s MOCVD equipment in the field of mini led. The company is committed to building a platform company and will gradually grow into an influential semiconductor equipment company in the world.
Eurocrane (China) Co.Ltd(603966) : the company’s core product, European crane, shows its advantages under the background of “carbon neutrality”. As the leader of high-end crane, it is expected to increase the high-end market share under the background of manufacturing industry upgrading and import substitution at the same time.
China Oilfield Services Limited(601808) : as the leader of offshore oil and gas exploitation services, the company occupies the advantages of technology and scale, and has strong profit elasticity in the recovery period of global oil service; China has benefited from the steady increase in the certainty of “three barrels of oil” capital expenditure under the national energy security strategy, and the company is expected to enter the release period of profit flexibility.
Risk tips
The macroeconomic boom is lower than expected; China’s fixed asset investment is less than expected; The implementation of policies in key industries is less than expected; There is uncertainty in the company’s promotion of relevant matters.
