In March, the communication sector index callback, and the operator sub sector performed well
Monthly market: the Shanghai stock index fell by 6.78%; The Shenzhen composite index fell by 10.16%; The gem index fell by 7.84%; In the primary industry index, the communication sector decreased by 9.57%. Among the individual stocks in the communication sector, the proportion of rising, maintaining and falling stocks was 16.15%, 1.54% and 82.31% respectively. Among them, in terms of the increase of individual stocks, Hengxin Shambala Culture Co.Ltd(300081) (+ 35.26%), Wuhan Fingu Electronic Technology Co.Ltd(002194) (+ 22.72%) and Routon Electronic Co.Ltd(600355) (+ 12.54%) were the top three respectively.
In terms of sub sectors: according to our data on the division of sub sectors by companies in the communication industry, the relevant targets of the operator sector performed well this month, and the sub sectors increased by 0.11%.
We believe that with the continuous promotion of the construction of 5g base stations by China’s three major operators, the continuous accumulation and innovation of 5g applications, the rapid growth of 5g traffic is expected to accelerate, and the economic development of digital traffic is expected to exceed expectations, maintaining the “recommended” rating of the communication industry.
The overall economic operation of the communication industry is good, and the performance growth rate is higher than expected
According to the latest data of the Ministry of industry and information technology, by the end of February 2022, the total amount of China Telecom Corporation Limited(601728) business had reached 262.5 billion yuan, an increase of 23.4% over the previous year, maintaining a rapid growth China Telecom Corporation Limited(601728) business revenue totaled 258.6 billion yuan, an increase of 9.0% over the previous year, and the growth rate of revenue increased.
From the perspective of communication infrastructure, the scale of 5g infrastructure continues to expand. China has built and opened 1.506 million 5g base stations. 5g construction and application in the eastern region are leading, and the proportion of 5g users of the three major operators continues to increase; The construction of gigabit optical network has been promoted in an orderly manner, the number of ports has continued to increase, the number of Gigabit users has expanded rapidly, and the penetration rate of high bandwidth users in the central region is slightly ahead. The promotion of communication infrastructure and the increase in the proportion of high bandwidth users have laid a good foundation for mobile Internet application innovation and promoted the digital transformation of the industry. From the perspective of mobile data traffic, the cumulative traffic of mobile Internet from January to February reached 37.3 billion GB, a year-on-year increase of 20.7%, and the traffic growth slowed down slightly; The growth rate of mobile phone calls slowed down, and the volume of mobile SMS business rebounded slightly. From the perspective of innovative applications, the growth of end users of cellular Internet of things and IPTV users is prominent, the growth rate of cloud computing and big data revenue is strong, and the three operators actively develop emerging communication services, bringing economic increment.
Investment suggestion: large space 5g application is the key direction of communication in the future
We believe that the investment focus of the communication industry is shifting from 5g equipment to application, and the valuation first and then the fundamentals are expected to rise. It’s suggested to focus on what’s proposed to focus on: light module: a 3 Zuming Bean Products Co.Ltd(003030) 3030303030 ( Yealink Network Technology Co.Ltd(300628) ), disaster monitoring faucet superimposed with automatic driving target Shanghai Huace Navigation Technology Ltd(300627) ( Shanghai Huace Navigation Technology Ltd(300627) ). At the same time, as a long-term configuration direction, the communication operator sector also needs to pay special attention, and China Mobile (600941) is recommended.
Risk warning: risk of rising raw material price; Global epidemic impact and uncertainty of foreign policy environment; 5g commercial promotion was less than expected.
