Industry core view:
Last week, the electronic index (Shenwan level) fell as a whole, down 3.10%, 5.53 percentage points lower than the Shanghai and Shenzhen 300 index. By sub industry, the second level industry Costar Group Co.Ltd(002189) optoelectronic sector had the smallest decline of – 1.27%; The consumer electronics sector had the largest decline, at – 5.16%. Since July 2021, the electronics sector has experienced a significant adjustment of up to 26%. The overall sector is undervalued and the investment value is significant. In terms of the dynamics of the electronics industry, important progress has been made in the negotiations between Russia and Ukraine. The two sides have reached an agreement on the eastward expansion of NATO and Ukraine’s accession to the EU. The semiconductor industry chain is expected to restore stability. In the integrated circuit sector, China’s leading foundry Semiconductor Manufacturing International Corporation(688981) released the annual report for 2021, and the company’s operating revenue increased by 29.7% to 35.631 billion yuan; The net profit attributable to the parent company increased by 147.7% to 10.733 billion yuan, and the annual revenue and net profit achieved double growth. Investors are advised to pay attention to the important boom tracks in the electronics industry and recommend landscape segmentation fields such as intelligence and power semiconductors.
Key investment points:
Major breakthroughs have been made in the negotiations between Russia and Ukraine, and the semiconductor industry chain is expected to restore stability: on March 29 local time, the delegations of Russia and Ukraine held a new round of negotiations, and Ukraine put forward a written proposal, hoping to declare itself a permanently neutral, non aligned and non nuclear weapon state under the guarantee of international law; Russia cannot oppose Ukraine’s accession to the EU. According to techcet data, the global supply share of neon in Ukraine reached 70%, while the global supply share of krypton and xenon reached 40% and 30% respectively; Russia is one of the major exporters of palladium and an indispensable material for packaging. This breakthrough in Russia Ukraine relations is conducive to the restoration of stability in the global semiconductor industry chain, but in the short term, the uncertainty of the situation between Russia and Ukraine still exists.
Semiconductor Manufacturing International Corporation(688981) released the annual report for 2021, with double growth in revenue and net profit: on March 30, China’s leading foundry Semiconductor Manufacturing International Corporation(688981) released the annual report for 2021, in which the operating revenue increased by 29.7% to 35.631 billion yuan; The net profit attributable to the parent company increased by 147.7% to 10.733 billion yuan, and the annual revenue and net profit achieved double growth. In recent years, due to the epidemic situation, geopolitics and other reasons, the overall supply and demand of the integrated circuit industry is mismatched, and it is now in a business cycle Semiconductor Manufacturing International Corporation(688981) annual report shows that in 2021, thanks to the increased demand for computing terminals and the stable shipment of smart phones and other applications, the overall demand of the industry is stable. At the same time, the penetration rate of emerging Internet of things products, smart home and other applications has increased significantly, becoming a new increment on the demand side of integrated circuits. We believe that at this stage, China’s integrated circuit products and technologies still rely heavily on imports, the scale of the integrated circuit industry does not match the actual integrated circuit demand, and the growth space of relevant Chinese enterprises is still very huge.
The industry valuation level gradually entered a lower range: the PE (TTM) of SW electronics sector was 24.36 times, significantly lower than the peak level of 88.11 times in the 4G construction cycle.
The performance of the electronics sector rebounded last week: among the 368 stocks in Shenwan electronics industry last week, 100 rose, 264 fell and 4 remained flat, with an increase ratio of%. twenty-seven point one seven
Risk factors: the risk of continued conflict between Russia and Ukraine; Trade friction risk; The risk of technology R & D not keeping up with expectations; The risk of intensified competition in the same industry.
