Key investment points
This week, the CSI 300 fell 2.39%, and the gem fell 6.80%, of which the communication sector fell 2.27%, and the price performance of the sector was stronger than the market; The turnover rate of 126 constituent stocks of China Communications (CITIC) index this week was 1.80%; In the same period, the turnover rate of 300 constituent stocks in Shanghai and Shenzhen was 0.67%, and the overall activity of the sector was stronger than that of the market. In terms of individual stocks in the communications sector, the top five companies that rose this week were: * ST bangxun (56.07%), Desheng Technology (19.87%), Suzhou Chunxing Precision Mechanical Co.Ltd(002547) (9.91%), SHENSANGDA a (9.16%) and Shenzhen Neoway Technology Co.Ltd(688159) (7.06%); The top five companies with declines are: Wenzhou Yihua Connector Co.Ltd(002897) (- 27.49%), Shanghai Huace Navigation Technology Ltd(300627) (- 12.85%), Hengxin Shambala Culture Co.Ltd(300081) (- 12.62%), Fibocom Wireless Inc(300638) (- 11.93%) and Quectel Wireless Solutions Co.Ltd(603236) (- 11.35%).
CES exhibition was opened and the technology of intelligent and electric vehicles was upgraded. The 2022 International Consumer Electronics Show (CES) was held in Las Vegas on January 5. The organizer said that more than 2300 global exhibitors participated, including more than 200 auto exhibitors, with a year-on-year increase of about 20%, a record high, and automatic driving has become a hot theme. From the chip side, according to the company’s official information, Mobileye has launched three chip products, including eyeq ○ R ultratm system integrated chip 176 tops, which can meet all the needs and application scenarios of L4 automatic driving. It is expected to be supplied by the end of 2023 and achieve vehicle specification level mass production in 2025. Eyeq ○ r 6L and eyeq ○ r 6h support L2 and L2 + ADAS functions respectively, It is expected that mass production will be completed in mid 2023 and late 2024, and Mobileye will establish deep cooperation with Volkswagen, Ford and krypton automobile. Among them, the L4 EyeQ with 5 automatic integrated EyeQ six system integrated chips developed by krypton and krypton CO is the first to start in China in 2024. NVIDIA display drive Hyperion platform adopts NVIDIA drive Orin system level chip of suanlida 254tops. The first mass production model of Jidu will be equipped with this chip, which has L4 level automatic driving capability and is expected to be launched in 2023. Qualcomm launched Xiaolong digital chassis, which is composed of a complete set of open and scalable cloud connection platforms, including snapdragon ride platform, Xiaolong cockpit platform, Xiaolong automobile Zhilian platform and Xiaolong automobile cloud service. It adopts the same architecture to improve safety performance and support function upgrading in the whole life cycle of the next generation of vehicles. Qualcomm also announced that it includes BMW, GM Honda, Volvo, Jidu, Weilai, Xiaopeng, SAIC and other 37 Chinese and foreign cooperative car enterprises. Lidar is the core accessory for the transformation from automatic driving to L3 and above. Valeo and Hesai technology released a new generation of lidar products at the exhibition. Under the trend of integrated evolution of Automotive E / E architecture, the domain controller is entering the mass production stage. ZF launched the vehicle motion domain (VMD) controller, and amborf showed the latest R & D achievements of regional controllers such as power data center (PDC) and vehicle central controller (CVC) around its intelligent vehicle architecture SVA. In addition, Volvo launched the automatic driving function ride pilot, Sony established a mobile travel company to enter the automotive industry, and parts suppliers such as Bosch, Magna and Mainland China also showed the latest achievements on automatic driving and three electricity solutions. With the integration of automobile and technology and the transformation from travel tools to mobile intelligent space, the value of automobile electronics will continue to grow.
The bidding for centralized purchase of switches in China Mobile Data Center was completed, and Huawei, ZTE, Xinhua III and Ruijie won the bid. China Mobile recently announced the results of centralized purchase of new data center switches from 2022 to 2023. Huawei, ZTE, Xinhua and Ruijie won the bid. According to the previous procurement announcement issued by China Mobile, the procurement of data center switches is divided into four bid packages, with a total budget of more than 3 billion yuan (including tax). The total number of bidding units is 16420, and the bidding scale is the largest for such products of China Mobile over the years. In terms of the final bid winning results, Huawei won the first place in the bid winning share of three packages, with a total comprehensive share of about 40%. Xinhua III won the first place in the bid winning share of package 3, with a comprehensive share of nearly 30%. The comprehensive bid winning shares of Ruijie and ZTE were about 22% and 8%. From the bid winning results of data center switching machine procurement of operators since 2020, the industry pattern tends to be stable. With the promotion of 5g and cloud computing infrastructure, the data center switch market has a large space. The purchase amount of new + capacity expansion of the three operators in the past two years is nearly 10 billion. According to the data of Dell’Oro group, the global data center switch market revenue in 2021q3 has increased by 11% year-on-year, a record high. Both Huawei and Ruijie have achieved double-digit revenue growth. It is expected that by 2024, Ethernet switch port shipments in the data center will exceed 60 million, of which more than 50% will be 100gbps, 400gbps and 800gbps ports. According to IDC data, China’s data center switch market increased by 6.4% year-on-year in the first half of the year, the increase of Beijing Vastdata Technology Co.Ltd(603138) switching and transmission rate driven the iterative demand of switches, and the proportion of 25g / 100g rate products further increased, 400g products have been deployed on a large scale since 2021q2. It is estimated that the switch market will reach US $4.86 billion in 2024, including US $2.513 billion for 25g / 100g data center switches, and 56.9% for CAGR in 2017-2024.
Aojie technology starts subscription and pays attention to domestic Internet of things baseband chip manufacturers. Aojie technology is about to land on the science and innovation board. The company is a platform chip enterprise providing wireless communication and super large-scale chips. It has the R & D and design strength of full-standard cellular baseband chips and multi protocol non cellular Internet of things chips, and has the ability to provide super large-scale high-speed SOC chip customization and semiconductor IP authorization services, It is one of the few fabless chip design manufacturers with 5g cellular communication chip R & D capability in China. At present, 5g chip products are in the back chip debugging stage. The company’s fund-raising projects are mainly used for 5g and WiFi 6 chip design projects. The company’s customers cover Quectel Wireless Solutions Co.Ltd(603236) , Sunsea Aiot Technology Co.Ltd(002313) , Shenzhen Neoway Technology Co.Ltd(688159) , Gosuncn Technology Group Co.Ltd(300098) , Meig Smart Technology Co.Ltd(002881) , u-blox Ag and other mainstream module manufacturers at home and abroad, and enter the supply chain system of Zte Corporation(000063) , Hitachi, 360, tp link and other well-known enterprises at home and abroad. In recent years, the company’s revenue has maintained a high growth rate, with a revenue of 1.081 billion in 2020 and a CAGR of 206.67% in 2018-2020. It is expected that the revenue in 2021 will be 2.002-2.213 billion yuan, with a year-on-year increase of 85.22% – 104.72%. The new revenue mainly comes from the increase in procurement of domestic module manufacturers and the delivery of chip customization business of domestic enterprises.
The company’s profitability continued to improve, and the gross profit margin increased to 40.7% in the first three quarters of 2021. It is expected that the net loss not attributable to the parent company will be deducted by 510-570 million yuan in 2021, a year-on-year decrease of 2.46-60.25 million yuan. The competition pattern of baseband chips is concentrated. According to counterpoint data, in 2021q3, Qualcomm ranks first in the market share of cellular Internet of things chips, with its share falling from 40% in 2020 to 37.2%, and Ziguang zhanrui’s share rising to 26.8%. Benefiting from the growth of Chinese market demand, it has become a leading supplier of 4G CAT1, Nb IOT and 2G technologies, and Hisilicon ranks third with 13.7%, The market pattern dominated by overseas chip manufacturers is gradually broken, and the rise of domestic chips is conducive to the development of local module industry chain.
Investment suggestions: focus on the Internet of things and the Internet of vehicles: Quectel Wireless Solutions Co.Ltd(603236) , Fibocom Wireless Inc(300638) , Meig Smart Technology Co.Ltd(002881) , Wingtech Technology Co.Ltd(600745) , Wenzhou Yihua Connector Co.Ltd(002897) , Foryou Corporation(002906) , Queclink Wireless Solutions Co.Ltd(300590) , Hangzhou Hopechart Iot Technology Co.Ltd(688288) , Streamax Technology Co.Ltd(002970) ; On board connector: Suzhou Recodeal Interconnect System Co.Ltd(688800) , Wenzhou Yihua Connector Co.Ltd(002897) ; Intelligent controller: Shenzhen Topband Co.Ltd(002139) , Shenzhen H&T Intelligent Control Co.Ltd(002402) , Shenzhen Longood Intelligent Electric Co.Ltd(300543) , Shenzhen Bestek Technology Co.Ltd(300822) ; Equipment manufacturer: Unisplendour Corporation Limited(000938) (Xinhua III), Zte Corporation(000063) , Fujian Star-Net Communication Co.Ltd(002396) ; Data center: Shanghai Baosight Software Co.Ltd(600845) , Kehua Hengsheng, Beijing Sinnet Technology Co.Ltd(300383) etc; Telecom operators: China Mobile, China Telecom Corporation Limited(601728) , China United Network Communications Limited(600050) ; Optical devices and optical modules: Eoptolink Technology Inc.Ltd(300502) , Suzhou Tfc Optical Communication Co.Ltd(300394) , Accelink Technologies Co.Ltd(002281) ; Military communications and satellite applications: Jushri Technologies Inc(300762) , Tianjin 712 Communication & Broadcasting Co.Ltd(603712) , Shanghai Huace Navigation Technology Ltd(300627) , Chengdu Corpro Technology Co.Ltd(300101) , Guangzhou Haige Communications Group Incorporated Company(002465) , China Satellite Communications Co.Ltd(601698) etc; IDC HVAC equipment: Shenzhen Envicool Technology Co.Ltd(002837) , Nanjing Canatal Data-Centre Environmental Tech Co.Ltd(603912) , Yimikang Tech.Group.Co.Ltd(300249) etc.
Risk warning events: technology upgrading is less than expected, 5g investment is less than expected, market competition intensifies, market systemic risk, etc
