Macro economy: Geopolitics, the trend of China’s epidemic, the implementation of stable growth policy and the upward range of US debt all have certain variables. It is suggested to stay dormant. Before the epidemic situation in China has not fundamentally improved, the expectation of steady growth is still strong, and the underestimated value is still dominant.
Computer industry: for the computer sector at the current stage, we believe that Xinchuang sector is undoubtedly the best choice. The sector is attractive in terms of institutional position, location, valuation, change and other dimensions. On Friday, the first openharmony ecological enabling signing ceremony was held, and Huawei completed cooperation signing with six openharmony distribution manufacturers. Huawei, as the leader of the domestic computing industry, further develops the computing industry, and the industrial prospect continues to improve. It focuses on Kunpeng industrial chain Digital China Group Co.Ltd(000034) , Hongmeng industrial chain Talkweb Information System Co.Ltd(002261) , Thunder Software Technology Co.Ltd(300496) , Xinchuang leader Dawning Information Industry Co.Ltd(603019) , etc.
Electronics industry: in the fourth quarter of 2021, the total revenue of the world’s top ten wafer foundry reached US $29.55 billion, an increase of 8.3% month on month, a record high for ten consecutive quarters. Among them, the Chinese mainland’s acting factories are brilliant, occupying three in the top ten world 2021Q4 foundries, and Semiconductor Manufacturing International Corporation(688981) , Huahong semiconductor and crystalline integration occupy fifth, sixth and tenth respectively. With the advancement of the localization of semiconductor industry chain and the upgrading of market share of foundry plants in Chinese mainland, the market demand of upstream semiconductor materials will expand year by year. It is recommended to pay attention to the upstream semiconductor material sector, and recommend Hubei Dinglong Co.Ltd(300054) , Hangzhou Lion Electronics Co.Ltd(605358) , National Silicon Industry Group Co.Ltd(688126) , Konfoong Materials International Co.Ltd(300666) , etc.
Media industry: China’s mainstream game manufacturers have talent and system advantages. Through active R & D strategic resource investment and localized distribution layout, they will quickly make up for the shortcomings lacking 3A product R & D experience in the implementation of the sea strategy and become an international game company. It is recommended to pay attention to G-Bits Network Technology(Xiamen)Co.Ltd(603444) , Xinxin company, Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) , Perfect World Co.Ltd(002624) .
Household appliance industry: 1) domestic demand for household appliances was relatively weak in March, and 618 promotion is expected to bring marginal improvement. On the whole, the performance of China’s home appliance retail market in March was still relatively weak. In the main categories, except dishwashers and integrated stoves, they still maintained positive year-on-year growth, and the retail sales of other categories showed a decline in varying degrees. 2) Beijing issued green energy-saving consumption vouchers, which is conducive to the release of domestic demand for household appliances. The Beijing Municipal Bureau of Commerce issued a notice on April 12 that it will issue six green energy-saving consumption vouchers to encourage consumers in Beijing to buy and use green energy-saving appliances. The subsidy involves an increase in household appliances, an expansion in the range of beneficiaries and a more flexible way of subsidy, which is expected to stimulate the recovery of short-term consumer demand.
Light industry and textile clothing: the market pattern of medium and high-end down clothing is better, and the rise of national tide provides opportunities: (1) price drives the growth of the industry, and there is more room for penetration improvement. In 2020, China’s down jacket market will exceed 130 billion yuan. Influenced by the entry of international luxury brands and the upgrading of consumption, the acceptance of medium and high-end down clothes has increased, and fashion has become an important demand. Compared with developed countries, China’s down jacket penetration rate is low and there is more room for growth. (2) The market structure of medium and high-end down jacket is better, which provides opportunities for the rise of national tide. The high-end down jacket Market is occupied by international brands; Fierce competition in the low-end market and industry clearing; The medium and high-end market pattern is better. In recent years, the rise of the national tide has provided an opportunity for the development of domestic brands, and the reform of industry leaders has improved efficiency. Remarkable results have been achieved in product strength, channel structure, supply chain quickness, etc. It is recommended to pay attention to Bosideng, Anta sports, Li Ning, etc.
Automobile industry: according to the news report of China Central Television, Saic Motor Corporation Limited(600104) plans to start the pressure test of resumption of work and production on April 18. The company said that in addition to the pressure test of vehicle factories, it will also drive some core parts factories to enter the pressure test. Shanghai and the Yangtze River Delta region (Jiangsu, Zhejiang, Shanghai and Anhui) are important bases of China’s automobile industry. In 2021, the automobile output of Shanghai / Yangtze River Delta accounted for about 11% / 23% of the country, and the number of parts and components enterprises above Designated Size in Shanghai / Yangtze River Delta accounted for about 4% / 37% of the country in 2020. The resumption of work and production practice of Saic Motor Corporation Limited(600104) is beneficial to the industrial chain to improve its response ability to the epidemic.
Pharmaceutical industry: the epidemic situation is repeated in many places, and the demand for covid-19 related industrial chains continues to grow. It is suggested to pay attention to: 1) small molecule specific drugs: upstream intermediates, APIs ( Aba Chemicals Corporation(300261) , Jinghua Pharmaceutical Group Co.Ltd(002349) (senxuan medicine) and Ningbo Menovo Pharmaceutical Co.Ltd(603538) ) and domestic drugs with rapid clinical progress and relatively mature technical routes in China ( Shanghai Junshi Biosciences Co.Ltd(688180) , developing the pharmaceutical industry). 2) Covid-19 vaccine: Chongqing Zhifei Biological Products Co.Ltd(300122) , Cansino Biologics Inc(688185) , Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) , Walvax Biotechnology Co.Ltd(300142) , Shijiazhuang Pharmaceutical Group; 3) Covid-19 detection: Guangzhou Wondfo Biotech Co.Ltd(300482) , Nanjing Vazyme Biotech Co.Ltd(688105) , etc; 4) Medical equipment: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Sonoscape Medical Corp(300633) , Qingdao Novelbeam Technology Co.Ltd(688677) , etc.
Real estate industry: the loose policy expectation brings about a comprehensive rebound in the sector. In addition to the game nature of crisis real estate enterprises, we are more optimistic about improving the elastic space of second-line leading real estate enterprises. Previously, the market gave the state-owned central enterprises a valuation premium. At present, the valuation has been generally repaired to more than 7 times, while the target of the second-line leader is only about 5 times, which still has more than 50% space compared with its own historical valuation center. At present, we prefer to recommend: Seazen Holdings Co.Ltd(601155) , Jinke Property Group Co.Ltd(000656) , Jiangsu Zhongnan Construction Group Co.Ltd(000961) , Xuhui holding group. Continuous recommendation: China Vanke Co.Ltd(000002) , Poly Developments And Holdings Group Co.Ltd(600048) , Gemdale Corporation(600383) , China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) , China overseas development. Property category: China Merchants Property Operation & Service Co.Ltd(001914) , country garden service, poly property, Xuhui Yongsheng service, xinchengyue service.
Building materials industry: on the evening of April 15, Xinjiang Tianshan Cement Co.Ltd(000877) announced that the company plans to acquire the holding rights and other assets of cement and other related business subsidiaries held by the related party Ningxia Building Materials Group Co.Ltd(600449) in cash Ningxia Building Materials Group Co.Ltd(600449) and Xinjiang Tianshan Cement Co.Ltd(000877) are both the controlling shareholders of China Building Materials Co., Ltd., and the actual controllers are China Building Materials Group Co., Ltd. If this transaction is successfully implemented, it will effectively solve the problem of horizontal competition between Xinjiang Tianshan Cement Co.Ltd(000877) and Ningxia Building Materials Group Co.Ltd(600449) in related businesses of cement sector. We are optimistic about the improvement opportunities brought by this integration to cement enterprises in northern China, and recommend Xinjiang Tianshan Cement Co.Ltd(000877) , Gansu Qilianshan Cement Group Co.Ltd(600720) , Ningxia Building Materials Group Co.Ltd(600449) , Tangshan Jidong Cement Co.Ltd(000401) , Xinjiang Qingsong Building Materials And Chemicals(Group)Co.Ltd(600425) , etc.
Machinery industry: thanks to the effective epidemic prevention and control and the recovery of downstream demand, China’s machine tool industry achieved rapid growth in 2021. The cumulative operating revenue of key associated enterprises in 2021 was + 26.2% year-on-year, an increase of 23.2pct over 2020. The downward trend of the machine tool industry in recent 10 years is expected to be reversed.
At the same time, in 2021, the performance of high-end CNC machine tool enterprises is bright, and the domestic substitution rate of high-end CNC machine tools is increasing. As the infrastructure of high-end manufacturing, high-end machine tools will emerge a number of leaders in subdivided fields in China’s machine tool enterprises in the future. It is recommended that Kede Numerical Control Co.Ltd(688305) , Zhejiang Rifa Precision Machinery Co.Ltd(002520) .
Military industry: 80 listed companies in Shenwan defense and military industry have published 2021 annual reports or performance letters, with an average revenue increase of 19.5% and an average net profit attributable to the parent company increase of 14.3%. In terms of major segments, the average revenue of 34 aviation equipment companies increased by 14.8%, and the average net profit attributable to the parent company increased by 12.7%; The average revenue of 32 military electronics companies increased by 26.2%, and the average net profit attributable to the parent company increased by 17%. The verification of advances received by downstream enterprises in the military industry sector and the landing of large orders will be conducted in an orderly manner to the upstream and midstream along the industrial chain. During the “14th five year plan” period, the demand of supporting enterprises is highly deterministic. The CSI military industry index is valued at 52 times, which is at the 7% quantile value of historical PE. It continues to be optimistic about the value of sector allocation under the current position.
Public utilities: the “14th five year plan” energy plans of major provinces have been released successively. Corresponding to the national plan, the construction and consumption of renewable energy and the transformation of power system will be the long-term main line. In the long run, renewable energy power is expected to usher in double growth in volume and price. We maintain the investment rating of “optimistic” in the industry, continue to be optimistic about the three main investment lines of large hydropower, scenery operators and clean energy transformation, and suggest paying attention to power operators with good cash flow. Recommend Huaneng Lancang River Hydropower Inc(600025) , Sichuan Chuantou Energy Co.Ltd(600674) , China Yangtze Power Co.Ltd(600900) , Huaneng Power International Inc(600011) electric power, Datang new energy and other companies.
Non ferrous industry: 1) industrial metals: for the external market, European energy supply concerns and high inflation expectations may support the continued high volatility of metal prices; At the same time, the continuous decline of some metal inventories deserves attention. For China, logistics transportation is the main factor affecting supply and demand, and downstream demand is expected to recover with the improvement of the epidemic and smooth transportation. 2) Energy metals: affected by the epidemic, the production of some vehicle factories and battery factories is limited, resulting in the cold market demand for lithium and cobalt. However, the new energy vehicle market has been improving for a long time. With the resumption of downstream enterprises, the demand for lithium and cobalt is expected to recover rapidly. 3) Precious metals: inflation data in Europe and the United States continued to rise. HICP in the euro zone was 7.5% year-on-year in March and CPI in the United States was 8.5% year-on-year in March. High inflation pushed gold prices upward. At present, inflation concerns and geopolitics are still the main factors affecting gold prices, and gold prices may continue to fluctuate upward in the near future.
Transportation industry: on April 11, Premier Li Keqiang presided over a symposium for the main principals of some local governments in Jiangxi, and proposed to attach great importance to the impact of the current poor logistics on the economic cycle, strengthen the connection between regions and departments, ensure the orderly operation of transportation backbone networks and ports, smooth the international logistics in China, and maintain the stability of the industrial chain and supply chain. At the study meeting of the Party group of the Ministry of transport, the Minister of transport proposed to make every effort to smooth the traffic and transportation channels, optimize the control measures for epidemic prevention passage, effectively organize the transfer of emergency materials, effectively ensure the passage of key materials and postal express, strengthen the service guarantee of employees, strive to alleviate difficulties and maintain the stability of the industry. We believe that with the implementation of the logistics guarantee, the logistics industry is expected to gradually recover before the development of the epidemic, the transportation services previously interrupted by express, express and other transportation enterprises are expected to restart quickly, the backlog of freight demand is expected to be gradually met, and the negative impact of the epidemic on the performance of industry enterprises will be alleviated. We believe that with the adjustment of Shanghai’s epidemic prevention and control policies, the epidemic situation is expected to be controlled at a faster speed, and there may be an inflection point within this month. In this case, we suggest paying attention to the targets with relatively stable performance and continuous improvement of profits, as well as the targets with bottom valuation and good safety margin. Aviation: it is suggested to focus on Air China Limited(601111) , China Southern Airlines Company Limited(600029) and Spring Airlines Co.Ltd(601021) , China’s leading low-cost airline, which is at the bottom of the valuation and benefits from the rebound in demand. Airport: it is suggested to pay attention to the Guangzhou Baiyun International Airport Company Limited(600004) , Shenzhen Airport Co.Ltd(000089) , which are expected to recover rapidly in China. Express delivery: the logistics industry is expected to repair quickly. It is suggested to pay attention to S.F.Holding Co.Ltd(002352) with obvious advantages in the field of aging parts and high brand reputation, as well as Yunda Holding Co.Ltd(002120) , which has a stable market share and benefits from the rise of unit price. Railway: it is suggested to pay attention to Beijing-Shanghai High Speed Railway Co.Ltd(601816) , with controllable cost and steady recovery of performance.
Chemical industry: under the background of national steady growth, with the deepening of policies of various industries in various regions, the marginal demand for chemicals related to the post cycle of infrastructure construction and real estate has improved. The main varieties include MDI (building insulation, refrigerator and freezer, etc.), titanium dioxide (coating, etc.), soda ash (glass, etc.), PVC (pipe, etc.), especially soda ash, which is booming due to the impact of supply and demand, inventory and so on, Key recommendation Inner Mongoliayuan Xing Energy Company Limited(000683) .
