Investment summary:
The establishment of Huawei Corps reflects the determination of ICT giants to survive inward and their judgment on the direction of technological evolution. Since 2021, Huawei has successively established the 15th corps of coal, smart customs port and smart highway. We believe that the essence of the Corps business model is to break the boundary of the company’s previous BG (business group), gather scientists with corresponding capabilities and experts in technology, products, engineering and sales in one subdivision direction, better implement basic research results and shorten the product replacement cycle through flat collective operation. As an ICT (information and communication technology) giant with global influence, Huawei chose to work in the direction of segmentation, showing its firm determination to survive in the plight of lack of core and frustration of overseas business. It is precisely that there is no retreat that is the way to victory. We believe that Huawei has unparalleled technical reserves and all-round development strength for Chinese and even global enterprises. Its business field covers all aspects of society. Only with both depth and breadth can we better explore and look at industrial opportunities more dialectically. Huawei’s choice of track reflects the giant’s judgment on the direction of future social evolution, and can provide guidance for the development of Companies in relevant industries.
Resume Huawei: closely follow the digital transformation, provide an industrial base and enable all walks of life. Sort out the development history of Huawei, Key nodes can be divided into: before 2009 (rooted in the telecom market) – 2010 (invested in cloud computing and increased enterprise services) – 2012 (Consumer Electronics) – 2015 (new energy Electronics) – 2016 (multi service development and breakthrough) – 2018 (“1 + 8 + n” whole scene intelligent ecological strategy) – 2019 (AI + smart car) – 2020 (cloud computing strategy) – 2021 (breakthrough in underlying technologies such as operating system and chip). To sum up, the business core of Huawei’s major legions is to enable traditional industries to carry out digital transformation through their own information and communication technology capabilities. Nowadays, Huawei’s ICT infrastructure has become an indispensable digital base for all walks of life. Cooperative players build their own high-rise buildings on the foundation built by Huawei, and the goal of establishing Huawei’s industry Corps will be gradually achieved.
Giants enter the blue ocean market and compete with the original players, which may change the industry pattern. From the perspective of market competition theory and industrial economics, we believe that the current attack direction of Huawei Corps is supported by policies, and the development stage is based on the blue ocean market in the early and medium term. The competition pattern of the new track has not been finally formed, and the admission of giants will inevitably form competition and cooperation with the original players in the same industry. In the text, we elaborate on the competition and cooperation relationship between Huawei’s first five legions and relevant listed companies, which can be used as a reference for the evolution of the competition pattern of relevant industries in the future.
Investment strategy: Huawei Corps empowers traditional industries with its own accumulation, resulting in different competition and cooperation relations. We believe that this relationship can be viewed from two directions: first, Huawei’s track selection direction with a comprehensive and forward-looking vision can reflect the development potential of relevant industries from the side, and the entry of giants may further boost the prosperity of relevant industries; Second, Huawei’s entry may achieve business accumulation with its partners, or challenge the market position of traditional players in the industry through competition. It may change the industry pattern through different competition and cooperation. We have analyzed the future prosperity and potential changes in the competition pattern of relevant industries from top to bottom. We recommend Beijing E-Hualu Information Technology Co.Ltd(300212) , Dawning Information Industry Co.Ltd(603019) and Macmic Science & Technology Co.Ltd(688711) . At the same time, we believe that Beijing Longruan Technologies Inc(688078) , Maxvision Technology Corp(002990) , China Transinfo Technology Co.Ltd(002373) , Shenzhen Jieshun Science And Technology Industry Co.Ltd(002609) and other companies will also benefit from the development and transformation of the industry.
Risk warning: the promotion of industrial policies is not as expected; The promotion of the Legion’s organizational business was less than expected, resulting in a decline in the input-output ratio; The new entry of Huawei Corps leads to the deterioration of the competition pattern; Product technology research and development failed to meet the needs of the industry in time.
