This week, there was a callback in the communication sector, of which the equipment integration sub sector performed better.
This week, the Shanghai Composite Index fell 1.29%, the Shenzhen Component Index fell 0.27%, the gem index rose 0.98%, and the communication sector in the Monday level industry index fell 1.10%. According to our data on the division of sub sectors of Companies in the communication industry, the targets related to equipment integration performed well in one week, with an increase of 0.97%. Among the individual stocks in the communication sector, the proportion of rising, maintaining and falling stocks was 15.50%, 1.55% and 85.95% respectively. In terms of the rise of individual stocks, Jiangsu Zhongtian Technology Co.Ltd(600522) (+ 11.15%), Shenzhen Roadrover Technology Co.Ltd(002813) (+ 9.41%) and Chengdu Rml Technology Co.Ltd(301050) (+ 8.75%) were among the top three. We believe that with the continuous progress of 5g base station construction of China’s three major operators, the continuous accumulation and innovation of Internet of things and 5g applications, the rapid growth trend of 5g traffic is expected to accelerate, the economic development of digital traffic is expected to exceed expectations, the communication valuation is expected to stabilize and recover, and maintain the “recommended” rating of the communication industry.
In 2021, the revenue and net profit of the communication industry increased year-on-year, and the performance margin improved in 2022q1. According to our analysis of the 2021 annual report and 2022q1 quarterly report of Listed Companies in the communication industry, the total revenue of the communication industry reached 2663084 billion yuan in 2021, a year-on-year increase of 9.87%; The total net profit deducted from non parent company was 163373 billion yuan, a year-on-year increase of 1.14%, and the overall performance maintained a good growth trend. Among the sub sectors, the Internet of things and 5g applications, cloud video, equipment integration and other sectors grew better year-on-year, with revenue increases of 48.46%, 16.44% and 16.23% respectively. In the whole year, 34 companies in the communication industry met the requirements of both revenue and deduction of non parent net profit, with a year-on-year growth rate of more than 20%. In 2022q1, the total revenue of the communication industry reached 683523 billion yuan, a year-on-year increase of 13.15%; The total net profit deducted from non parent company was 43.584 billion yuan, a year-on-year increase of 4.37%. Among the sub sectors, the Internet of things and 5g applications, cloud video, optical devices and other sectors grew better year-on-year, with revenue increases of 32.03%, 26.18% and 15.35% respectively. In the first quarter, there were 26 companies in the communication industry that met the requirements of both revenue and deduction of non parent net profit, with a year-on-year growth rate of more than 20%. Meanwhile, Huawei announced its 2022q1 performance, achieving a sales revenue of 131 billion yuan and a net profit margin of 4.3%, and its operating performance met expectations; Generally speaking, the communication industry has developed steadily and upward, and its business performance has maintained a rapid growth trend.
Investment suggestion: improve the concentration and optimize the high-quality target of the marginal improvement direction of the prosperity of the sub industry. The marginal improvement of prosperity of the sub industry of communication is conducive to the stabilization and recovery of valuation, and the high growth of performance is more deterministic in the medium and long term. It’s recommended to focus on what’s being proposed. Focus on what’s being proposed: the correlation between East and West Computing: the correlation between East and West Computing: the correlation between East and West: the Fujian Star-Net Communication Co.Ltd(002396) ( Fibocom Wireless Inc(300638) ). Communication + breakthrough in new business development Jiangsu Zhongtian Technology Co.Ltd(600522) ( Jiangsu Zhongtian Technology Co.Ltd(600522) ), Hengtong Optic-Electric Co.Ltd(600487) ( Hengtong Optic-Electric Co.Ltd(600487) ), Runjian Co.Ltd(002929) ( Runjian Co.Ltd(002929) ). At the same time, as a long-term configuration direction, the communication operator sector also needs to pay special attention, and China Mobile (600941 + 0941) is recommended.
Risk warning: risk of rising raw material price; Global epidemic impact and uncertainty of foreign policy environment; 5g large-scale commercial promotion was less than expected.
