Overall steady operation. In 2021, the overall revenue of the communication industry was 2247378 billion yuan (year-on-year + 12.68%), the net profit attributable to the parent company was 184.89 billion yuan (year-on-year + 12.24%), and the net profit attributable to the parent company after deduction was 165002 billion yuan (year-on-year + 8.59%), and the performance growth rate was steadily higher than that in 2020. In 2022q1, the overall revenue of the communication industry was + 15.73% year-on-year, the net profit attributable to the parent was + 7.64% year-on-year, and the net profit attributable to the parent after deduction was + 8.48% year-on-year. The revenue performance of enterprises below 100 billion market value was more prominent, with a year-on-year increase of + 31.11%.
In 2021, Internet of things modules and solutions, laser industry and communication chip sectors performed prominently. In 2021, the revenue of all segments achieved year-on-year growth. Among them, the revenue and net profit attributable to the parent of Internet of things modules and solutions, laser industry and communication chip entered the top five in the industry. In 2022q1, the communication chip sector still performed strongly, with the year-on-year growth rate of revenue and net profit attributable to the parent company ranking first in the industry sector, and the industrial Internet ranking in the top five.
In addition to the segments with the highest performance growth rate, there are many highlights in the segmentation direction of the cloud industry chain: 1) network equipment manufacturers have outstanding performance. In 2022q1, Unisplendour Corporation Limited(000938) , Fujian Star-Net Communication Co.Ltd(002396) net profit attributable to parent company after non deduction increased significantly by + 162.54% and 462.21% respectively year on year; 2) Optical modules and devices: Huagong Tech Company Limited(000988) has outstanding business ability and leads the industry. The upgrading of broadband network promotes Broadex Technologies Co.Ltd(300548) strong performance, and the overseas demand for data communication side optical modules remains good. The fundamentals of the three major operators are accelerating upward, and their performance is equally bright: the overall revenue of the sector in 2021 is + 10.15% year-on-year, and the year-on-year growth rate of the three operators has reached a new high since 2015; The net profit attributable to the parent company was + 10.42% year-on-year, which was also significantly higher than the previous growth rate. The revenue of 2022q1 sector was + 17.02% year-on-year, and the net profit attributable to the parent company was + 8.35% year-on-year.
The gross profit margin is under pressure in the short term, and the cash flow is steadily improving. Affected by the global shortage of raw materials, tight chip supply chain and other factors, the gross profit margin of most sectors is under pressure. The average gross profit margin of 2021 and 2022q1 sectors was -1.52pct and -1.69pct respectively year-on-year, and the decline of 22q1 narrowed. However, the gross profit margin of telecom equipment manufacturers has significantly improved, with year-on-year growth in 2021 and 2022q1. In 2021, the overall net operating cash flow of the communication industry was + 1.10% year-on-year, among which the growth of communication chips, optical modules and devices took the lead.
In 2022q1, the market value of fund positions in the communication industry accounted for 1.32%, which was basically the same month on month, ranking 18th among all 28 application level industries. The over allocation ratio was -1.36%, which was also flat month on month.
2022q1 Jiangsu Zhongtian Technology Co.Ltd(600522) , Yealink Network Technology Co.Ltd(300628) , Zte Corporation(000063) ranked among the top three stocks held by funds in the communication sector. Among them, Jiangsu Zhongtian Technology Co.Ltd(600522) (holding market value of 8.831 billion yuan, with a chain comparison of – 16%), Yealink Network Technology Co.Ltd(300628) (holding market value of 7.33 billion yuan, with a chain comparison of – 40%), Zte Corporation(000063) (holding market value of 5.73 billion yuan, with a chain comparison of – 57%) ranked among the top three stocks held by funds in the communication sector. We believe that since the position data of 2021q4 is obtained according to the data disclosed in the fund’s annual report, the disclosure scope is different from the quarterly data. If considering the change compared with 2021q3, the stock market value of the top ten companies in the holding market value has achieved significant growth.
2022q1 Yealink Network Technology Co.Ltd(300628) , China Mobile and Quectel Wireless Solutions Co.Ltd(603236) ranked among the top three in the proportion of fund positions in tradable shares. Among them, Yealink Network Technology Co.Ltd(300628) 1955% (mom -11.38pct), China Mobile 19.05% (mom + 7.55pct), Quectel Wireless Solutions Co.Ltd(603236) 18.45% (mom -6.88pct), all higher than Q3. 2022q1 Jiangsu Zhongtian Technology Co.Ltd(600522) , China Mobile and Yealink Network Technology Co.Ltd(300628) ranked among the top three in the number of shareholding fund institutions. Of which Jiangsu Zhongtian Technology Co.Ltd(600522) is 249, holding 519.45 million shares (Mom – 15.86%); China Mobile has 217 companies, holding 76.32 million shares (mom + 41.02%) Yealink Network Technology Co.Ltd(300628) is 98, holding 94.28 million shares (Mom – 36.80%), all higher than Q3.
We judge that the communication industry is in the process of “old and new” changes in 2022. The development of the industry is upward, the valuation of head enterprises is at the bottom of history, and we are optimistic about the overall potential opportunities of the industry. 1. Booming demand of cloud computing industry chain – with the expected rapid growth of global data center capital expenditure in 2022 and Chinese operators’ increasing investment in Network & cloud business, key companies in the industry chain are expected to continue to benefit, including: 1) equipment side: it is recommended to focus on Unisplendour Corporation Limited(000938) , Fujian Star-Net Communication Co.Ltd(002396) , Zte Corporation(000063) , Hangzhou Dptech Technologies Co.Ltd(300768) , China Mobile, China Telecom Corporation Limited(601728) , China United Network Communications Limited(600050) , etc. 2) Upstream core devices: optical devices – it is recommended to focus on Huagong Tech Company Limited(000988) , Suzhou Tfc Optical Communication Co.Ltd(300394) , Zhongji Innolight Co.Ltd(300308) and Advanced Fiber Resources (Zhuhai) Ltd(300620) , Accelink Technologies Co.Ltd(002281) and so on; Optical fiber cable – it is suggested to focus on: Jiangsu Zhongtian Technology Co.Ltd(600522) , focus on Hengtong Optic-Electric Co.Ltd(600487) ; PCB – it is recommended to pay attention to Wus Printed Circuit (Kunshan) Co.Ltd(002463) , Shennan Circuits Co.Ltd(002916) , Shengyi Electronics Co.Ltd(688183) , etc. 2. Industry digitization continues to accelerate – 1) industrial Internet: China’s industrial Internet has developed at the right time, location and people. Grasp the dividend of industrial upgrading, and the core intelligent equipment and industrial Internet platform will usher in rapid development opportunities. It is suggested to focus on: Zhejiang Supcon Technology Co.Ltd(688777) , it is suggested to focus on Opt Machine Vision Tech Co.Ltd(688686) , etc. 2) Aiot: the demand of the aiot industry continues to be high, the valuation is not high, and the potential energy of the head target is stronger. It is suggested to focus on: Fibocom Wireless Inc(300638) , Cubic Sensor And Instrument Co.Ltd(688665) , Shanghai Huace Navigation Technology Ltd(300627) , Yealink Network Technology Co.Ltd(300628) , Quectel Wireless Solutions Co.Ltd(603236) , focus on: Queclink Wireless Solutions Co.Ltd(300590) , Qingdao Eastsoft Communication Technology Co.Ltd(300183) , etc. 3) The long-term trend of advanced laser manufacturing is improving – it is suggested to focus on: Changguang Huaxin, Huagong Tech Company Limited(000988) , Shenzhen Jpt Opto-Electronics Co.Ltd(688025) , Han’S Laser Technology Industry Group Co.Ltd(002008) , etc. 3. The rise of communication chips has benefited from the wave of localization – communication chip companies have continuously increased R & D investment in recent years, improved product autonomy and achieved leading layout in key fields. It is suggested to focus on: Unigroup Guoxin Microelectronics Co.Ltd(002049) (China’s leader in special chip industry), Advanced Fiber Resources (Zhuhai) Ltd(300620) (layout thin film lithium niobate technology, which is expected to lead the next generation of optical devices), Hebei Sinopack Electronic Technology Co.Ltd(003031) (gallium nitride business is leading in China and has broad growth space), etc, At the same time, it is suggested to pay attention to China’s baseband communication chip, access end communication chip and optical chip related companies.
Risk warning. Overseas epidemic situation and the impact of Sino US science and technology friction; The progress of 5g expansion investment is lower than expected.
Compliance tips. According to the company’s 2021 annual report, Haitong Securities Company Limited(600837) self operated holding [ Cubic Sensor And Instrument Co.Ltd(688665) Cubic Sensor And Instrument Co.Ltd(688665) ] exceeds 1% of the total share capital.
