Industry market review: the performance of the electronics sector was poor in December. The electronics (Shenwan) sector index rose 1.14% in December, underperforming the Shanghai and Shenzhen 300 index (2.24%) in the same period, ranking 22nd among the 31 Shenwan industries. The performance of sub sectors was relatively differentiated, and the performance of consumer electronic parts and assembly, optical components and digital chip design was better, up 8.36%, 6.33% and 5.53% respectively; Semiconductor equipment, analog chip design and discrete devices performed poorly, down 8.75%, 10.03% and 16.14% respectively.
The prospect index of electronic information manufacturing industry is good: in November, the production of China’s electronic information manufacturing industry maintained steady growth. The added value of electronic information manufacturing industry above designated size increased by 13.5% year-on-year, 4.2 percentage points higher than that of the same period last year, and 9.7 percentage points higher than that of industries above Designated Size in the same period. From January to November 2021, the computer, communication and other electronic equipment industry achieved a cumulative operating revenue of 12493.74 billion yuan, a year-on-year increase of 14.7%, and the growth rate increased by 6.9 percentage points over the same period of the previous year. The total profit was 679.68 billion yuan, a year-on-year increase of 29.8%, an increase of 14.1 percentage points over the same period of last year, and the profit margin of operating revenue was 5.4%, an increase of 0.6 percentage points over the same period of last year.
The trade deficit of integrated circuits has expanded and is still in a high boom state: in November 2021, China’s output of integrated circuits was 30.06 billion pieces, a year-on-year increase of 11.9%. In November 2021, the import volume of China’s integrated circuit industry was US $41.56 billion, a year-on-year increase of 25.2%, the export volume was US $15.758 billion, a year-on-year increase of 37.3%, and the trade deficit was US $25.802 billion, an increase of about 18.9% over the same period in 2020. In November 2021, the global semiconductor sales reached US $49.69 billion, with a year-on-year increase of 23.5% and a month on month increase of 1.5%. The “housing economy” effect brought by the epidemic in continued to stimulate the demand for semiconductors in the upstream; At the same time, the outbreak led to the shutdown of chip manufacturers in some areas. In this environment of supply-demand mismatch, global semiconductor sales still maintain a high-speed growth. It is expected that the production capacity may ease this year, but it is still in a situation of short supply. This round of semiconductor rise cycle may be longer.
China’s mobile phone market recovered and the global mobile phone market was cold in the second half of 2021: in November, China’s mobile phone shipment continued the growth trend in October, with a shipment of 35.252 million units, a year-on-year increase of 19.2% and a month on month increase of 5.0%. Among them, there were 28.967 million 5g mobile phones, a year-on-year increase of 43.9% and a month on month increase of 8.9%, accounting for 82.2% of the mobile phone shipment in the same period. Global mobile phone shipments were cold in the second half of the year. In the global market, according to DIGITIMES research data, the global smartphone shipment is expected to be about 1.32 billion in 2021, with an annual increase of only 6.1%. In the second half of 2021, global smartphone shipments did not show the growth momentum in the first half of the year, and the total shipments were less than 700 million.
Maintain the industry’s “stronger than the big market” investment rating: as of January 14, 2021, the PE of SW electronics sector (excluding negative values) was 25.76 times, significantly lower than the gem index valuation (51.89x) and the science and Innovation Board valuation (50.79x). From the valuation trend in recent three years, the current valuation is lower than the average level (41.32x). At present, under the background of rapid rotation of industry hotspots in the secondary market, the performance of sub sectors in the electronics industry is also relatively differentiated. There are many theme hotspots in the industry, such as “folding screen”, “Automotive intelligence”, “continuous penetration of VR” and “domestic substitution of Semiconductors”. However, at the same time, there are also risk factors such as US science and technology sanctions and tightening expectation of risk preference. Therefore, In the short term, especially before the Spring Festival, we believe that the electronics industry will still be a structural investment opportunity; From a long-term perspective, under the background that the world continues to be affected by the epidemic, the demand in 5g + alot, smart home, telecommuting, PC, new energy vehicles and other fields has been directly or indirectly boosted, and the electronic sector has long-term growth momentum. Maintain the investment rating of “stronger than the market” in the electronics industry.
Investment suggestion: focus on the four main lines of semiconductor, consumer electronics (VR, folding screen), automotive electronics and PCB. Recommended targets: (1) semiconductors: National Silicon Industry Group Co.Ltd(688126) (688126. SH), Advanced Micro-Fabrication Equipment Inc.China(688012) (688012. SH), Maxscend Microelectronics Company Limited(300782) (300782. SZ); (2) Consumer electronics: Hetai (002402. SZ), goer (002241. SZ), Lansi Technology (300433. SZ); (3) Automotive electronics: Will Semiconductor Co.Ltd.Shanghai(603501) (603501. SH), Ofilm Group Co.Ltd(002456) (002456. SZ); (4) Copper clad laminate and PCB: Shengyi Technology Co.Ltd(600183) (600183. SH), Shennan circuit (002916. SZ), Hudian Co., Ltd. (002463. SZ), Shiyun circuit (603920. SH)
Risk warning: semiconductor demand is affected by downstream, resulting in order cutting risk; Game uncertainty in the field of science and technology between China and the United States; The cost of upstream raw materials remains high; The development of advanced technology of Chinese manufacturers may not be as expected; Systemic risk.
