Industry core view:
Last week was the third trading week of A-Shares in 2022. The CSI 300 index rose 1.11%, and 10 of the 31 industries in Shenwan class rose and 21 fell. The overall trend of the communication industry was weaker than the market last week, rising by 0.43%, ranking 10th and second in the TMT industry. 5g application is an experience mode of digital economy. In the next 1-2 years, the integrated application of various industries will gradually move to the next stage. From the “blooming Cup”, it can be seen that China’s 5g application has carried out a lot of exploration and produced many excellent pilot demonstration projects to empower, wisdom and assign value to thousands of industries. Due to the uneven information foundation and different development paths of various industries, the development pace of 5g industry application is fast and slow. Compared with the overall development law of 5g application, at present, China’s rapidly developing leading industries (such as industrial manufacturing, electric power, medical treatment, etc.) have entered the growth stage, and 5g application products and solutions continue to adapt and run in with various industries and commercial exploration. In the fields of integrated media and smart city, the industry demand is gradually clear, and it is expected to become the next batch of industries entering the growth stage. Cultural tourism, transportation and other industries with development potential follow closely. They are exploring the needs of industry users, clarifying application scenarios, developing products and forming solutions for scenario adaptation. With the evolution of 5g standard and the development of industrialization, the technology “spillover effect” displayed by 5g will far exceed that of previous generations of mobile communication technologies, and will give birth to more application scenarios and business models, drive information flow with data flow, promote the reorganization of capital flow, material flow, talent flow, technology flow and other elements, and inject vitality into the development of digital industrialization. With the maturity of 5g applications, the communication industry is expected to obtain more investment opportunities in 2022.
Key investment points:
One week’s industrial news: (1) Ministry of industry and information technology: China has opened 1.425 million 5g base stations, and this year will strive to promote the large-scale development of 5g applications; (2) CAAC issued the first 5g application specific guide: it will not affect civil aviation safety; (3) Focus on the 2022 annual work conference of China Radio and television: 5g is officially listed as the number one target; (4) China Telecom Corporation Limited(601728) : the starting conditions for triggering stable share price will determine specific measures with the controlling shareholders; (5) The reorganization plan of Ziguang group was approved by the court; (6) China United Network Communications Limited(600050) centralized collection of access routers: Huawei, ZTE and Shanghai Nokia bell were shortlisted; (7) The high resolution multi-mode satellite with the highest resolution of 0.5m was officially put into use; (8) China has achieved mass production of low orbit broadband communication satellites for the first time;
(9) a new generation of high-resolution remote sensing satellite will be launched in Wenchang in the near future.
With the gradual advancement of 5g construction and the continuous high growth of cloud computing construction scale, the fundamentals of the communication industry may continue to improve in 2022. In terms of 5g construction, with the implementation of the development plan of the information and communication industry in the 14th five year plan, the future construction goal of 5g is clear. In the next three to five years, 5g construction will also maintain a stable pace of construction investment. However, with the gradual progress of construction, the downstream supporting applications will gradually mature, thus driving the relevant construction of 5g again.
In the future when the structural market in the communication industry continues to evolve, we suggest paying attention to four investment tracks in the communication industry: (1) operators & equipment manufacturers: 5g construction continues to promote, and the prosperity of traditional communication business is rising. With the expansion of 5g construction, the performance of communication construction, operation and maintenance industry chain has increased significantly, The cloud network construction of data center and 5g 2B service also opens new growth space for operators & communication equipment manufacturers. (2) Optical module: with a new round of demand growth and the promotion of optical module technology, the industry is expected to usher in a new round of development in 2022. It is suggested to pay attention to the leading optical module enterprises on the digital communication side. (3) Internet of things module: in the next two years, the Internet of vehicles module will still be one of the main directions of the future market growth of the Internet of things module. It is suggested to pay attention to the leading enterprises with deep layout in the Internet of vehicles industrial chain. (4) Temperature control: it is suggested to pay attention to some leading temperature control enterprises that have the ability to transplant the original data center liquid cooling technology to the energy storage system.
Risk factors:
Price fluctuation of upstream raw materials
