Zhang Yidong, global chief strategist of Industrial Securities, believes that China's new round of "Jugla Cycle" has been launched, characterized by scientific and technological innovation and advanced manufacturing, with time, location, and people.
Among them, the five major tracks are expected to cross the volatility and maintain the highlight market for many years.
They are low-carbon technology industry chain, "intelligent connection of all things" industrial chain, pan-military industrial chain, high-end manufacturing represented by semiconductors, and life science and technology.
In the new era of "double carbon", the five major tracks will usher in a period of capital expenditure expansion, becoming the protagonist of this round of "Jugra Cycle" Chinese stock market, comparable to the "five golden flowers market" of that year.
Zhang Yidong believes that carbon neutrality is a global industrial trend, since this year, the state has successively issued "carbon neutrality" and "carbon peak" related opinions and notices, the overall idea is to "carbon peak, carbon neutral into the overall economic and social development", the carbon peak throughout the entire process of economic and social development and all aspects, emphasizing the need to better play the role of the government, build a new national system, give play to the role of market mechanisms, vigorously promote green and low-carbon science and technology innovation, deepen the reform of energy and related fields.
Carbon neutrality will bring a huge increase in global fixed asset investment. Investment in the power sector, clean energy infrastructure, electric vehicles, CCUS1, the use of hydrogen in industry and transportation, energy-efficient buildings and appliances will continue to increase over the next decade.
Just as the construction of the information superhighway in the United States in the 90s promoted the development of the Internet in the United States, China's computing power advantage will be the highway in the era of intelligent connection of all things. China's computing power is at the forefront of the world, and China's manufacturing industry is the largest in the world, but the digitalization process of Chinese manufacturing enterprises is relatively slow. China's computing power advantages and data resource endowments will help the manufacturing industry to achieve digital and intelligent transformation, and promote the manufacturing industry to move towards the industrial Internet of intelligent manufacturing.
Zhang Yidong believes that the industrial chain related to the intelligent connection of all things, such as the digital economy, smart city, and intelligent transportation new infrastructure, is a starting point for combining medium- and long-term industrial upgrading, promoting new urbanization and stable growth in the short and medium term.
Zhang Yidong believes that "military-civilian integration" is expected to drive the upgrading of the manufacturing industry, and the related advanced manufacturing industry chain and the special new "little giant" are expected to benefit.
The demand for the independent and controllable core supply chain of domestic fabs is increasing, the speed of localization will be further accelerated, and domestic semiconductor equipment and material manufacturers are also actively laying out and achieving breakthroughs in various segments.
According to the judgment of the electronic team of Industrial Securities, in the case of tight supply and demand in the global semiconductor industry, domestic fabs /storage plants have entered the peak period of capital expenditure, and domestic fabs/storage plants are entering an accelerated expansion period after achieving breakthroughs in technical processes, and corresponding capital expenditures have also entered an explosive period, measuring the growth of CAGR of more than 30% in the next three years; at the same time, in the current environment, domestic customers have accelerated the localization process, and equipment and material manufacturers have ushered in good development opportunities.
The outline of the 14th Five-Year Plan says: "Promote the integration and innovation of biotechnology and information technology, accelerate the development of biomedicine, biological breeding, biological materials, bioenergy and other industries, and make the bioeconomy bigger and stronger." Orderly promote the industrialization and application of biological breeding, and cultivate leading enterprises in the seed industry with international competitiveness. Improve the agricultural science and technology innovation system, innovate agricultural technology extension and service methods, and build smart agriculture. ”
Zhang Yidong believes that biotechnology and agricultural modernization are expected to usher in development opportunities, and agricultural modernization can focus on: agricultural product supply security, biological breeding industrialization, and agricultural science and technology.
Zhang Yidong analyzed that the industry prosperity cycle of the "five major tracks" has continued to be verified, and the ROE of A-share related sectors has steadily improved, of which the ROE TTM reported by semiconductors in 2021 is 11.1%, which is already at a high level in the past decade. The new energy ROE of power equipment has reached a new high in the past 5 years, and in addition, the ROE of communications, national defense and military industry, and life sciences has ushered in a central upward trend since 2019.
Moreover, the proportion of market value of the five major tracks has been continuously improved, and the proportion of market value has doubled, but the absolute level is not high, accounting for only 12% as of September 2021; power equipment and new energy and semiconductors are the main force in market value expansion, but the market value expansion of computer communications and military industry is relatively backward.
Source: Industrial Securities Zhang Yidong, Title: "Finding the Power of Self-Confidence - 2022 China Equity Market (A+ Hong Kong Stocks) Annual Investment Strategy"
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