Wu Chaoze: 5G applications are most optimistic about the three directions, and today's localization is like new energy two or three years ago

"In 2022, the two major directions of the science and technology track, one is that 5G applications are getting closer and closer to us, and the other is that localization begins to start from 0 to 1, a breakthrough in the real sense." Among them, 5G applications will be the most anticipated direction in the market in 2022. ”

"Under the main line of 5G application, there are three most optimistic directions: one is automotive intelligence; the other is the VR and AR and high-definition video industries extended around the metaverse; and the third is the various scenarios of the industrial Internet to B."

"In terms of automotive intelligence, 'the first half is electrified, the second half is intelligent', and the automotive market will also follow the path taken by consumer electronics five years ago." In terms of time rhythm, first of all, it will still revolve around the level of hardware, and its investment opportunities will be more; in addition, along the chain of cars, the entire computer industry will also usher in a relatively large change. ”

"Around the direction of the meta-universe, on the one hand, we see some content-related companies in the media industry, on the other hand, some traditional Internet giants, which have been laid out in this. In addition, some industries that may revolve around the entire format, such as the electronics industry, revolve around optical displays, panels, and other companies, are also deterministically beneficial. ”

"The third direction of 5G application is the various scenarios of the industrial Internet of toB, looking forward to 2022, because the entire industrial Internet scene may be some large and specialized scenarios, more of a standardized application, may be in the subdivision industry, vertical industry to do some SaaS companies or industrial software companies, the degree of benefit may be more extensive."

"The semiconductor industry chain and the extension of such as the localization of software and information security are the directions worth looking forward to on the localization track in 2022."

"Today's localization is a bit like the new energy industry two or three years ago, from a relatively suspicious, relatively policy-led track, and gradually moving towards industrialization in the true sense."

"On the localization track, the plate with the highest certainty and prosperity at the current stage is still the semiconductor plate. The semiconductor industry chain is very long, from chip design to upstream equipment and even materials. In addition to the electronics industry itself, there are some related targets around materials, such as the chemical industry, and industries like non-ferrous metals. ”

On November 30, Wu Chao, director of the Securities Research Institute of CITIC Construction Investment and chief analyst of the TMT industry, made the above judgment when giving a speech on the theme of "5G Applications Are Gradually Approaching, Localization from 0 to 1" at the 2021 China Analyst Conference.

The following is the essence of the investment workbook (WeChat ID: touzizuoyeben), to share with you:

The two major directions of the science and technology track are optimistic

In 2022, on the technology track, we are most optimistic about two directions.

The first direction is 5G applications, including smart cars, VR, AR, metaversities, and the entire to B industrial Internet.

The second direction is localization, our focus, from the past we have seen the entire chip industry chain represented by semiconductor materials, equipment as the autonomous controllable, in 2022 will also extend to software, operating systems and information security and network security. These two directions are what I personally believe are worth paying attention to in terms of the big investment strategy in 2022.

5G applications are the next most worth looking forward to

In terms of 5G applications, 5G was officially commercialized in June 2019, after about two years, the construction of the entire 5G base station has now reached more than one million stations in the Chinese market, it should be said that in the global 5G network construction is the largest existing commercial 5G network, accounting for about 70% of the total number of global 5G base stations. At present, million base stations can basically achieve 5G coverage in all prefecture-level cities.

In addition, the penetration rate of the entire 5G terminal or 5G mobile phone has also been significantly improved. According to data from the Ministry of Industry and Information Technology in the third quarter of 2021, our 5G mobile phone users are currently more than 400 million. According to the total number of mobile Internet users now, it has basically reached a penetration rate of more than 40%.

Of course, next year this number may have a larger breakthrough, next year is expected to be 560 million shipments of 5G mobile phones. From this point of view, when the penetration rate of the entire mobile terminal exceeds 30%, the development of the entire application or further outbreak has a preliminary condition.

And observing 5G applications is not just about looking at mobile phones. Around the 5G terminal more market such as the increase in the penetration rate of smart cars, the explosive development of the smart home industry, a variety of smart terminals are entering our lives.

Looking forward to 2022, wearable devices like Apple, AR, MR helmets, headshots, and headsets will also be put on the market as mainstream products. This is also of considerable help to the penetration of the entire 5G terminal or the internet of things terminals we commonly call it, which is worth looking forward to.

Therefore, from the perspective of the entire infrastructure or new infrastructure, from the perspective of 2019 to the present, the entire market has made great progress. It is based on such a long-term underlying hardware penetration rate and the logic of basic computing power improvement, I personally feel that in 2022, the application of 5G should be the most worthy of everyone's expectation in the next market.

5G application in three directions

Specific to the application, it is mainly divided into three aspects.

1. Car intelligence

First of all, from the perspective of the whole year of 2022, from the short-term perspective of the deterministic growth of performance and the logic of long-term growth, one of the sectors worth looking forward to is automotive intelligence.

We often talk about the phrase "electrification in the first half, intelligent in the second half". Personally, I think the automotive market will follow the same path that consumer electronics took five years ago. The first thing we see is the improvement of the level of intelligence of the entire terminal hardware, and then after the penetration rate of such an intelligent foundation of the automobile is improved, it is more important to expand around a series of applications of automobile intelligence, such as intelligent cockpit, automatic driving and even the future of the Internet of Vehicles or the Internet of Vehicles, which we will gradually see in the future stage.

From the perspective of time rhythm, first of all, it will still revolve around the level of hardware, and its investment opportunities will be more, such as sensors related to automotive electronics, including upstream chips.

The most typical sensors around automotive electronics, cameras, vehicle-mounted lidar, including passive components MLCC, PCB and IGBT, etc., the entire hardware iteration around automotive intelligence may bring some certainty to the original electronics industry.

Of course, here we will see a lot of targets, may also be only around the Apple industry chain or some of the leaders in the consumer electronics industry chain, many people are also verifying whether they have caught up with the wave of automotive intelligence. Therefore, the first thing we recommend may still be around this chain, may have proved themselves in products or in technical strength, but in the future in the direction of automotive intelligence, the certainty of shipments in the vehicle industry chain, and the higher certainty of these targets in the supply chain.

Of course, there are some directions, like IGBT, including chip-related companies, the valuation is still relatively high. But more worthy of everyone's attention, like passive components, including PCB, cameras, these directions, in fact, the valuation may be relatively back to a more reasonable position in the past period of time, this piece to 2022, if the logic of growth is verified, it is also expected to usher in a valuation repair, which is also a direction that we are relatively optimistic about in the consumer electronics sector.

In addition, continue to go down along the chain of the car, the entire computer industry will also usher in a relatively large change.

Most typically, software service-related companies benefit to some extent. You may be worried about whether these companies can eventually have enough barriers in the industrial chain. At this stage, the entire industry is still in the process of rapid development from 0 to 1, at this time, in fact, according to the entropy reduction effect of the industry, its industrial chain will be invested in or will give more orders to these companies that can quickly reduce the cost of the industry and provide more cost-effective products. Some of the traditional Chinese software companies here still have very good advantages in layout and technology and efficiency.

In addition to these software companies, some companies that provide computing power like upstream cloud computing, including edge computing, and even the underlying communications do IDC (data centers) and some of the derivative communication services and equipment companies related to data centers, are also deterministically beneficial.

The above are some of the targets that we see in the direction of automotive intelligence under the 5G application.

2. The VR and AR and HD video industries that extend around the metaverse

The second direction revolves around the now hot to C direction, the pixel universe, which is actually an extension of AR/VR technology. On the one hand, we see some content-related companies in the media industry, and on the other hand, some traditional Internet giants have laid out in this area. In addition, some industries that may revolve around the entire format, such as the electronics industry, revolve around optical displays, panels, and other companies, are also deterministically beneficial.

3. ToB industrial Internet scenarios

In addition to the two directions of automotive intelligence and meta-universe just mentioned, the third largest application direction of 5G application is the industrial Internet, that is, there will be some definite scenes in the direction of to B.

According to the data released by China Mobile and Telecom in 2021, there are already a large number of industrial Internet scenarios in the landing, such as in smart ports, terminals and mines. Involving the past, the risk factor was relatively high, and now like some digital twins, some scenarios such as 5G area coverage have also been landed.

Everyone may not feel very obvious in terms of investment, the most important thing is that the application of to B is more abstract than the application of to C, but I think some targets related to the industrial chain, such as connectors, including modules, and some of the upstream companies that we see chips, controller companies, etc., in fact, the prosperity in 2021 has been very high.

Looking forward to 2022, because the entire industrial Internet scene may be some large and specialized scenes, may not be like the to C class scene, it is more of a standardized application. From this point of view, companies that may do some SaaS companies or industrial software companies in sub-sectors and vertical industries may benefit a little more broadly.

Localization from 0 to 1: optimistic about semiconductor, software and information security

Looking forward to 2022, there is a second direction in the big technology track, that is, the entire localization from 0 to 1, it should be said that it is in the process of gradually moving from the deep water area to verification and differentiation. Therefore, I think that today's localization may be a bit like the new energy industry two or three years ago, from a relatively skeptical and relatively policy-led track to a real sense of industrialization.

Of course, at this stage, the industry has the highest certainty or from the perspective of prosperity, the better and more elastic is the semiconductor sector.

Semiconductors themselves are actually a very long industrial chain, from chip design to upstream equipment and even materials. In addition to the electronics industry itself, around the materials, like the chemical industry, as well as like non-ferrous metals and so on, these industries, are some related targets.

Looking at 2022, although the valuation of this track is relatively high, around the entire Huawei ecosystem, some advanced processes are gradually validated and landed, and in addition to eliminating the lack of production capacity caused by the epidemic in 2021 and the factors affecting the prosperity, in fact, some high-end chains with relatively high core technologies are still worthy of high valuation. The reason is that once it is verified, the future growth space of the entire industry is still very large. The most typical ones are like analog IKER, and we see companies in the field of equipment and materials.

Therefore, looking forward to 2022, whether it is PE or PEG, the valuation level that matches the growth rate is still worth looking forward to.

Of course, localization in the future will also be a big concept, not only chips and semiconductors, like the Hongmeng ecology in the Huawei ecosystem, it actually began to open the ecology. After the localization of hardware, it is equally important to focus on the software ecology, as well as the operating system, etc., which are also worthy of everyone's attention.

In addition, around the "Information Security Law", this year's policy field has come out a lot about data security and privacy protection, and the policy height has also been raised to a very high position. In addition to the catalysis of policies, the most important thing is that the future 5G will definitely bring about the digitization of the whole industry, compared with the past 3G, 4G relative to C more affect everyone's life, many related to production safety or reliability requirements of the scene will come out, such as intelligent medical care, including some scenarios of to B, will definitely bring it high requirements for data and reliability. At this point, it is more the outbreak of real industry demand brought about by industrial digitalization. Therefore, we are also very optimistic about the information security sector.

As the security industry has evolved over the past period of time, its products have also undergone fundamental changes. In the past, there were more software and hardware companies, and now it is basically some cloud product companies that are deeply integrated into the entire cloud, pipe, and terminal. Several of the leaders in this industry basically have hundreds or even thousands of products. Some of the leading companies here, whether it is R&D or the entire revenue scale, the customers of to B and to G, have a fairly leading position in the industry. Therefore, it is easier for everyone to choose the target.

summary

That's our outlook for the big investment strategies in the TMT and tech sectors as a whole of 2022. To sum up, there are two major directions, one is that 5G applications are getting closer and closer to us. Second, localization began to start from 0 to 1, and there was a breakthrough in the real sense.

Under the big main line of 5G applications, I am personally most optimistic about three directions: the first direction is automotive intelligence. The second direction is the VR and AR and HD video industries that extend around the metacosm. The third direction is the various scenarios of the industrial Internet of toB. These are the three directions we are most optimistic about in the application.

Under the localization track, in addition to the semiconductor industry chain that everyone is very concerned about in the past period of time, the localization of software and information security are the directions we are looking forward to in the localization track in 2022. (Editor Bit Yuxiang)

This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, opinions or conclusions in this article are appropriate for their particular situation. The market is risky, investment needs to be cautious, please judge and make decisions independently.