Summary of institutional reviews: optimistic about the new round of Huawei's automotive industry chain product cycle

【Soochow Auto Zero】Firmly optimistic about the new round of Huawei's automotive industry chain product cycle

Outstanding core technology advantages: Huawei cockpit + intelligent driving industry leading, no map progress beyond expectations

1) HUAWEI ADS 2.0 is based on the ADS 1.0 Transformer BEV architecture and further equipped with the GOD network to realize mapless intelligent driving, and it is expected to open NCA (originally planned as 45 cities) in urban areas that do not rely on high-precision maps nationwide in December 2023, and the progress has exceeded expectations.

2) Intelligent cockpit: In August, Huawei released HarmonyOS 4.0, which continuously improves the efficiency of terminal application circulation under the Huawei ecosystem.

The smart assistant Xiaoyi has been connected to the AI large model capability to improve the intelligent experience through the blessing of the underlying technology of the Pangu large model.

Business model innovation: Huawei+ automotive companies are expanding their circle of smart choice friends

With Huawei's strong technical advantages (especially intelligence) + brand channel advantages + product definition capabilities + supply chain reshaping capabilities, the number of smart car companies (BAIC + Cialis + Chery + JAC etc.) is increasing, and it is expected to create a new business model.

New car catalytic intensive: Based on Huawei's ADS2.0 iteration + new iteration of the vehicle platform, a new round of intensive new vehicle cycle begins!

23 years: Chery-pure electric coupe Zhijie S7 has been listed in the catalog of the Ministry of Industry and Information Technology in August and is expected to be launched in November; Chang'an-Avita 12 will be officially launched and delivered in Q4;

The flagship M9 flagship SUV will be launched in December.

24 years: JAC - cooperation is in full progress, or will be positioned in the ultra-high-end luxury pure electric market. Cialis + Chery continues to release more new cars on the market.

In addition, new cars such as Changan Avita + Beiqi Extreme Fox are also worth paying attention to.

L3 intelligent leading + business model innovation + new car catalysis is optimistic about Huawei's automotive industry chain, vehicle partners preferred (Cialis + JAC Automobile + Changan Automobile, etc.), Huawei-Cialis industry chain (Huguang + Wencan + Xingyu + Tuopu Group, etc.), Huawei-Chery Industry Chain (Ruihu Mould + Xinquan + Baolong Technology + Xingyu + Luxshare Precision (attention)).

【Zhongtai Architecture】Urban village transformation: urban corner trillion market, focusing on three directions

This round of urban village renovation focuses on megacities and helps improve urban quality, non-shantytown reform 2.0.

On July 21, the executive meeting of the State Council deliberated and adopted the "Guiding Opinions on Actively and Steadily Promoting the Transformation of Urban Villages in Megacities", emphasizing that the current round of urban village transformation adheres to the main responsibility of the people's government, raises rectification funds through multiple channels, encourages and supports the participation of private capital, and adheres to the "retention, reform and demolition" method of carrying out transformation.

Scope of transformation: mainly for 7 megacities (urban population > 10 million) and 14 megacities (urban population of 5 million to 10 million); Difference from shed reform:

1) Transformation objects: urban village renovation is aimed at the renovation of self-built houses and homesteads in large urban urban villages, mostly collective land; The shantytown reform targets a large number of dangerous old houses in cities and towns, mostly state-owned construction land;

2) Scope of transformation: the transformation of urban villages focuses on megacities; The shantytown reform is oriented to the whole country, covering a large number of third- and fourth-tier cities;

3) Transformation mode: the transformation of urban villages adopts different methods such as demolition and new construction, rectification and upgrading, and combination of demolition and reorganization; The shed reform mainly adopts the mode of demolition and reconstruction;

4) Participants: the transformation of urban villages is guided by the government, market-led, implemented by enterprises, and biased towards marketization; The shantytown reform is led by the government, implemented by state-owned enterprises, and biased towards policy;

5) Source of funds: the current round of urban village renovation encourages the participation of private capital, emphasizing multi-channel financing for transformation; The source of funds for shantytown reform focuses on policy financial support, which is mainly reflected in PSL and special bonds.

This round of urban village renovation changes: limit "large-scale demolition and construction", focus on improving infrastructure facilities, and focus on improving urban quality.

Necessity: Expand domestic demand, improve people's livelihood, and help large cities improve quality and capacity

Addressing the housing shortage in large cities:

1) From the perspective of net population inflow, from 2018 to 2021, the CAGR of urban population in key cities (21 megacities + Suzhou and Hefei) in urban villages will be +3.6%, 2.3pct higher than that of the whole country; among them, the CAGR of Shenzhen, Hangzhou, Jinan, Changsha and Hefei will exceed 10%;

2) In terms of per capita housing area, according to the data of the seventh population census, the per capita housing area of key cities for urban village renovation is 36.81 square meters, lower than the national average of 41.76 square meters; of which Shenzhen, Dongguan and Guangzhou are lower, 21.50, 27.80 and 30.15 square meters respectively.

The shortage of housing in large cities is significant, and the significance of urban village renovation and expansion is prominent.

Investment Advice:

1) Engineering construction sector: China Communications Construction (0.59xPB, operating data flexibility (hereinafter referred to as "elasticity") 8.2%), China Railway Construction (0.49xPB, elasticity 4.4%), China Metallurgical Corporation (0.79xPB, elasticity 9.8%), Anhui Construction (0.92xPB, elasticity 6.5%); China Construction (0.59xPB, flexible 11.4%), Shanghai Construction (0.81xPB, flexible 6.9%), Tunnel (0.68xPB, flexible 1.3%), Shaanxi Construction (0.86xPB, 13.6% flexible);

2) Planning and design: focus on Huayang International (24.9xPETTM, elasticity 27.3%), Qilianshan (CCCC Design) (17.7xPETTM, elasticity 2.8%), Huajian Group (13.7xPETTM, elasticity 6.2%), Tus Design (180.6xPETTM, elasticity 2.3%);

3) Testing and evaluation sector: focus on Shenzhen Ruijie (57.5xPETTM, elasticity 40.5%), Shanghai Jianke (22.1xPETTM, elasticity 6.1%).

【Huaan Pharmaceutical】Pay attention to the marginal changes in the medical device industry and look for sufficient internal vitality targets

Medical equipment: In 2023H1, the revenue of the medical equipment sector increased by about 20.93% year-on-year, and the growth rate increased compared with the same period in 2022. Quarterly, Q2 revenue growth was slightly slower than Q1. thereinto

(1) The rehabilitation sector as a whole showed a good year-on-year growth, because the rehabilitation sector was significantly damaged by the epidemic, and the base in the same period of 2022 was also relatively low;

(2) areas that benefit from the growth of demand after the epidemic, such as Shanwaishan and Yuyue Medical;

(3) There are new products launched, and the individual stocks whose product structure has changed also have good growth, such as Yirui Technology, Aohua Endoscopy, etc.;

(4) It is related to the demand for the new crown, and the procurement funds are mostly related to the financial end of the demand decline, such as Haier Biotechnology, BGI Intelligent Manufacturing (non-sequencer business), etc.

Looking ahead, we focus on the rehabilitation sector, which is still on a low base in the same period last year, as well as individual stock companies with new product volume logic.

In vitro diagnostics: Some POCT companies in the 2023H1 sector benefited from the demand for overseas new coronavirus antigen testing in 22Q2, and some molecular diagnostic companies benefited from the large increase in nucleic acid detection reagents required for domestic epidemic prevention in 22Q2, with a high base in the same period, and the performance of 2023H1 showed a downward trend.

At the same time, the demand for routine clinical use products such as chemiluminescence testing is recovering rapidly.

In the future, we will continue to be optimistic about the investment opportunities accelerated by domestic substitution under the promotion of centralized procurement in the field of luminescence chemistry, and pay attention to the leading enterprises (such as Shengxiang Biotechnology, Adder Biotechnology, etc.) that are gradually emerging in POCT and molecular diagnosis.

High-value consumables: From the perspective of volume and price, although the volume of surgeries recovered quickly after the epidemic in 2023, the unit price level was still greatly affected by centralized procurement, and the revenue of the high-value consumables segment in 2023H1 increased by about -4.25% year-on-year (of which the revenue growth rate in 2023Q1 was about 3.62% year-on-year).

In 2023Q2, the centralized procurement policy was implemented, and the orthopedic companies such as Chunli/Weigao/Dabo/Kailitai, meningeal centralized procurement such as Maipu, and the affected by the centralized procurement of dental implants such as Zhenghai Biotechnology, the revenue of 2023Q2 decreased by different degrees, dragging down the revenue growth rate of high-consumption sectors.

At the same time, vascular intervention (coronary intervention, aortic intervention), cardiac electrophysiology, and ophthalmology still maintained a good growth trend.

In the future, we are still optimistic about high-demand industries such as cardiac electrophysiology, vascular intervention, and ophthalmology, and pay attention to the inventory clearance rhythm in the orthopedic field.

Investment advice: Preferred leading targets in subdivided industries and targets with strong demand and high prosperity in subdivided tracks, including soft mirror equipment, rehabilitation equipment, cardiac electrophysiological consumables, and leading companies with chemiluminescence.

【Guosheng Communications】AI Wensheng Video: The Next Stop for Multimodal Applications

The market believes that AI applications have gradually entered a mature period, but there are no killer applications.

In this report, we would like to take the multimodal application of "Wensheng video" as an example to explain that the development of AI applications is still in the early stages, and correspondingly, the demand for computing power is far from peaking.

Vincent video is the holy grail of multimodal AIGC, and the optimization iteration speed is slow. Video is a combination of multi-frame images, but the Bunsen video adds a time dimension on the basis of the Bunsheng diagram, which is more difficult to achieve.

Even Silicon Valley AI giants such as Meta and Google have been slow to make progress on Wensheng Video, and their Make-A-Video and Phenaki respectively have not yet been publicly tested.

The underlying model and technology of Wensheng Video are still being optimized, and the optimal model has not been screened out.

The main development process of Wensheng video technology has gone through three stages: GAN and VAE, Transformer model, and diffusion model.

At present, the mainstream Wensheng video model mainly relies on the Transformer model and the diffusion model.

1) Phenaki, a representative based on Transformer, breaks through the video generation time limit, but the effect is relatively rough and lacks detail.

2) Make-A-Video, a representative based on the diffusion model, focuses on improving video quality, but its video duration is within 4s.

Vincent videos vary in effect and overall low quality.

At present, there are few applications that can be tested by Wensheng Video, only a few such as RunwayGen-2, ZeroScope, and Pika Labs, which have the following common problems:

1) The continuous effect of complex character action generation frame is poor;

2) The video architecture capability of non-daily scenes is generally continuous;

3) Multi-agent video generation lacks logical continuity, etc.

Investment Advice:

1) Computing power: the cornerstone of AIGC's vigorous development, it is recommended to pay attention to optical communications, including Zhongji Xuchuang, Tianfu Communications, Xinyisheng, Taichenguang, and Dekeli; Computing power equipment: Sonke Communications, Hengwei Technology, Ruijie Network, Cambrian, Meige Intelligence, Unigroup, Industrial Fortune Union, ZTE, etc.; Computing power leasing: Zhongbei Communications, Yunsai Zhilian, etc.;

2) Model layer: it is recommended to pay attention to Kingsoft Office, Wondershare Technology, iFLYTEK, etc.;

3) Application layer: optimistic about the iterative innovation of games, it is recommended to pay attention to Kaiying Network, Shenzhou Taiyue, Shengtian Network, Youzu Network, etc.

【Huatai Electronics】Pay attention to the latest development of overseas AI large model applications

Dynamic #1: OpenAI, Meta, Google launched a series of new AI services In the past two weeks, we have seen the rapid development of overseas AI large model applications.

On 9/26, ChatGPT launched a ChatGPT chatbot service that supports "see, listen, and speak".

On 9/28, Meta released Meta AI, a chatbot based on Llama 2, and Emu, a MidJourney-like Wensheng graph service.

On 10/4, Google released AI mobile apps such as Microsoft Copilot's OS assistant Assistant with Bard and Best Take.

Combined with Microsoft's release, we see:

(1) At present, the application of AI large models mainly focuses on chatbots, Wensheng diagrams, productivity tools and other directions.

(2) Meta and Google launched AI-optimized hardware (Ray-Ban smart glasses) and AI acceleration chips (Tensor G3) to support the side landing of AI ends, and it is recommended to pay attention to semiconductor and mobile phone upgrade opportunities.

Dynamics #2: Amazon, SoftBank, Apple are actively catching up through investments, etc. In addition, we see tech giants with relatively backward AI catching up accelerating.

On 9/25, Amazon invested $4 billion in AI startup Anthropic (benchmarking against OpenAI, with a large model Claude) to join the competition through a Microsoft-OpenAI-like cooperation model.

On 9/29, according to the BBC, Apple CEO Cook said that he is actively researching generative AI, and said that he will increase investment in AI, and also emphasized that AI has supported features such as fall detection, collision detection and iOS 17 autocorrect text on Apple devices.

On September 27, according to FT, Open AI is discussing with former Apple designers Jony Ive and Softbank to develop an "iPhone" in the AI era.

In addition, Reuters reported on 10/6 that the U.S. Office of Management and Budget published "Export controls to Semiconductor Manufacturing Items, Entity List Modifications", suggesting that attention be paid to the subsequent impact of the detailed rules on the domestic industry.

Elsewhere in TMT, SW Communications rose 0.2%, SW Computer rose 0.2%, and SW Media rose 0.5%.

Hong Kong stocks: The Hang Seng Technology Index fell 4.4%, underperforming the Hang Seng Index (-3.2%), with the average daily turnover of all Hong Kong stocks totaling HK$49.1 billion in the past two weeks, down 26.8% month-on-month.

The top gainers among the major components of Hang Seng Technology include: Xpeng (+4.2%), Alibaba Health (+2.3%), Ping An Good Doctor (+1.5%); The top decliners were: Li Li (-13.8%), Sunny Optical Technology (-11.2%), Kingdee International (-10.4%).

In the media and Internet sector, Baidu fell 1.4%, Kuaishou fell 2.5%, and Meituan fell 10.3%.

Southbound funds totaled a net inflow of HK$14 billion last week, mainly increasing their holdings in Meituan, Tencent and Xpeng, and reducing their holdings in China Mobile, SMIC and BYD.

This article is from Alpha Factory Research