Hot spot rotation, turn to the military industry?
On November 13, A-shares weakened in early trading, and the index turned red strongly in the afternoon, and individual stocks showed a general upward trend. On the disk, boosted by the satellite Internet, the military sector took over the leading banner in rotation, and TMT remained active. Nearly 3,900 shares rose during the day, but the consumer and financial sectors performed relatively poorly.
At the close, the Shanghai Composite Index rose 0.25% to 3,046.53 points, and the ChiNext Index rose 0.2%. The trading volume of A-shares was 870.78 billion yuan throughout the day, a slight increase from the previous month, and the net selling of northbound funds was nearly 1.5 billion yuan.
Source: Wind
The military ETF (512660) ushered in a long-awaited rally, closing up 3.07%, mainly catalyzed by the satellite Internet industry chain. Recently, the Ministry of Industry and Information Technology proposed to strengthen the prefabricated equipment of satellite communication equipment for small applications, and promote the comprehensive use of special satellite terminals and mass consumer satellite terminals.
Source: Wind
In addition, China Telecom said that it will focus on supporting domestic mainstream mobile phone terminal manufacturers to launch flagship models that are directly connected to satellites, and will launch no less than 5 flagship terminal models by the end of 2024, with a centralized procurement volume of more than 5 million units, and fully incorporate 100% of the main promotion of its own channels.
The short-term development of satellite Internet is due to national security, and the long-term development space comes from the commercial market. Previously, Huawei MATE 60 opened the demand for mobile phone direct connection to satellite applications, and SpaceX Starlink also launched a direct connection mobile phone business, which demonstrated the recognition of C-end customers for the satellite communication market, and related companies in the military sector benefited significantly.
On the whole, some of the core targets of the military industry have been sharply adjusted since the beginning of the year. The mid-term adjustment of the "14th Five-Year Plan" is expected to be implemented in the fourth quarter of 2023, orders are expected to pick up, and the military sector as a whole has a strong valuation attractiveness.
At the same time, a variety of new models entered the batch stage during the 14th Five-Year Plan period, and a variety of factors in the early stage of production led to a significant lag in the release of the middle and lower reaches of the industrial chain. With the gradual arrival of supporting production capacity in the industrial chain, various problems are expected to be gradually alleviated, and the performance growth rate of midstream and downstream enterprises may improve significantly, entering the stage of stable performance release, and there is more room for the valuation repair of the sector.
The semiconductor equipment ETF (159516), which focuses on the core neck of semiconductors, ushered in another positive situation.
Source: Wind
On November 9, SMIC disclosed its third quarterly report, although its performance was temporarily under pressure, it did not stop the pace of its capacity expansion. The company's 2023 capital expenditure target was raised from $6.35 billion to $7.5 billion, and the significant increase in capital expenditure was mainly used for capacity expansion and new plant construction. In the short term, the company's continuous investment and expansion of production is expected to benefit its upstream semiconductor equipment/materials-related supply chain.
From the perspective of the industrial chain, mobile phone-related applications in the third quarter have driven the recovery of 8-inch demand, while Canalys expects smartphones and PCs to achieve moderate growth in 2024, and the continued warm current of consumer electronics is expected to drive the industrial chain to stock up, which in turn makes the 8-inch capacity utilization rate gradually rebound. On the other hand, due to the strong demand for generative AI, the new 12-inch production line for high-end manufacturing processes is expected to maintain a high level of utilization.
Since last year, sanctions from the United States, Japan and the Netherlands have been implemented one after another, and a consensus has been reached on the independence and controllability of the supply chain. At present, some domestic enterprises have achieved breakthroughs in products and technologies, such as China Micro Corporation and NAURA have been delivered in batches in the field of etching equipment, and Tuojing Technology's PECVD equipment has been widely used in domestic first-line wafer factories. At present, it is in the golden window period of domestic substitution, and the localization rate of equipment of large wafer manufacturers is on the rise in the next few years, and the introduction of domestic equipment and materials is expected to accelerate, so you can pay attention to the investment opportunities of semiconductor equipment ETF (159516).
The Communication ETF (515880) performed strongly on November 13, rising 2.67%.
On the news side, the 2023 World Internet Conference Wuzhen Summit was recently held in Wuzhen, Zhejiang, during which activities such as the Light of the Internet Expo and the release of leading scientific and technological achievements were held. In addition, the Blue Book of the World Internet Conference was released to showcase the important achievements of Internet development. The Internet has increasingly become the focus of great power competition, and the world's major economies have increased investment in network infrastructure construction.
ZTE recently completed the end-network docking verification of RedCap commercial and pre-commercial chips and modules under the 5G commercial network with a number of mainstream RedCap chip and module manufacturers in Guangzhou. The test marks the intermediate transition stage from 5G to 6G, and the industry chain is expected to usher in a critical period of development and maturity. From the perspective of industry chain integration, 5.5G technology is expected to significantly improve the efficiency, operating costs, and security of multiple vertical industries.
Overall, in the context of the continuous increase in policies such as Digital China and the continuous promotion of new AI applications, the new infrastructure of the digital economy is expected to help upgrade the computing power network. The basic capabilities of the computing power network continue to be enhanced, the large-scale development of 5G applications is expected to continue to advance, and the demand for the digital economy continues to grow, which is expected to continue to inject new momentum into the economic development of the mainland. The communication sector corresponding to computing power and digital economy is currently at a historically low valuation, and you can pay attention to the communication ETF (515880).
Source: Wind
After a pullback in the third quarter, the media sector has experienced a strong rebound, with game ETF (516010) and film and television ETF (516620) rising by about 10% in the past 10 and 20 days, taking a leading position in the whole market.
Source: Wind
On the news side, the "2023 Game IP Ecology Conference" was held in Suzhou last Friday. The "2023 Mobile Game Industry IP Development Report" was released at the meeting. According to the report, as of September this year, the actual sales revenue of the mobile game IP market in mainland China was 132.206 billion yuan, accounting for 77.70% of the overall mobile game market in mainland China.
In recent years, the micro-short drama industry has shown rapid growth. In the first half of this year, a total of 481 micro-short dramas were launched in China, and from January to July, the number of key micro-short dramas premiered by iQiyi, Youku, Tencent Video, Mango TV, and Station B reached 297, all of which have exceeded the number of last year, and the scale of market supply has shown a rapid expansion trend.
Short dramas have the characteristics of covering a wide range of people and strong user payment. Represented by the recent popular interactive drama model of "short drama + game", if it can be combined with new technologies such as games and AI in the future, it is expected to open up a new content experience.
From a fundamental point of view, the revenue of the game sector in the third quarter increased by 12.77% year-on-year, and the net profit attributable to the parent increased by 39.33% year-on-year, driving the year-on-year decline in net profit in the first three quarters of 2023 to narrow.
The revenue of the film and television sector increased by 54.21% year-on-year, and the net profit attributable to the parent company was 1.223 billion yuan, compared with -380 million yuan in the same period last year. After the recovery of the industry, the overall profitability of the sector has increased significantly.
Source: Wind, Zhongyuan Securities
Recently, the release of the game version has gradually stabilized. From the perspective of edition number distribution, a total of 87 games received version numbers in October, and the number of version numbers issued in 2023 has reached 786, an increase of 67% over the whole of last year. Since the beginning of this year, the distribution of edition numbers has gradually become normalized, the industry's supply-side policies have continued to improve, and the new product cycle of major manufacturers is steadily opening, and the scale of the game market will further grow.
As the direction with the highest certainty for AIGC to reduce costs and increase efficiency, AIGC is deeply penetrating into all aspects of game development. Short dramas have more potential combinations with interactive film and television games and AI, which may further meet users' demand for content. After the early adjustment, the cost performance of the game and film and television sectors has been improved to a certain extent, and you can continue to pay attention to the investment opportunities of game ETF (516010) and film and television ETF (516620).
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National Business Daily