Text/paper is silent
In 2023, after watching a press conference from Huawei, economist Lang Xianping lamented that the global information industry chain is being controlled and connected by one company. "Huawei is equal to Apple + Cisco + Qualcomm + Starlink + Nvidia + Google + Microsoft, these companies are connected by Huawei to become an unprecedented information industry chain."
At present, Huawei covers eight major industrial chains, including automobiles, mobile phones, AI Pangu models, 5G, and Starlight, and has established strategic partnerships with outstanding global suppliers, invested in more than 85 companies, and has more than 500 A-share suppliers, leading the development and upgrading of multiple industries.
Support Chinese sensor companies that have been abandoned by the "fruit chain".
In 2023, with the launch of Huawei's Mate 60 series mobile phones and the mass production of Kirin 9000s chips, the domestic supply chain hidden behind Huawei has attracted widespread attention. Among many domestic sensor companies whose stock prices have risen due to their deep participation in Huawei's supply chain, such as Goodix Technology and Goertek, OFILM has performed well.
OFILM's market value in 2020 was as high as 70 billion yuan, and then it lost money for 3 consecutive years, and its market value was only 15 billion yuan in October 2023.
With the release and hot sales of Huawei's new flagship mobile phone, OFILM's share price has risen from 5.82 yuan/share at the close of trading on September 27, 2023 to 10.6 yuan/share at the close of trading on October 16, 2023, and the share price of OFILM has doubled in a short period of time.
Source: Sensor Expert Network
Previously, OFILM, as a "fruit chain" enterprise, had a revenue of more than 50 billion yuan and a market value of 70 billion yuan around 2019. However, since July 2020, it has been sanctioned by the U.S. Department of Commerce on the "Entity List" for "human rights violations in some regions of China", and was officially kicked out of the supply chain by Apple, OFILM has ushered in a three-year loss.
According to OFILM's relevant annual report, in 2019, the revenue was 51.9 billion yuan and the net profit was 500 million yuan, while in 2020, the revenue was 48 billion yuan and the loss was 1.9 billion yuan, the revenue in 2021 was 22.8 billion yuan and the loss was 2.6 billion yuan, and the revenue in 2022 was 14.8 billion yuan and the loss was 5.1 billion yuan, and the market value fell to 15 billion yuan - a decrease of three-quarters.
"Stubbornly live." Cai Rongjun, chairman of OFILM, used these five words to describe 2020-2022.
Now, OFILM has once again gained market attention due to its cooperation with Huawei.
According to a supply chain source, in the Mate 60 series, OFILM camera modules are all involved in the supply and account for the vast majority of the share, including rear cameras, front cameras, and fingerprint (sensor) modules, with a single value of 500-600 yuan. "In the first half of 2023, OFILM has recruited thousands of new people in the Nanchang factory, adding a lot of production lines in production."
In 2023, OFILM will achieve operating income of 16.863 billion yuan, a year-on-year increase of 13.73%, and net profit attributable to shareholders of listed companies of 76.905 million yuan, turning losses into profits.
OFILM said in the annual report that benefiting from the significant increase in end customer demand and sales revenue in the second half of 2023, the company's operating income in 2023 will increase year-on-year, driving the company's capacity utilization rate to increase.
Negatively affected by Apple's "abandonment", there is also the "fruit chain" leader - Goertek shares.
In 2010, Goertek became a member of the "fruit chain". At that time, Goertek's revenue increased by 134.7% year-on-year, and its profit increased by 204.72%.
With Apple's huge MEMS microphone shipments, Goertek has become the largest company in China's semiconductor MEMS field in terms of revenue for many years, and in 2021, Goertek will spin off all its MEMS business to its subsidiary Goertek Microelectronics, seeking to be independently listed on the GEM of the Shenzhen Stock Exchange.
However, not long after Goertek Microelectronics successfully passed the meeting, Goertek shares broke out in the "Apple Cutting Order" storm, and since then, Goertek's listing progress has been stranded. Goertek's performance and stock price have been negatively affected, and in August 2023, it will hit a new low in two years, and its market value will fall below 50 billion yuan - the market value will evaporate by more than 130 billion.
Now, Huawei has replaced Apple and become Goertek's core strategic customer. In addition to smart phone-related components, Goertek has reached in-depth cooperation with Huawei in the fields of smart headphones and smart speakers, smart wearables and virtual reality, from acoustics, optics, microelectronics and other precision components to complete machines, from design to manufacturing.
According to the teardown report, Huawei's Mate 20 series, Mate 30 series, P30 series, P40 series and folding screen mobile phone Mate Xs all use silicon microphone products supplied by Goertek.
Source: Sensor Expert Network
Affected by Huawei's supply chain information, Goertek's share price began to rise after a long period of downturn in the "Apple Cutting Orders" turmoil, and even approached the intraday limit on October 11, 2023, and as of May 14, 2024, Goertek's market value was about 60 billion.
In addition, major suppliers such as Goodix, GigaDevice (Siliwei) and Weir (Jihao Technology), which provide under-display fingerprint recognition sensor chips for Huawei's Mate 60 series mobile phones, have also seen stock price changes.
The net profit of upstream enterprises has grown steadily
According to relevant statistics, the number of Huawei suppliers in A-shares exceeds 500, and it is expected that more than 100 are related to smartphones, and the core suppliers include BOE, BYD, Xinwei Communications, Weir Shares, Shuobeide, Lingyi Intelligent Manufacturing, Lens Technology, etc.
图源：IC&PCB UNION
With the announcement of the 2024 Q1 results of listed consumer electronics companies, the list of the top 10 in revenue and net profit has also been released:
According to the statistics of high-tech job search services, in the top ten list, the revenue of each company exceeded 10 billion yuan, and the net profit exceeded 300 million yuan. Among them, there are 19 companies with positive revenue growth, accounting for 86.4%, and 17 companies with positive net profit growth, accounting for 77.3%.
1. Batteries and components
From the perspective of revenue, the revenue of Goertek and Sunwoda has exceeded 10 billion, but the revenue growth rate of Goertek is in a state of decline, with a range of nearly 20%, while OFILM has reached a growth rate of 72.33%. In terms of profits, the net profit level of the four companies is not high, but the net profit growth rate of Goertek, Sunwoda and OFILM has increased by 1 to 3 times compared with 2023.
2. ODM and foundry
The ODM and foundry industry as a whole performed well, with the revenue of the five companies exceeding 10 billion. In terms of net profit, Lixun Precision Fault ranks first on the list, except for Wingtech Technology's net profit that has decreased by 68.82% compared with 2023, the other 4 companies are all on the rise.
3. PBC circuit board
The overall revenue of the PBC circuit board industry showed a growth trend, and the net profit level was relatively average. Among them, the net profit of Pengding Holdings is nearly 500 million yuan, and the net profit growth rate of Shennan Circuit is outstanding, exceeding 80%.
4. Mobile phones and other components
In the field of mobile phones and other components, the revenue of the five companies has shown a steady growth trend, with a growth rate of more than 30%. In terms of net profit growth rate, Changying Precision is ahead, followed by Lens Technology, with 479.92% and 379.02% respectively, an increase of nearly 4-5 times, and the net profit margin of the two remains relatively stable.
Fifth, the panel industry
Source: Sina Finance
The performance of the panel industry in the first quarter of 2024 has also increased significantly. According to Wind statistics, the 41 companies in the industry that disclosed their quarterly reports achieved a total net profit attributable to the parent company of -103 million yuan, a significant reduction from -2.924 billion yuan in the same period in 2023.
Among them, BOE A alone achieved a net profit of 4.389 billion yuan, accounting for 82.61% of the industry's net profit attributable to the parent company. In the first quarter of 2024, BOE A achieved a net profit attributable to the parent company of 984 million yuan, an increase of 297.80% compared with the first quarter of 2023. Although the net profit attributable to the parent company in the first quarter of 2024 is negative, the growth rate of net profit attributable to the parent company in the same period of 2023 is more than 50%.
Source: Sina Finance
Compared with the change in performance, the improvement in the revenue level of the panel industry is more obvious. According to statistics, the total operating income of 41 companies in the first quarter was 133.078 billion yuan, an increase of 11.84% compared with 118.994 billion yuan in the same period of 2023, and a gap of about 8 percentage points from 144.334 billion yuan in the first quarter of 2022.
Among the above-mentioned companies with significant increases in performance and significant loss reductions, except for the year-on-year decline in operating income of Jingwei Huikai, the rest are growth. Among them, BOE A's revenue in the first quarter of 2024 accounted for 34.48% of the industry scale, reaching 45.888 billion yuan, a year-on-year increase of 20.84%.
Overall, the above-mentioned consumer electronics companies that have business cooperation with Huawei in related fields have achieved positive growth in revenue and net profit in the first quarter of 2024, and the year-on-year growth rate of revenue and net profit has been improved in an all-round way.
Huo Huaming, fund manager of GF CSI All-Index Information Technology ETF, said that Huawei's mobile phone sales continued to exceed expectations, driving demand in the upstream industry chain. According to the survey data, Huawei's shipments of new phones have increased significantly since the release, with weekly shipments reaching a maximum of 1.183 million units, an increase of 82.3% month-on-month, indicating that the sales momentum is strong, which is good for suppliers in the upstream industry chain.
At the same time, Huo Huaming pointed out that the "catfish effect" generated by Huawei's new machine has made its own market share increase rapidly, while other mobile phone manufacturers are also actively stocking up in order to maintain their share, which will stimulate the demand of upstream suppliers. In addition, the destocking of the consumer electronics industry is basically over.
The trend of domestic substitution will be further expanded
In addition to the field of mobile phones, China's industrial chain will also usher in more development opportunities.
As economist Lang Xianping said above, the current Huawei is a synthesis of Apple + Cisco + Qualcomm + Starlink + Nvidia + Google + Microsoft, and Huawei connects them together to become an unprecedented information industry chain.
Judging from the products released by Huawei, its self-developed chips have begun to break out of the shackles, creating an ecological closed loop from 1 to 100, covering from the initial chip design to the final mobile phone application. Based on the two basic chip families of Kunpeng and Ascend, it has built an open source ecosystem that includes hardware such as Euler, HarmonyOS, and Gauss.
This not only represents an unprecedented localization rate of Huawei's mobile phone parts, but also means that it has expanded the circle of friends in the supply chain.
Lin Xinlong, manager of Tianhong CSI Electronics ETF and Connection Fund, believes that Huawei, as the "leader" of China's technology industry, is forward-looking and leading, and Huawei's industrial chain is expected to continue to ferment from the mobile phone end to the AI side in the future, helping the long-term development of the electronics industry. In addition, after the release of Huawei Mate60Pro, according to the data reported by Bloomberg, the sales volume in early October 2023 has exceeded 300,000 units, rising to the second place in the domestic mobile phone sales list, and the market has given better expectations for the shipment outlook in 2024, driving the H supply chain targets in the entire consumer electronics supply chain to come out of a relatively strong market performance.
For the future industry cycle, Lin Xinlong said that the boom cycle of each round of consumer electronics is mainly driven by new demand caused by technological progress. With the continuous rotation of recovery transactions + thematic investment logic, the valuation repair market of consumer electronics (from low valuation to reasonable valuation) is still not over, and there is still room for upward gain.
Ivan Lam, a senior analyst at Counterpoint, said that on the one hand, in terms of market share, some users in the high-end market occupied by Apple will return to Huawei, and on the other hand, in technology. "As Huawei decentralizes more technologies into the supply chain, it will also bring new opportunities to the domestic industrial chain."
At a time when the U.S. sanctions on Huawei have further escalated, Huawei's overseas chip suppliers continue to "cut off supply", and Huawei will continue to increase its support for domestic suppliers. In addition, Xiaomi, OPPO, vivo and other domestic first-line mobile phone brands will also join the state of supporting domestic suppliers, and the trend of domestic substitution will continue to increase.
[Quote]
(1) Profit increased by 101%! OFILM has successfully turned around its losses, and it is expected to continue its high growth on the boom track. Oriental Fortune.2024-04-23.
(2) Huawei detonated, and this industry is completely on fire! 7000 words of latest research and judgment. China Fund News.2023-10-22.
(3) Huawei's new narrative of the industry chain: return, carnival and unprecedented. First Outlet.2023-09-28.
(4) From 15 billion to 30 billion, Huawei saved the sensor company that was abandoned by the "fruit chain". SensorExpert.2023-10-16.
(5) The first quarter results of 22 top consumer electronics companies such as Lixun Precision have been released!.High-tech Job Search Service.2024-05-05.
(6) The performance of the panel industry in the first quarter rebounded significantly, and some companies started the personnel expansion mode. Sina Finance.2024-05-12.