"Can you popularize 5G and what are the good stocks to buy?"
As the first hot plate of new infrastructure investment in 2019, 5G's rise in the last two months has made many investors red-eyed and hot.
The urgency of investors is exactly where the value of Junlin lies.
In retrospect, Junlin has written a lot of articles about 5G, but it seems that the whole industry chain has not been sorted out.
Well, today we will make a pot of tea, knock some melon seeds, and listen to the 5G industry chain from beginning to end to do a popularization.
In this article, we address three questions:
1, what is 5G?
2, where are the opportunities for 5G?
1
What is 5G?
5G, simply put, is the 5th generation of mobile communication networks.
From 1G to 5G, each generation of mobile communication technology upgrade brings revolutionary investment opportunities.
A simple example:
In 1G, you could only make phone calls and listen to accompanying calls on the sound desk.
2G time, you can send and receive text messages, you can also log in to the mobile dream network WAP platform to read novels, the three portals rely on SMS color bell successfully turn a profit.
3G, there are images and animations, microblogging, microblogging, dropping, mobile payment, mobile games, you can also in the stranger on the girl.
4G, faster, more traffic, live, video popularity, fast hands, shake the sound of all the people addicted to the next game is not moving 1G, 2G capacity.
We can see that from 1G to 4G, there are two basic features:
First, the network speed is faster, the traffic is bigger, and the tariffs are cheaper, which brings about a multiple expansion of the market size.
Second, new technologies bring new applications, evolving from voice, text, images, to video.
For example, when it comes to the upcoming 5G, the average person's subconscious reaction is, "Isn't it just a faster way to download movies?"
That's certainly true, but if that's all it is, you're probably not going to get the meat of the 5G investment.
In fact, the second point is the more important one.
5G follows the same principles of upgrading as above, and in terms of technical features, it includes four:
Faster speeds, more traffic, shorter latency, and wider connectivity.
The first two, speed and traffic, correspond to the first feature of generational upgrades;
The last two, latency and connectivity, correspond to the second feature of generational upgrades.
Let's start with the first feature.
In terms of speed, the peak communication rate of 5G can reach 20Gbps, which is 20 times that of 4G;
In terms of traffic, the bandwidth of 5G can reach 100-400MHz, which is 50-100 times that of 4G.
The upgrading of speed and traffic mainly brings the upgrading of entertainment, including 8K UHD video and cloud gaming applications, and the corresponding new wave of cell phones.
Recently, with the release of the high-level "ultra-high-definition video product development action plan 2019-2022", this plate has started signs, Junlin will also start the analysis of the industry chain, so stay tuned.
The cloud game is also worthy of attention.
In the evolution of 3G-4G, mobile games have experienced a shift from small light games (such as Angry Birds) to large heavy games (such as King's Pride);
The next round of upgrades will undoubtedly be higher quality requirements and operational complexity of the game, in which case the game's mode of production will undergo a fundamental change.
At this year's MWC, Tencent launched a cloud game platform, Tencent Instant Play, which does not require downloading and installing, and can be played online, pointing the industry in the direction of development.
Simply put, cloud gaming combines the high-speed, high-traffic transmission technology of 5G and the super computing power of cloud computing to bring cooler graphics and more intense scene experiences, and its revolution can be compared to IMAX in the movie industry.
In order to enjoy these new forms of entertainment, the hardware of the phone has to be updated, so after the completion of the 5G infrastructure construction, the new cycle of the cell phone industry will follow, the details of which will be discussed later.
And then there's the second feature.
In terms of latency, 5G can do less than 1ms, which is 10 times smaller than 4G;
In terms of connectivity, the number of terminals connected at the same time in 5G can reach 11 billion, which is 10-100 times higher than 4G.
These two characteristics are what make 5G truly revolutionary.
For example, in the past, due to the long latency, the information between two network terminals could not be synchronized, and many wireless remote control functions could not be realized.
Examples include driverless cars, remote medical operations, remote drone operations, and large-scale smart manufacturing.
These technologies have very high requirements for security and precision, and low latency is one of the important underlying support logics, which, once technically satisfied, will lead to a dazzling boom in innovation.
Another example is the exponential increase in the number of connections, which is a key step in expanding the terminal platform from cell phones to the Internet of Everything.
The IoT boom will lead to a huge amount of new hardware that we might not be able to imagine right now, from cars, to drones, to robots, to smart wearables, to VR devices, all of which will change dramatically in form and function.
If the first feature of 5G is just an experience upgrade to meet the needs of the C-suite;
the second feature is a revolution that will allow 5G to cut into the B-suite, transforming our mode of production and way of life in all aspects.
2
Where is the opportunity for 5G?
5G as a cyclical upgrade industry, grasp the investment rhythm is very critical.
The rhythm here refers to base station equipment, terminal hardware, and application software, the three major links.
Buy early, or sell late, will be very lose.
As an example, in 2017, the 5G concept was a fire, if that time you start to buy, experience the kill fall in 2018, definitely turn off the lights and eat the rhythm of the noodles.
With experience, investment in the communications industry needs to first build infrastructure (base station equipment), then terminal hardware can be sold, and finally the application software bloom, operators can only make money at this stage.
According to China's 5G planning:
Licensing in the middle of 2019, the second half of the year to start the network infrastructure construction, large-scale commercialization in 2020, 2020-2022 are the peak investment period.
According to this timeline, the 5G phone refresh wave won't start until 2020 at the earliest, and will complete a cycle in the next 3 years;
apps will be a bit later.
Between the three segments, there is a time lag of about half a year to a year for performance release.
Of course, you can't wait for earnings to be released.
The best time to enter is often half a year to a year before the performance of the volume: institutional investors are often in this period of time to start the layout, ambush.
For example, the 5G equipment stocks, the installation started in the second half of this year, and working backwards, equipment procurement and production started in the first half of the year, and then forward, the second half of 2018 is the best time period for layout.
We look back, we will find that those 5G stocks that have already risen a round, the start time point is almost always in this interval.
This is exactly why, the paid version of Junlin had a round of revamping at the end of October last year, to include a large number of 5G leading stocks into the Junlin index, and categorized ratings, for key tracking.
The two points that need careful attention here are:
First, the time, too early to enter and too late to enter, will lose out on the best opportunity for profitability;
Second, before the release of the performance, the investment in technology stocks is often a speculation of the concept of fish and dragons, presenting a pattern of generalized rise of the chickens and dogs.
Even some of the dipping stocks, more than a good company with real technology, such as Orient Communications.
The reason for this is that value investors value long-term returns, and the share price of a good company usually grows steadily with the release of results, slowly and permanently.
Swimming capital obviously does not have such patience, so they will choose those who lack the actual product, not valued by institutional investors pseudo-concept company for speculation.
Imagine, a good company, a large number of institutional funds piled up, the stock price has just been speculated some, they sold a large number of, how to play on?
Therefore, "low price, small disk, easy to manipulate" is the lobbying is important, so that the party can take advantage of the lively to do a bureau, coaxing the small scattered to follow the wind to join, fish in troubled waters.
But this kind of stock, Junlin suggests that investors must stay away from, the probability of being cut leek is very big.
After entering the performance release period, each link of the industry leading companies will gradually stand out from the dark horse into the white horse;
And the pseudo-conceptual stocks will reveal their original form, from where they come, back to where they go, the lobbyists with the spoils of war to fight the next piece of fertile grass, leeks lush wilderness.
So, how to distinguish who is the real leader, who is a pseudo-concept shares?
3
Start with the base station equipment.
There are three sub-sectors in the equipment segment: equipment vendors, RF components, and optoelectronic components.
The relationship is like this: operators are responsible for burning money, allocating orders to equipment vendors, who then break up the orders and place orders with various parts companies.
In this process, the equipment vendors are the ones that benefit from the most certainty.
Because after a long period of competition, the pattern between several leading companies has been very stable.
At present, the local equipment vendors, Huawei, ZTE, Fiberhome, the size of the three companies in accordance with the approximate ratio of 7:2:1 in descending order.
In the parts segment, there are a lot of companies, and the technology is changing fast, but once you bet on it, the returns are even more amazing.
The two segments that have changed the most are the RF side and the optoelectronic side.
The RF side includes antennas, RF chips, PCB boards, and several other parts, is 5G and 4G compared to the most technological innovation in the part, but also the performance of the earliest start, the share price elasticity of the strongest areas.
Companies include -
Antennas: Tongyu Communications, Shenglu Communications, Mobile Development, Jingxin Communications, Dongshan Precision, Fei Rongda;
RF chips: Aifu Electronics, Canqin Technology, Guohua new material, Dafu Technology, Wuhan Fangu, Lixun Precision, Dongshan Precision, Sanan Optoelectronics, Fenghua High-tech, Shunluo Electronics;
PCB board: Shenzhen South Electric Road, Hudian shares, the birth of the benefit of science and technology, Dongshan Precision, Founder Science and Technology, Peng Ding Holdings, Chonda Electronics, Jingwang Electronics, Shenghong Technology;
But be careful, this is a strong cyclical link, the stock price rise period is usually within 1-2 years, it is difficult to sustain, timely tracking is very important.
Mainly because, the technical threshold of this segment is low, the relevant enterprises lack the bargaining power with equipment vendors, and can only earn money in the early supply and demand tension.
Once into the industry's big expansion stage, the equipment supplier's price pressure will be like a shadow, so that the performance of parts and components companies lose imagination.
Optical end, including optical chips, optical modules, fiber optic cables and several other parts, the short-term elasticity of the stock price is slightly worse, but the performance of the continuity will be better.
In fact, due to the 5G transmission rate increase, the transmission distance becomes longer, the bandwidth becomes bigger, the density of the base station is greatly increased, the long-term demand for optoelectronic end of the growth is very obvious.
Companies include -
Optical chip: Optical Technology;
Optical module: Optical Technology, New Easyland, the intermediary Xu Chuang, Botronics, TFN, too Chenguang, Cambridge Technology;
Fiber optic cable: Hengtong Optoelectronics, Zhongtian Science and Technology, Tongding Interconnection, Telfa information;
4
Next is the terminal.
Terminal is divided into several big opportunities: first of all, the opportunity is very clear cell phone new wave, followed by driverless cars, VR equipment, service robots and other industries are still in the concept stage.
Let's start with cell phones.
If the base station equipment segment has entered the early stage of performance release in 2019, the cell phone industry will not have performance out until at least 2020.
Therefore, the theoretical speculation of the concept should also be until the middle of this year, the 5G cell phone of each brand name is listed one after another is appropriate.
After all, it is expected that the first batch of 5G phones on the market, are sold to more than 8,000 yuan, and there will be almost no big sales.
This year is in the last year of the cell phone 4G cycle, sales are expected to fall.
But the thing about investing is that things that exceed expectations always happen at any time.
With the announcement of Huawei's first "5G + folding screen" phone (although the actual market will not be until mid-2019), the enthusiasm for investment in 5G phones has been ignited in advance.
So where are the major opportunities?
The cell phone brand names are left out, and anyway, one is not listed on the A-share market.
Junlin believes that the next cycle of cell phone upgrades will provide opportunities for innovation and pattern reorganization mainly at the RF end, display end, and camera end.
As with 5G equipment, the biggest change in 5G cell phones is the RF side, and the investment logic is almost the same as the same, only the beneficiary companies are significantly different.
Companies include:
Antennas: Xinwei Telecom, Lixun Precision, Dalian Technology, Dongshan Precision, Speed;
RF chips: UV Spreading Sharp, Triple-A Optoelectronics, Xinwei Telecom, MAGIC Technology, Hodacom Electronics, Josun Micro;
PCB boards: PCB boards:
PCB boards:
PCB boards:
The most important thing is that they can be used in the same way as 5G devices. PCB board: Dongshan Precision, Hongxin Electronics, Peng Ding Holdings, Jingwang Electronics, Chongda Technology, Shenghong Technology;
The investment opportunity of the display is also huge, especially the emergence of the folding screen technology, which will make the next few years of the cell phone form exciting changes.
What's more, this will be a key battle to shift the dominance of the panel industry from South Korea to China.
Over the past 20 years, China's panel industry has burned more than hundreds of billions of dollars, but has always lagged behind South Korea in technology and scale, making it difficult to make money for years.
Now, with the panel industry's top technology to catch up, China's panel industry will gradually enter the sweet inflection point of profit.
This is very worth looking forward to.
Companies include:
Panel: BOE, VISION, SZTEMA, HUAXING OPTOELECTRIC;
Material: Sinews Technology, Strong New Material, Sunny Spectrum, Zhongshi Science and Technology, Wanrun Stocks, Puyang Huicheng;
Equipment: Two simple examples: The first piece, the Huawei P20Pro for the first time with 3 cameras, the shooting effect is amazing, the P series of phones in 2018 doubled year-on-year growth, so that Huawei has successfully stood in the high-end cell phone field. The second piece, at this year's MWC, OPPO demonstrated a periscope telephoto lens with 10x zoom, pushing the phone's photographic ability to a new peak. With the upgrading of various technologies such as triple camera, zoom, wide-angle, ultra-high-definition, 3D structured light, and the increase in precision and complexity, the long-term growth value of this segment is huge, and the investment logic is similar to that of the optoelectronic sector of 5G equipment. Companies include: Modules: Ophi Technology, Sunny Optics, Xinli International, Qiu Titanium Technology, Hollister; Motors: Jinlong Electromechanical; 3D Structured Lighting: Lianchuang Electronics, Crystal Photoelectric; The company's main business is the development of the 3D structured light industry, which has been in the forefront of the industry for many years. strong> 5 The opportunity of the cell phone is finished, but Junlin believes that this opportunity mainly belongs to 2020. After the time enters 2021, with the improvement of 5G facilities and the maturity of AI technology, the investment in the technology industry will usher in a real climax. This stage belongs to the innovative terminal hardware and corresponding application software, and is a unique treasure belonging to the 5G era. It's too early to analyze and predict. Let's start with drones. It's been exactly 10 years since Google introduced the concept in 2009. Although it's still in the experimental stage, more and more money and companies are pouring into the whole industry chain, and there have been theoretical breakthroughs in how to achieve the ultimate driverless state. To put it simply, to realize driverlessness, we must have four major technical supports - Perception system: Relying on various sensors such as vision, radar, and localization, we can realize the perception of the road position and obstacles, just like a human being has five senses. Cognitive system: Through the 5G network connected to the cloud data center, combined with high-definition maps and other automotive **** enjoy the data, so that the car knows what kind of environment they are in a situation, so as to avoid collision in dynamic driving, to ensure safety. This is critical, just like a human being with consciousness. Decision-making system: through the AI chip and deep learning algorithms, real-time update of routes and scenarios processing methods, like a person with a brain; Control system: the new energy vehicle terminal driven by electricity, like a person with arms and legs. These years down the line, the perception system, decision-making system, control system, have gradually matured, waiting for the cognitive system of 5G connection. Without low-latency 5G technology, it's like a computer that relies only on a 56K phone line to access the Internet, and you have to wait ten minutes to open a website. This car, can only be considered a retarded child. Therefore, the entire industry is looking forward to the arrival of the 5G era, so that driverless cars can really realize the commercialization of the landing. The traditional automotive industry is a huge market at the level of a million billion dollars, and is the backbone of modern industry throughout the West, and is one of the core industries of Japan, Germany, the United States, South Korea, and France. Over the last hundred years or so, this industry has been refined along the evolutionary laws of mechanical power structures, but never qualitatively changed. Now once it is disrupted by new technologies and the industry value chain is reorganized, what an amazing investment opportunity there is! Companies include: Vehicle: Tesla, Azure, BYD, Geely Automobile, SAIC, Yutong Bus, traditional automotive giants; AI chip: Nvidia, Intel; IGBT chip: NXP, Renesas, Infineon, Texas Instruments, BYD, Huamicroelectronics; Algorithms: Google, Apple, Uber, Delphi, DDT, Baidu, Huawei; Maps:
Software: KDDI;
Screen: Ophiuchi Technology, Changxin Technology;
Camera: Ophiuchi Technology, Sunny Optics, Crystal Optoelectronics, Lianchuang Electronics;
Sensors: Neoway Technology, Gore, Weir, Huagong Technology, Gao De Infrared, Suzhou Solid State Technology, Huacan Optoelectronics;
Intelligent Cockpit: Junsheng Electronics;
...... ......
There are a lot of companies involved here, and the industry chain is unprecedentedly large.
And it is conceivable that as the technology matures and gets off the ground, many more companies in the communications, software, electronics, and semiconductor industries will be lining up to get in to share in its cake.
This will be an epic investment feast, far larger than any past round of A-share themes.
Reading this, maybe you're thinking, "Is this a company I can invest in?"
This is not a decision that can be made easily with a pat on the head, because in addition to fundamental opportunity analysis, it requires a more in-depth examination of financial risk, performance certainty, and the competitive landscape of the business.
Written by Team King's Landing.
More growth stock analysis, industry interpretation in the "China's new generation of investment research services" - Junlin