Demand is king, the winner of the product wins the market

  Under the epidemic situation in 2021, demand will increase, supply will be limited, and prices will increase due to lack of cores. Domestic substitution will be accelerated, and those who have production capacity will gain the world. Looking forward to 2022, with the gradual release of production capacity, supply and demand tend to ease, and the marginal price attribute weakens. On the whole, technological innovation will never stop, the electrification and intelligence of automobiles, the opening of new product cycles for VR/AR, server upgrades, the continuous penetration of 5G, the blooming of AIOT, the long slopes and thick snow of analog chips, the huge space for innovation demand and domestic alternatives, win Product owners win the market.
  Automobile: electrification and intelligence are unstoppable, driving the high growth of demand for automotive-grade semiconductors. The general trend of automobile electrification, the global sales of new energy vehicles continues to grow rapidly, the value of single-vehicle power semiconductors has increased significantly, and the market demand for automotive-grade IGBT and silicon carbide has grown rapidly; the development of automotive intelligence has accelerated, driving automotive cameras, computing, storage, connectivity and other chips high demand growth.
  VR/AR: Metaverse empowerment needs are released, and VR/AR starts a new product cycle. Tech giants scrambled to deploy, Facebook changed its name to Meta, opening a new era of metaverse. On the content side, various indicators of Steam VR games and users continued to rise rapidly. On the hardware side, sales of VR devices continued to grow rapidly. The inflection point of VR has come, AR is coming, a new round of innovation cycle will start, and the long-term space of the industry is expected to open up.
  Servers: DDR4 products are upgraded to DDR5 products, and memory interface chips are ready for a new growth cycle. The server memory is upgraded from DDR4 to DDR5, and the memory interface chip is upgraded accordingly. At the same time, new supporting chips are added to form new solutions to meet the new growth cycle. In addition, upgrading DDR5 for PC memory will also open up new market space.
  Consumer Electronics: The penetration rate of 5G mobile phones has increased, and AIOT has blossomed. Smartphone shipments have stabilized, and the penetration rate of 5G mobile phones has continued to increase, resulting in a continuous increase in the demand for RF front-end chips, and at the same time driving the continuous development of RF front-end modularization. A hundred flowers are blooming in AIOT, the demand for TWS, smart watches, and smart home is constantly growing, and the ecosystem of the Internet of Everything is becoming more and more perfect, driving the continuous growth of SOC, MCU, storage and other markets.
  Analog chips: Changpo thick snow has a large market space, and product expansion continues to be replaced by domestic products. There are many types of analog chip products, which are widely used in downstream applications, and the market space for Changpo and thick snow is large. Trade frictions superimpose tight supply and demand to accelerate domestic substitution. Domestic manufacturers seize the opportunity to continuously expand their products and continue to expand application fields such as consumer electronics, home appliances, industry, and automobiles.
  Investment suggestion: Looking forward to 2022, demand is king, and those who win products win the market. It is recommended to pay attention to high-quality companies with competitive products in each growth track.

  2021 is the year of policy, and the regulatory framework is determined. In 2022, it is recommended to focus on the relevant winners in the transformation of the Internet from “island” to “channel”, as well as the high-quality development of Internet companies in the all-dimensional and all-domain regulatory environment (refinement). Operation improves link efficiency, expands capacity overseas or guards traffic pools, and iterates business model evolution to improve monetization rate, etc.). Looking forward to 2022, taking into account factors such as user and revenue growth, industry barriers and competitive landscape, cash flow and sustainable development, we are relatively more optimistic about the sub-sectors including video (especially short video), local life services, social networking, games, Trendy games, live e-commerce, VR/AR, etc.
  Video: Regulatory policies tend to ease + member prices increase, which may lead to the recovery of long-term video performance in 2022; China Video continues to penetrate the user market through multi-channel and content diversification; short video continues to drive traffic growth through stickiness improvement and speed version.
  Social & Online Music & Online Reading: In 2022, we will focus on the commercialization of WeChat and the innovation of QQ after the opening of the ecosystem. There is still room for further improvement in the payment rate of music streaming media. Tencent Music (TME) continues to implement the dual content strategy of music + long audio. NetEase Cloud Music mainly depends on the increase in the number of users to drive the improvement of long-term commercialization capabilities.
  Games: Strong supervision and release of version numbers will be suspended. In the middle of 2021, the valuation of the sector will bottom. However, in the second half of the year, the products of leading game companies performed well, reflecting the advantages and resilience of the business model. In 2022, the two major logics of China’s mobile games going overseas and high-quality products are expected to continue to deepen. With the addition of new channel evolution (VR/VR, Metaverse, etc.), the valuation gap between individual stocks is expected to increase.
  Advertising and marketing: In 2021, the regulatory and macro environment will affect short-term performance, and the head platform will actively adjust and adapt. The overall demand of advertisers has grown relatively slowly, and some industries have been significantly reduced due to the influence of regulation. In 2022, we will seize three opportunities: platform structural opportunity; advertiser structural opportunity; regional structural opportunity (the budget for overseas investment continues to grow).
  Live e-commerce and SaaS: Short videos drive the rapid increase in the penetration rate of live e-commerce. Douyin promotes interest in e-commerce, and Kuaishou strengthens trust in e-commerce: Douyin and Kuaishou are still expected to enjoy higher growth rates than the broader market in 2022. In addition to the centralized e-commerce layout, merchants have strengthened their private domain layout; affected by the macroeconomic pressure and the accelerated closed-loop of some channels in the short term, the growth of the number of e-commerce SaaS companies has slowed down, and the long-term trend will not change.
  Film and television theaters: The repeated epidemics in 2021 have led to a month-on-month drop in box office and stock prices, which have not yet returned to pre-epidemic levels. The box office of imported films in 2022 is expected to improve marginally. First, many Hollywood blockbusters that have been delayed before have been intensively scheduled for 2022. Second, the time difference between the introduction of imported films and the release time window of streaming media is expected to return to normal.

 2021 will be the most difficult year for real estate companies since 2008. In the first half of the year, driven by a low base and post-epidemic market inertia, the industry’s performance was basically stable; in the second half of the year, the deterioration of sales, combined with the accelerated outflow of financing cash, increased the pressure on the industry’s funds in place, and the data on investment, land acquisition, and construction all touched worst level in history. In the fourth quarter, this pressure spread to enterprises. The cumulative market share of defaulting enterprises, including Evergrande, was close to 10%, and the overall industry stability was facing unprecedented pressure.
  The industry faces great downward pressure in 2022. At present, the regional sales differentiation is further widened, and the supply-side pressure caused by factors such as corporate defaults is superimposed. It is expected that in 2022, the sales area will decrease by 8% year-on-year, and the sales amount will decrease by 7%. On the supply side, it is expected that the land transfer amount in 2021 will drop by more than 13% year-on-year, and the transfer area will drop by nearly 30%, which will affect the start of construction, construction and overall investment in 2022. New construction area is expected to drop by 15% and overall investment to drop by 5.2%. In terms of completion, the industry completion obligation according to the sales rhythm has increased by 6% year-on-year, and the actual completion is greatly affected by the capital situation of the enterprise.
  In 2022, the sector has the opportunity for systematic valuation repair. The bottom position of the current cycle will cause unprecedented pressure on the stability of the industry structure and the economy in 2022. Starting from the central bank’s statement in September 2021, the China Banking Regulatory Commission and the China Securities Regulatory Commission have continued to speak out to maintain stable demand and reduce private enterprise defaults. Pressure will be the focus of policy in 2022. Under the influence of policy expectations, the valuation has room for repair.
  Redistribution of resources for supply-side reform, high-quality enterprises usher in good opportunities for development. 2021 is the “year of reform” in the real estate industry, and the scale of the industry’s interest-bearing liabilities will experience negative growth for the first time. The first is the “three red lines” policy at the end of 2020 to limit the overall debt growth rate of the industry, differentiated allocation of financial resources, and “implement policies according to enterprises”. The management of real estate credit concentration in early 2021 will further constrain the rhythm of banks’ credit resource allocation, superimposed on the contraction of trust and bond markets, and the industry is facing greater financial pressure, leading to the deterioration of the investment side. From the perspective of enterprises, credit defaults, net debt repayment pressure, and slowdown in land investment, more companies have adjusted their main goal from “seeking development” to “survival”, the gap in management capabilities between enterprises has been enlarged, and policies have been superimposed. The inclination of resources has led to intensified differentiation. The central government’s policy support for acquisitions between real estate enterprises marks the beginning of the restructuring of the real estate industry. High-quality central state-owned enterprises and true green private enterprises with the ability to undertake projects have more opportunities to acquire projects and expand their scales, so as to improve and surpass their concentration. developing.

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