Zhitong Financial AP learned that CITIC released a research report saying that the current valuation of the electronic sector is at the absolute bottom of history, the value of core assets is prominent, and reiterated its active attention to the two main investment lines:一、Upstream semiconductors look at the scene demeanor, "heavy assets" look at localization, "light assets" look at the top three, currently the first semiconductor plate, focus on year-on-year growth more determined subdivision direction (equipment localization, manufacturing localization, customer structure high-quality chip designers).二、The downstream terminal focuses on the blue ocean of innovation increment: looking for a pure incremental downstream product track with strong certainty, focusing on automotive electronics (electric and intelligent) and AIoT (watch, VR); it is also recommended to pay attention to the segment direction of performance growth, such as folding screen increment in the mobile phone stock market.Key recommendations: North Hua Chuang (002371.SZ), China Micro Corporation (688012.SH), Shengmei Shanghai (688082.SH), Semiconductor Manufacturing International Corporation (00981), Hua Hong Semiconductor (01347), Shilan Wei (600460.SH), etc.

The main points of the report are as follows:

Upstream semiconductors look at the scene, how to determine the focus of investment?-- Plate investment strategy: "heavy assets" look at localization, "light assets" look at the top three.

What do you focus on? "focusing on assets" looks at the localization of equipment / manufacturing, while "light assets" focuses on design enterprises with good customer structure and strong global competitiveness.

Four core issues of the semiconductor subplate:

1) can the prosperity of the industry be sustainable? It lasts! With the growth of global semiconductor sales, the industry is characterized by a structural boom: from general shortage to "long and short materials"

2) Why should the equipment / manufacturing sub-industry be recommended? The equipment delivery time is tight and the localization is booming; the capacity utilization rate of the fab is high, and the product portfolio upgrade and price increase lead to the increase of ASP.

3) what are the changes in the investment thinking of the design company? From last year's focus on "out-of-stock price increase benefit" to this year's focus on "top three customers in the industry quality"

4) Analysis of prosperity and supply and demand of power semiconductors? The prosperity of the industry is still optimistic, sub-track growth differentiation, pay attention to IGBT and SiC/GaN track.

Downstream terminal point of view of the industry, which blue ocean which volume?-- plate investment strategy: focus on automotive electronics + AIOT increment + mobile phone subdivision innovation.

What do you focus on? The blue ocean market looks at the key points (cars, AIOT), and the stock market looks for increments (mobile phones).

Four problems of the incremental Blue Sea:

1) Automotive: electric and intelligent, what are the changes and opportunities of automotive chips? ① domain controller reform; domestic replacement of ② MCU; ③ automotive storage; ④ CIS increment; ⑤ power semiconductor.

From Apple Inc to Tesla, Inc., can it become the new blue ocean of the electronic industry chain? Incremental opportunities in Automotive Electronics

2) AIOT: who will pick up the AIOT after the headset? Smartwatch, smart home

What does metacosmos hardware focus on after VR? Progress of the whole machine, AR direction

Four problems in the stock market:

1) what is the trend of the mobile phone market? The overall stock market, focusing on the marginal improvement in demand in the second half of the year and the changes in brand share

2) which subdivisions have increments? Focus on the folding screen industry chain

3) what is the possibility of the relocation of the industrial chain? The epidemic situation may be disturbed in the short term, but most of the links do not have the economy of relocation in the medium term, and the upgrading of the domestic structure in the long term.

What are the investment opportunities in other cyclical sub-industries in the second half of the year?-- Plate investment strategy: focus on MiniLED, PCB, thin film capacitors and other subdivision directions.

Risk factors:The risk of global macroeconomic downturn, the persistence of the global epidemic, lower-than-expected downstream demand, less-than-expected innovation, increased risks of international industrial environment changes and trade frictions, exchange rate fluctuations, and so on.