Four expectation differences of 5G theme investment in [Guangfa Strategy]-- the theme Theory of the week "September 2nd issue"
Editor's note: the 5G spectrum specification is entering the countdown this month, and only after the completion of spectrum allocation can the relevant operators and equipment manufacturers plan the follow-up networking costs and investment plans. At present, the "excitement" of the capital market for 5G mainly comes from the event catalysis of spectrum distribution in September, and once the spectrum allocation is completed, the market is expected to boost the investment boom of 5G theme.
GF Securities Co., LTD. believes that the 5G theme has the logical basis of "looking at the long and doing the short": 1) in the short term, September spectrum allocation and PT show will once again release commercial acceleration signals, boosting theme risk appetite. 2) in the medium to long term, on the one hand, 5G is the fulcrum for the growth of information consumption, which is in line with the policy independent and controllable strategic direction; on the other hand, 5G is a new performance improvement direction for communication manufacturers and operators, and spectrum distribution is expected to greatly increase the number of base station orders in the upper and middle reaches.
Four major expectation differences of 5G investment
One of the expected differences: the replacement cycle of 5G technology is long, and "leapfrog" applications will give priority to the video field.
Unlike 4G, 5G has a very strong malleability. The key technologies to promote the digitization process include software-defined devices, cloud computing, delay-sensitive networks, virtual reality and so on, and 5G is the most critical connection fulcrum. GF Securities Co., LTD. believes thatThe commercial use of 5G is "progressive", the space is broad, and the replacement cycle of 5G technology is much longer than that of 3G/4G.The commercial scene defined by R15 is an eMBB scene, so 5G "leapfrog" applications will be the first to appear in the video field (4K HD video, AR/VR video, 3D video).
The second difference in expectation: China's 5G occupies a comparative advantage, and trade frictions strengthen the medium-and long-term trend of self-control.
GF Securities Co., LTD. believes that 5G is one of the commanding heights of the new generation of technological revolution in global competition, and under China's established strategic goal of "taking the lead in 5G", trade frictions will strengthen the independent and controllable trend of 5G and "force" China's commercial process to speed up. However, we should not rule out the short-term disturbance caused by the escalation of trade frictions, but should wait for the negative digestion and pay attention to the positive factors of 5G which are constantly strengthened in the medium and long term.
In addition, the most developed 5G technology focuses on "millimeter wave spectrum". China's 5G wireless spectrum allocation is ahead of the United States, and the level of optical network coverage of operators is much higher than that of the United States.
The third difference is expected: 5G has the attribute of "new infrastructure" and pays attention to the order increment on the base station side after spectrum allocation.
According to the prospective Industry Research Institute's "2018-2023 China Private Network Communication Industry Development Prospect Forecast and Investment Strategic Planning Analysis report", the target 4G base station is used to calculate the future 5G construction investment:It is estimated that the number of 5G Macro stations will be 1.25 times that of 4G in the future., about 4.5 million. Considering that 5G base stations will greatly increase the use of RF devices and antennas, the total investment in the construction of 5G base stations in China is expected to reach 705 billion yuan in 2026.An increase of 56.7% compared with 4G investment.
GF Securities Co., LTD. believes that the significance of spectrum distribution is to open a new round of capital expenditure expansion on the upstream base stations of 5G, and the attribute of 5G "new infrastructure" is consistent with the policy tone of "strengthening the deficiencies in infrastructure" emphasized by the Politburo at the end of July.
The fourth gap is expected: with the launch of 5G mobile phones next year, operators have "more opportunities than challenges".
On the one hand, the issuance of 5G licenses in China is expected to be issued at the beginning of 1919. Compared with 4G penetration speed, China's 5G penetration rate may approach 60% in 2022; on the other hand, according to MIC, global 5G mobile phone shipments are expected to reach 136 million units in 2021, with a penetration rate of 7.8%, and shipments in 2022 will rapidly rise to 311 million units, with a penetration rate of 17.3%. GF Securities Co., LTD. believes thatAccording to the experience of 3G/4G, the market is worried that the operators' early investment is too high so that their profits can not keep up with the late profits. However, with the launch of 5G mobile phones next year and the sharp increase in user penetration after the issuance of licenses, operators have a stronger incentive to improve profitability in the 5G era.
Finally, GF Securities Co., LTD. suggested that investors should grasp the 5G theme window of "Spectrum release + PT Exhibition" in September, pay attention to the medium-and long-term deterministic trend, and continue to pay attention to the increment of base station-side orders in the middle and upper reaches of the second half of the year. including main equipment, base station antennas, radio frequency devices, optical communications and other areas.