The Zhitong Finance App learned that Tianfeng Securities released a research report stating that it continues to be optimistic about the core beneficiaries of the AI computing power supply chain (optical module, PCB, GPU module manufacturing, switch, etc.), and also suggests focusing on three AI diffusion branch line investment opportunities: domestic computing power, AI technology silicon, liquid cooling, and new applications (AI+ robots, AI PCs, AI mobile phones, etc.). At the same time, emphasis is placed on low-level undervaluation, the upward trend in the industry, seabreeze and submarine cable investment opportunities, and active attention to satellite/low-altitude developments. Therefore, in the medium to long term, seize the boom track and be firmly optimistic about investment opportunities in the three major sectors of AI computing power+satellite internet/low-altitude economy+sea breeze.

Tianfeng Securities's main views are as follows:

In terms of revenue, the overall 23Q4 and 24Q1 revenue of communication equipment increased 3.2% and 5.9% year on year. Since the growth rate began to decline in Q1 in '21, the growth rate has been declining for 10 consecutive quarters until negative growth in 23Q3, but growth has been reversed since 23Q4, and growth has accelerated in 24Q1, reflecting the completion of the switching between old and new momentum in the industry, and AI computing power has become a new engine driving the growth of the industry. In terms of net profit, overall 23Q4 and 24Q1 net profit of communication equipment increased 30% and 13% year over year, a sharp reversal from -16% in 23Q3, reflecting the rapid recovery of industry profits under the switch between old and new momentum, and the industry trend is expected to continue.

The industry segment is worth focusing on: 1) Optical Devices 23Q4 and 24Q1 revenue growth rate was +15.3% and +40.8%. After slowing to negative growth for 5 consecutive quarters, 23Q4 resumed positive growth for the first time, and 24Q1 accelerated high growth. Net profit growth rates to mother were +35.6% and +108.3%, respectively, or reflect the overall high growth in global AI-driven optical module demand. Currently, it is expected to benefit mainly from overseas, and is expected to benefit from the growth in domestic computing power demand in the future;

2) IoT 23Q4 revenue maintained a steady increase of 7.1% year-on-year, 24Q1 growth accelerated markedly at 23.9%, and 24Q1 net profit grew at a year-on-year rate of +92.5%, the first positive growth in six quarters. The industry showed further recovery, and domestic and foreign economic recovery was driving market demand. In particular, leading companies in the controller field, Tuobang Co., Ltd. and Heltai showed outstanding performance;

3) Main equipment 23Q4 and 24Q1 revenue increased 6.8% and 3.2% year-on-year. The growth rate has slowed since 2021 Q1, but 23Q4 and 24Q1 resumed growth for two consecutive quarters, benefiting from the switch between old and new kinetic energy;

4) The satellite industry's 23Q4 and 24Q1 revenue fell 0.3% and 27.8% year on year; net profit to mother fell 75.9% and 201.6% year on year; mainly affected by military adjustments and personnel changes (excluding China Test). It is expected to enter the formal networking stage in 24. The industry may recover in the second quarter, and there is plenty of room for industry growth;

5) IDC&CDN23Q4 and 24Q1 revenue increased 2.2% and 13.0% year over year. The growth rate declined starting in 23Q3, and the growth rate accelerated again in 24Q1, or reflecting the transition between old and new kinetic energy. Mainly benefiting from the development of the AI industry, Runze Technology, the leader in the intelligent computing center, performed well;

6) The revenue of optical fiber optic cable 23Q4 and 24Q1 increased 5.6% and -0.2% year-on-year, mainly due to slow demand for optical fiber and delays in the development of sea breezes and submarine cables. Net profit to the mother grew by -35.8% and -22.3% year on year. Countries had tight bidding schedules in 2024. The bank believes that offshore wind power installations will grow or turn positive in the next few years.

I. Artificial Intelligence and Digital Economy:

1. Optical modules & optical devices, key recommendations: Zhongji Xuchuang, Tianfu Communications, Xinyisheng, Yuanjie Technology (joint electronic coverage), Bochuang Technology, Shijia Photonics, Optical Bank Technology, China Porcelain Electronics (joint coverage of new materials); Recommended attention: Taichen Light, Guangxun Technology, Mingpu Optoelectronics, Dingtong Technology, Cambridge Technology, etc.;

2. Network equipment infrastructure: Key recommendations: ZTE, Ziguang Co., Ltd. (joint computer coverage); Recommended attention: Phillincox, Shengke Communications, Ruijie Networks, Sanwang Communications, Yinghantong, Dongtu Technology, etc.;

3. Overseas recovery & focus, focus on recommendations: Tuobang Co., Ltd., Guanghetong, Yilian Network, and Shifu Communications. It is recommended to focus on: Heertai, Yiyuan Communications, etc.

4. Undervalued and high dividends: China Mobile, China Telecom, China Unicom.

5. AIDC & cooling: Key recommendations: Runze Technology (joint mechanical coverage), Runjian Co., Ltd., Kehua Data (joint coverage of telecommunications), and Aofei data (joint computer coverage). Recommended attention: Invec, Guanghuan New Network, Gaolan Co., Ltd., Science Innovation Source, Shenling Environment, Data Port, etc.;

6. AIGC application, focusing on: Caixun Co., Ltd., DreamNet Technology.

II. Satellite Internet & Low Altitude Economy:

Defense informatization construction is being accelerated, low-orbit satellites are being actively developed, and the low-altitude economy is being actively promoted. Key recommendations are: Huazue Navigation (joint computer coverage), Haige Communications; recommended attention: Chengchang Technology, Zhenlei Technology, Shenglu Communications, Xinke Mobile, Shanghai Hanxun, Jiayuan Technology, Mengsheng Electronics, China Satellite Communications, Telecom Network Security, Hytera, etc.

3. Sea Breeze Cable & Intelligent Driving:

1. Sea Wind Cable: Key recommendations - Hengtong Optoelectronics, Zhongtian Technology, Dongfang Cable (telecommunications coverage);

2. Intelligent driving: It is recommended to focus on: modules & terminals (Guanghetong, MeiG, Yieyuan Communications, etc.); sensors (Hanwei Technology & Sifang Opto-mechanical joint coverage); connectors (Yihua Co., Ltd., Dingtong Technology, etc.); structural parts & air suspension (Rima Precision), etc.

Risk warning: The decline in operators' capital expenditure exceeds expectations, the impact of the global pandemic exceeds expectations, industry competition intensifies, the impact of raw material shortages and price increases exceeds expectations, the risk of exchange rate fluctuations, and the risk that a small number of samples selected may cause deviations in statistical results.