5G promotes the implementation of driverless applications, and domestic products will usher in a period of heavy volume!

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Contents for January 14, 2019

?Cement supply-side reform continues, exploring regional opportunities in the supply and demand game (Northeast Securities)

?Capital market" "The nose of the cow", seize the big opportunity for "China-prefixed" securities companies (Tianfeng Securities)

?The new CES has many highlights, including AI, autonomous driving, 5G, etc. (Ping An Securities)

Self-driving cars are smart cars that sense the road environment through on-board sensing systems, automatically plan driving routes, and control the vehicles to reach predetermined destinations. At the end of 2018, the Ministry of Industry and Information Technology formulated and released the "Internet of Vehicles (Intelligent Connected Vehicles) Industry Development Action Plan" to promote the cross-industry integration of the Internet of Vehicles industry. On January 10, Miao Wei, Minister of the Ministry of Industry and Information Technology, said that my country will carry out 5G commercial promotion, and some regions will issue 5G temporary licenses, with special emphasis on the Internet of Vehicles. In the future, my country's road network will also undergo digital and informatization transformation to build a vehicle A large network system that connects , roads and people to each other. Tianfeng Securities pointed out that as 5G accelerates its implementation, driverless driving will gradually become closer.

Broken down, autonomous driving requires dozens of components at three levels: perception, decision-making, and execution to work together efficiently and stably. The main products of the perception module include cameras, lidar, millimeter wave radar, and high-precision maps. The decision-making layer uses software to build a corresponding model through the reflected information, and through analysis, formulates the most suitable control strategy to replace humans in driving. The execution layer is mainly composed of three parts: electronic braking, electronic driving and electronic steering. The entire autonomous driving industry chain is mainly composed of OEMs, Tier1 (ADAS) manufacturers, and Tier2 (millimeter wave radar, electronic steering, electronic braking, etc.) manufacturers.

Tianfeng Securities pointed out that the domestic autonomous driving layout below LEVEL3 is relatively complete, and the companies participating in the autonomous driving perception layer have completed the initial accumulation, and the products are about to enter the batch supply stage. Among them, Huayu Automobile and Joyson Electronics are the forerunners, and their products have been successfully supplied to customers such as SAIC, Geely, and NIO; while latecomers such as Desay SV, Huayang Group, and Baolong Technology have also obtained a number of vehicle The company's fixed-point order will be implemented soon. The main products at the execution level include ESC (electronic stability control system), AEB (emergency emergency control system), EPB (electronic parking system), EPS (electronic power steering system), etc. The first-generation products of Tuopu Group, Asia-Pacific Co., Ltd., and Wanan Technology have all achieved mass production, and the new-generation products are also in the testing stage.

The cement industry continues to promote supply-side reforms. At the same time, it is affected by multiple factors such as peak-shifting production, environmental protection production restrictions, and mine governance. It has shown the characteristics of not being weak in the off-season. Since July, the cement sector has been relatively stable compared with Shanghai and Shenzhen. 300 has achieved an excess return of over 20, and as of December 2018, it still maintains an excess return of over 10.

Northeast Securities pointed out that the cement sector market from 2016 to the present has gone through two stages. From the beginning of 2016 to the middle of 2017, cement prices continued to rise, performance gradually improved, valuations increased, and the rise in stock prices was reflected in performance and performance. Valuation is driven by the same trend, and although cement prices are still rising since then, valuations have declined during this period, suppressing the stock price. The important factors suppressing the valuation of cement are on the one hand the pessimistic expectations for real estate investment on the demand side and the lack of confidence in the power of infrastructure construction. On the other hand, the price of cement itself is currently at a historically high level, and there are doubts about the room for future growth.

According to statistics from the Digital Cement Network, there were ***14 new ignition clinker production lines nationwide in 2018 (including 1 technical transformation project), with a total new clinker production capacity of approximately 20.43 million tons, which is the same as in 2017. The newly added clinker production capacity of 20.46 million tons was basically the same, and the impact rate on the total national production capacity was about 1.1. It is expected that new ignition production capacity in 2019 will be mainly concentrated in Southwest and South China. Based on the construction progress tracking of the clinker production line currently under construction, the Digital Cement Network estimates that the new ignition clinker production capacity in 2019 will be about 25 million tons, of which 16 million tons will be in the first half of the year. By region, the total in Guangdong and Guangxi will be about 6 to 7 million tons. The total output of Yunnan and Guizhou provinces is about 8 million tons, and the ignition time in Guangdong, Guangxi and Yunnan-Guizhou regions is mostly in the first half of the year. From the perspective of production capacity impact rate, Southwest and South China have been greatly affected.

Northeast Securities pointed out that the pressure on new production capacity in my country's cement industry has been significantly reduced in recent years, but the problem of overcapacity still exists. The focus of overcapacity reduction work is to remove clinker production capacity, so the elimination of backward production capacity, especially backward overcapacity, Production capacity is particularly important. The "Cement Industry Capacity Reduction Action Plan (2018-2020)" formulated by the China Cement Association mentioned that the clinker production capacity will be reduced by 293 million tons in three years, 540 cement grinding stations will be closed, and the number of grinding stations will be eliminated by 25, so that The national average utilization rate of clinker production capacity reaches 80%, and the average utilization rate of cement production capacity reaches 70%. The clinker production capacity concentration ratio of the top ten enterprises reaches 70%, and the cement production capacity concentration ratio reaches 60%.

With the elimination of low-standard cement, clinker demand and capacity utilization will increase. According to calculations by Northeast Securities, assuming all P.C32.5 cement production is converted to P.S.A32.5/P.P32.5/P.F32.5, it will drive clinker demand to grow by about 7% and clinker capacity utilization to increase by about 6%; Assuming that all P.C32.5 cement production is converted to P.O42.5, and considering equal-intensity conversion, clinker demand will increase by about 12% and the clinker capacity utilization rate will increase by about 9%. At present, the capacity utilization rate in the northern region is generally lower than that in the south. As long as the overall demand does not drop significantly, the overcapacity of clinker in the northern region will be alleviated. For the southern region, especially in the peak season, the supply of clinker will be even tighter.

On January 12, Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission, emphasized increasing equity financing, increasing the activity of the stock and futures markets, introducing long-short gaming tools, and promoting the implementation of the Science and Technology Innovation Board and the pilot registration system as soon as possible. The Central Economic Work Conference attached great importance to capital market reform. Tianfeng Securities judged that it is currently in the early stages of improving regulatory policies. "The investment clock points to securities companies" and the trend of securities companies' stocks is improving.

Tianfeng Securities firmly recommends large securities firms. The balance sheets of large securities companies are solid, and the impairment losses of some small and medium-sized securities companies such as Pacific are not representative of the industry. The ratio of financing scale and equity attributable to parent shareholders below the liquidation line of large securities firms is significantly lower than that of small and medium-sized securities firms, while the credit/asset impairment provision ratio is much higher than that of small and medium-sized securities firms.

The monthly financial data from January to December 2018 shows that leading securities firms are more stable than small and medium-sized securities firms. Tianfeng Securities believes that the fundamentals of securities companies will improve in 2019: capital market reform and policy correction, investment banking and direct investment business growth, financing costs falling, equity pledge business relief, increased concentration, the stock market is at the bottom, and high beta. The average valuation of the securities industry is 1.4xPB, the valuation of large securities companies is between 0.9 and 1.4xPB, and the median industry historical valuation is 2xPB.

The 2019 U.S. Consumer Electronics Show (CES) was held from January 8th to 11th. This year, nearly 4,000 manufacturers from around the world participated in the exhibition, displaying the latest technologies and innovative products.

Ping An Securities analyzed that the main highlights of 2019 CES are: ① Artificial Intelligence (AI): Artificial intelligence is becoming the core of CES, and AI has gradually penetrated into smart applications in life, life, and production; ② Internet of Vehicles/autonomous driving: autonomous driving and new energy Cars have become a hot topic at CES in recent years, and major car manufacturers will also demonstrate the latest progress in autonomous driving technology; ③5G communications: The shadow of 5G appears in various locations at the exhibition. Qualcomm also announced that there will be 30 The remaining 5G equipment is on the market.

In terms of artificial intelligence, Ping An Securities believes that the current rapid development of artificial intelligence is mainly due to the comprehensive improvement of three major elements: ① The computing power has been significantly improved and the computing cost has been significantly reduced; ② The algorithm has achieved major breakthroughs. Deep learning algorithms are widely used; ③ Massive data provides support for algorithm implementation and optimization. At present, domestic artificial intelligence terminal application products are abundant, and technologies such as computer vision, natural language processing, and robotics are being deeply integrated with traditional fields such as security, transportation, medical care, and education. Among them, autonomous driving has become a key area in the field of artificial intelligence. At this year’s CES, many car companies released autonomous driving concept models and related solutions. The increasing maturity of technologies such as 5G communications and human-vehicle interaction will also promote the development of the Internet of Vehicles and bring more imagination to people's future driving experience.

Another highlight at this CES is 5G communications. Qualcomm said that 2019 will be the "Year of 5G" and it is expected that more than 30 terminal devices will be launched this year, the vast majority of which are smartphones. A number of 5G mobile phones also appeared at the Qualcomm booth. Ping An Securities believes that if nothing unexpected happens, 5G mobile phones will be officially shipped in the first half of this year. In addition, Intel released "Snow Ridge" for the 5G era. Snow Ridge is a new network system chip specifically designed for 5G wireless access and edge computing. It will introduce Intel computing architecture into wireless access base stations and allow more computing Functionality is distributed at the edge of the network.

29 companies in Table 1 received first-time buy ratings from institutions

21 companies in Table 2 received upgrades from institutions

Shennan Circuit announced positive results last week According to the revised announcement, the net profit attributable to the parent company is expected to be 672 million yuan to 717 million yuan for the whole year of 2018, a year-on-year increase of 50 to 60%. The reason for the sharp increase in performance is that the Nantong factory’s production capacity ramp-up progress exceeded expectations. It is understood that the planned production capacity of the Nantong factory is 340,000 square meters per year.

CITIC Construction Investment estimates that the value of 5G macro base station PCBs will be close to 30 billion at the peak of the 5G cycle. The competitive landscape of communication base station PCBs is stable, with high product technology thresholds and long customer certification cycles. The company is the leader in the segmented industry, leading Communication equipment vendors account for a high proportion of revenue and benefit from the flexibility of 5G base station construction performance. At present, the demand from the company's communication customers is stable, and orders for 5G base station equipment at home and abroad in 2019-20 are expected to exceed expectations. With the increase in production capacity of the Nantong plant, the company's revenue and gross profit margin are expected to continue to increase, and the performance is worth looking forward to.

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