(report producer/author: Wanlian Securities, Xia Qingying )
1 Industry review: The capital market has recovered, and the valuation cost-effectiveness highlights
.1 Market review: The valuation is at a low level, and the attention of funds has increased
The computer industry's annual ups and downs are average, ranking 16. From the beginning of 2021 to the present, the Shenwan computer industry has fallen by 0.89%, ranking 16th among the 28 industries in Shenwan’s first-level. During the same period, the Shanghai and Shenzhen 300 fell 5.95%, leading the index by 5.06pct. The attention of the capital of the
industry has increased significantly in the past two weeks. The transaction volume of Shenwan computer industry reached 300.624 billion yuan in the latest week of December 3, with an average daily transaction volume of 60.125 billion yuan, an average daily transaction volume increased by 11.18% compared with the previous trading week. The average daily turnover in the latest two weeks is significantly higher than the average daily turnover from 2015 to the present, showing a rising trend, reflecting that the computer industry's capital attention has increased significantly.
.2 Performance Analysis: The revenue side is steady and improving, and the profit side is under short-term pressure
We took the internal standards of the SW computer industry as the basis and based on the time interval of the sample from 2019 to 2021, and finally selected 239 targets as the sample analysis sample (because the data is incomplete and not comparable, 40 targets were excluded). Since the scales of the computer industry vary greatly, we will compare the growth performance of the overall method and the median method at the same time so as to better reflect the real growth changes and structured characteristics of the computer industry, and avoid the large-scale target from having an excessive impact on the overall industry.
Revenue growth in the first three quarters recovered significantly. In the first three quarters of 2021, the computer industry achieved operating income of 574.303 billion yuan, an increase of 18.74% year-on-year under the overall method, an increase of 17.89pct year-on-year compared with the revenue growth rate of 0.86% in the same period last year; a year-on-year increase of 16.42% under the median method, an increase of 15.38pct year-on-year compared with the revenue growth rate of 1.04% in the same period last year. The revenue growth rate under the overall method and the median method is basically the same, and both have a significant increase compared with the same period last year, reflecting that the sales of the computer industry are recovering at an accelerated pace.
The industry revenue growth rate differentiation in the third quarter was significant. In the single quarter, the computer industry achieved operating income of 204.097 billion yuan in Q3 2021, a year-on-year increase of 12.98% under the overall method, a year-on-year increase of 3.3% in the same period last year; a year-on-year increase of 6.13% under the median method, a year-on-year decrease of 7.27 pct compared with the revenue growth rate of 13.4% in the same period last year. The industry growth rate is higher than the median method under the overall method, indicating that the revenue growth of leading enterprises in the industry is stronger than that of small and medium-sized enterprises under the influence of the epidemic.
Net profit attributable to shareholders in the first three quarters was basically the same year-on-year. In the first three quarters of 2021, the computer industry achieved a net profit attributable to shareholders of 19.888 billion yuan, a year-on-year decrease of -3.67% under the overall method, which is a significant recovery from the growth rate attributable to shareholders of -34.10% in the same period last year; the median method increased by 6.54% year-on-year, an increase of 1.79pct from the growth rate attributable to shareholders of 4.75% in the same period last year.
Q3 net profit attributable to shareholders is under pressure, and the differentiation phenomenon is significant. quarter-on-quarter, the computer industry achieved a net profit attributable to shareholders of RMB 7.308 billion in Q3 2021, a year-on-year decrease of 20.83% under the overall law, and continued to weaken compared with the growth rate of net profit attributable to shareholders of RMB -11.5% in the same period last year. The median method increased by 1.2% year-on-year, worse than the growth rate of net profit attributable to shareholders in the same period last year. The net profit attributable to shareholders in Q3 declined in the single quarter, contrary to the revenue growth, mainly due to the mismatch of revenue recognition and expense investment under the influence of the point-like outbreak of the epidemic, coupled with the influence of factors such as rising prices of some raw materials. The growth rate of Q3 net profit attributable to shareholders under the median method is significantly better than the overall method, mainly because the cost and expenses of small and medium-sized enterprises are compressed by a large amount under the influence of the epidemic, while leading enterprises maintain relatively normal expenses.
Q1-Q3 net profit growth rate is better than net profit attributable to shareholders. In the first three quarters of 2021, the computer industry achieved a net profit of 14.246 billion yuan with a year-on-year increase of 4.56% under the overall method, which is a significant recovery from the growth rate of -28.93% of the non-net profit in the same period last year; the median method increased by 11.32% year-on-year, an increase of 10.29pct compared with the growth rate of 1.03% of the non-net profit in the same period last year.The growth rate of net profit excluding non-recurring items is higher than the growth rate of net profit attributable to shareholders, mainly because the computer industry received a large number of government subsidies and tax and fee reductions and other non-recurring gains and losses in . After excluding this part of the difference, the industry's profit level actually increased slightly.
Q3 net profit excluding non-recurring items is under pressure, and the differentiation phenomenon is significant. -minute quarterly, the computer industry achieved a net profit of 6.321 billion yuan in Q3 2021, a year-on-year decrease of 14.69% under the overall law, which was worse than the growth rate of 3.42% of the non-net profit in the same period last year. The median method increased by 2.32% year-on-year, worse than the growth rate of non-net profit excluding non-issuance in the same period last year. The growth rate of net profit excluding non-recurring items under the median method is significantly higher than that of the overall method, reflecting the differentiation of the growth rate of net profit excluding non-recurring items in the computer industry.
Operating cash flow is under significant short-term pressure. Computer industry Q1-Q3 achieved net operating cash flow of -49.995 billion yuan, which significantly increased compared with the net outflow of 15.368 billion yuan in the same period last year. Q3's single-quarter operating cash flow changed from net inflow last year to net outflow. The poor performance of operating cash flow is mainly due to the slowdown in customer collection progress under the influence of the epidemic, but the credit levels of the government and B-ends are generally good. After the payment is delayed, it is expected to be collected in a concentrated manner around the end of the year, thereby significantly improving cash flow .
021 Q1-Q3 Construction Information Technology, Artificial Intelligence, and Information Technology Innovation Segment sectors have the best revenue growth rate. Among them, the operating income of construction information technology increased by 44.63% year-on-year, a significant increase of 38.93pct from the growth rate of 5.7% in the same period last year. The revenue growth rate of artificial intelligence was 41.41%, which was also significantly higher than the growth rate of 1.31% in the same period last year. The revenue growth rate of the Xinchuang sector turned from negative to positive, ranking third. In a single quarter, the top three sub-industry ranking in revenue growth are also construction informatization, artificial intelligence and information technology.
021 Q1-Q3 sub-sectors of information creation and construction information technology attributable to shareholders performed well. The year-on-year growth rate of the construction information sector in the first three quarters turned from negative to positive, and the net profit attributable to shareholders increased significantly by 197.88% year-on-year. The growth rate of net profit attributable to shareholders of the Information Innovation sector also turned from negative to positive, with a significant year-on-year increase of 294.67% in the first three quarters. In the single quarter, the construction information technology and information innovation sectors in Q3 continued to maintain strong growth momentum, with the year-on-year growth rates of Q3 being 201.13% and 65.41% respectively. The cloud computing sector's net profit attributable to shareholders also achieved a high growth rate of 81.91%, turning from negative to positive year-on-year.
.3 Position analysis: The allocation ratio is at a historical low, and the degree of grouping has increased
The proportion of fund holdings in the computer industry in Q3 2021 was 2.70%, and 1.41pct was low. The proportion of fund holdings in the computer industry in Q3 2021 was 2.70%, down 1.61pct from Q3 2020 and 0.86pct from Q3 2021. Compared with the proportion of the circulating market value of the computer industry in terms of the circulating market value of all A-shares, the adaptation ratio of the computer industry fund holdings in Q1 2021 was 4.11%, with a low allocation of 1.41pct.
Compared with the computer industry's heavy holdings in the past four quarters, the composition of the top ten heavily held stocks has not changed much. Among them, Hang Seng Electronics , Broadcasting, Kingsoft Office, UFIDA Network, Deep Continuing , iFLYTEK , Zhongke Chuangda , and Baoxin Software ranked among the top ten heavily held stocks for four consecutive quarters, and Hang Seng Electronics ranked among the top three heavily held stocks for four consecutive quarters. Anheng Information and Baichu Electronics are newly entered into heavy-weight stocks in 2021Q3. Although the rankings of the top ten heavily held stocks in Q4, Q1, 2021 and Q2 in Q2, have changed, their composition is basically the same, and they are all high-quality companies in each sub-industry.
The degree of holdings of funds in the computer industry is still relatively high. 021 Q3 computer industry fund holdings top 5, top 10, top 20 stocks market value accounts for 42.65%, 62.10% and 81.32% of the overall computer industry fund holdings, respectively, which changed -0.4pct, 1.84pct, and -0.36pct year-on-year respectively compared with 2021Q2, and the industry allocation concentration is still relatively high.
2 Industry Outlook: Digitalization is the long-term main line, information security runs through all the time
"14th Five-Year Plan" Digital China is independent, and the digital transformation of the economy becomes the long-term development main line. The 14th Five-Year Plan clearly proposes that it is necessary to develop digital economy , promote digital industrialization and industrial digitalization, promote the deep integration of the digital economy and the real economy, and build an internationally competitive digital industry cluster. With the new generation of information technology 5G, big data, cloud computing, and artificial intelligence empowering the physical industry, it will help digital transformation of in various industries. At the same time, adhering to independent and controllable and solving the problem of chokes is still the key R&D and innovation direction of various industries, and the prosperity of the information and innovation industry will continue to rise. In addition, in the era of big data, the importance of data security is unquestionable, and the network security industry will accelerate its development.
.1 Industrial Internet: Help the development of intelligent manufacturing, and industry applications are accelerated to be implemented
Industrial Internet can realize the comprehensive interconnection of the entire value chain of enterprises. In recent years, my country's manufacturing industry has gradually shifted from the middle and low end to the middle and high end, and a large number of digital and intelligent demands have emerged. As the product of the deep integration of new generation information technology and manufacturing technology, the industrial Internet has achieved a comprehensive connection between all factors, all industrial chains and all value chains through the comprehensive interconnection of people, machines and objects. It also collects, transmits, analyzes, and forms intelligent feedback to promote the formation of a new production, manufacturing and service system. It is constantly subverting traditional manufacturing models, production organization methods and industrial forms around the world, and promoting the accelerated transformation and upgrading of traditional industries and the accelerated development and growth of emerging industries.
Industrial Internet system architecture can be divided into five levels: device layer, network layer, platform layer, software layer, and application layer, as well as a security system that runs through each level. Among them, the equipment layer is the underlying infrastructure of the industrial Internet, including intelligent production equipment, production status smart terminals, embedded software and industrial data centers, etc.; network layer refers to the network interconnection of all aspects of the company's production, supply and marketing; the platform layer is the industrial cloud platform, including collaborative R&D, collaborative manufacturing, information transaction and data integration platforms, which is the carrier and center of data exchange and management; the software layer includes R&D design, information management and production control software, which is the core link that helps enterprises realize digital value; the application layer includes vertical industry applications, process applications and applications based on data analysis; and the security system is permeated in the above layers, from the security of the underlying equipment to the security of the upper layer of application to provide support and guarantee for the entire industrial Internet system.
Emerging technologies are becoming more and more mature, empowering the rapid development of the industrial Internet. Industrial Internet is an important implementation scenario for the cross-application of emerging technologies. In recent years, new technologies represented by artificial intelligence, 5G, edge computing , Internet of Things, digital twins, etc. have accelerated their integration into the industrial Internet, and have continuously expanded the capabilities and boundaries of the industrial Internet. The integration of advanced manufacturing technology and information technology has strengthened the empowerment role of the industrial Internet, and has given rise to integrated technologies such as industrial software, industrial big data, and industrial artificial intelligence. It enables innovative applications such as real-time modeling and simulation of machines, processes and systems, and mining and refining products and process technology hidden knowledge .
policies are intensively introduced, continuously improving the positioning of the industrial Internet. requires the acceleration of the construction of new infrastructure such as industrial Internet, emphasizing that the integration of 5G and industrial Internet will accelerate the construction of digital China and smart society, accelerate China's new industrialization process, and inject new impetus into China's economic development. The "Guiding Opinions on Deepening the "Internet + Advanced Manufacturing" Development of Industrial Internet" issued by the State Council pointed out that the industrial Internet is the key infrastructure of the new industrial revolution characterized by digitalization, networking and intelligence. Accelerating its development will help promote the transformation and upgrading of traditional industries, and optimize the allocation of production and service resources on a larger scale, higher efficiency and more precise manner.In 2020, the "Outline of the 14th Five-Year Plan for National Economic and Social Development and the Long-Term Goals for 2035" clearly proposes to actively and steadily develop the industrial Internet, and regards the industrial Internet as a key industry in the digital economy. It proposes to build an independent and controllable identification resolution system, standard system, and security management system, strengthen the research and development and application of industrial software, cultivate and form an industrial Internet platform with international influence, and promote the construction of the "Industrial Internet + Intelligent Manufacturing" industrial ecology. (Report source: Future Think Tank)
Industrial Internet helps enterprises reduce costs and increase efficiency . From the perspective of the value created by the industrial Internet, it mainly lies in the ability to optimize the efficiency of resource allocation, give full play to the potential of manufacturing equipment, processes and materials, improve enterprise production efficiency, create differentiated products and provide value-added services. According to the data from China Electronic Information Industry Development Research Institute , Huawei relies on the "coal mine brain" built by Huawei Cloud to create a "full perception-full link-full intelligence" smart coal mine in an integrated way of "cloud + edge + end". The real-time risk recognition rate reaches 98%, the effective working hours of the coal mine are increased by 10%, and the equipment operation and maintenance costs are reduced by 65%. FAW monitors the status of motor equipment in the assembly workshop based on the industrial Internet platform in real time. Through predictive maintenance of the assembly motor, it effectively avoids losses caused by unplanned downtime, and achieves significant economic benefits. The accuracy of the assembly motor fault prediction is improved to more than 90%, the prediction cycle is 7-90 days ahead of schedule, the unplanned downtime is reduced by 10-20%, and the motor maintenance cost is saved by 5-15%. Therefore, we believe that the main driving force for the current development of the industrial Internet has not only come from policy deployment, but also the pursuit of cost reduction and efficiency improvement and value innovation has also caused it to have a large amount of spontaneous demand for the industrial Internet.
China's industrial Internet market maintains rapid growth. According to CADI Consultant data, the scale of China's industrial Internet market reached 671.27 billion yuan in 2020, and it still achieved a growth rate of more than 10% under the severe blow to the manufacturing industry by the epidemic in 2020. It is estimated that by 2023, the scale of my country's industrial Internet market will reach 981.49 billion yuan. From the perspective of sub-sectors, as the underlying infrastructure and equipment layer gradually improves, the growth rate of industrial software, industrial Internet platforms and industrial Internet security will exceed that of industrial smart devices and industrial communications, and the proportion of industrial revenue will continue to increase.
.2 Industrial software: It is both a shortcoming and an opportunity
Industrial software is an important support for realizing intelligent manufacturing. industrial software runs through the entire process of product planning, design, production, management, sales, etc., and is essentially integrating manufacturing experience, manufacturing processes, etc. into the software system, thereby empowering the entire production and manufacturing process. Industrial software is a technical means to ensure the refinement of manufacturing and the advanced development of industrial foundations. It significantly improves industrial productivity and production efficiency through the realization of enterprise automation and digital R&D, management and control. It is the core element and important support for promoting the high-quality development of intelligent manufacturing and industrial Internet. Its advancedness determines the efficiency level of the industry. According to the classification of CIDI Consulting , industrial software can be mainly divided into four categories: R&D design, information management, production control and embedded software.
R&D and design software: mainly assists enterprises in R&D and innovation through computer means, including CAD (computer-aided design), CAE (engineering simulation), CAM ( computer-aided manufacturing , mainly index control programming software), EDA (electronic design automation), and PDM/PLM ( product data management /product full life cycle management ), etc.
Production control software: is mainly used to improve the management and control level of the manufacturing process and improve the efficiency and utilization of production equipment. Including industrial control systems, manufacturing execution systems (MES), manufacturing operation management (MOM), product data management (PDM), operator training simulation system (OTS), dispatch optimization system (ORION), advanced control system (APC), etc.
Information management software: supports various software for enterprise operation and management. Specifically, it includes ERP (enterprise resource planning), MES (manufacturing execution system), CRM (customer relationship management), SCM (supply chain management), SRM ( supplier relationship management ), EAM (enterprise asset management), HCM (human asset management), BI (business intelligence analysis), APS (advanced production scheduling), QMS ( quality management system ), etc.
015-2020, the scale of China's industrial software market continued to grow. In 2020, industrial software products achieved revenue of 197.4 billion yuan, an increase of 14.8%. According to Gartner data, the global industrial software market size in 2020 was approximately US$433.2 billion, equivalent to approximately RMB2989.1 billion. In 2020, the scale of my country's industrial software market accounted for about 6.6% of the global market. According to the share of my country's manufacturing added value in the world, China's industrial software market still has about 5 times the growth space.
my country's industrial software is still in its early stages of development. Most industrial software in my country are still in the critical stage of transforming from introduced applications to independent research and development and establishing technological iteration capabilities. The penetration rate of industrial software is relatively low. In 2018, only ERP and CAX software are popularized in enterprises exceeding 50%. From the perspective of domestic production rate, the degree of domestic production of business management industrial software is relatively high, but R&D and design software is almost monopolized by foreign giants. In 2019, domestic industrial software had a market share of only 5% in R&D and design products, and production control products was only 50%. 3D high-end industrial software such as CAD, CAE, EDA, MES, PLC needs to be made urgently.
technology blockade is imminent, and industrial software is elevated to a national strategy. In May 2019, Huawei and the three major EDA manufacturers were all terminated due to trade sanctions. In June 2020, the United States banned some Chinese enterprises and universities from using MATLAB software through an entity list. The importance of localization of core industrial software technologies is becoming increasingly prominent. During the 14th Five-Year Plan period, the Ministry of Industry and Information Technology organized and implemented the industrial foundation reconstruction project, combining the important part of industrial software, industrial basic software, with the traditional "four basics" (i.e., key basic materials, basic components, advanced basic processes and industrial technology foundation) into the new "five basics". On November 30, 2021, the Ministry of Industry and Information Technology issued the "14th Five-Year Plan for Software and Information Technology Service Industry Development". The plan points out that software is the soul of the new generation of information technology, the foundation of the development of the digital economy, and the key support for the construction of a strong manufacturing country, a strong cyber country, and a digital China. The main tasks proposed by the plan include focusing on breakthroughs in industrial software.
R&D design category: The technology difference is obvious, the domestic substitution space is vast
D CAD breaks the monopoly of Europe and the United States, and 3D CAD needs to be broken through urgently. The main domestic CAD manufacturers include Zhongwang Software, Suzhou Haochen, and Digital Dafang. In the field of 2D CAD, domestic products have basically been replaced by AutoCAD in the fields of construction, basic machinery manufacturing, etc., and have occupied a certain market share in China and overseas with their high cost-effectiveness advantages. However, in the field of 3D CAD, domestic products are still in the stage of continuous research and development and iteration and conquering key technologies, and have not actually broken the monopoly of foreign manufacturers. In 2018, the global 3DCAD software market size was approximately US$8.66 billion, monopolized by France's Dassault Systems, Germany's Siemens and American parameter technology company (PTC), accounting for more than 60% of the global market share. The domestic CAD software market size is about US$733 million, accounting for 8.5%, and more than 95% of the market is occupied by foreign software.
EDA The industry market concentration is relatively high, and Chinese enterprises are mainly in the second and third echelons. The global EDA industry is mainly monopolized by Kaideng Electronics, Synopsys and Siemens EDA. The above three companies belong to the first echelon with significant leading advantages, accounting for about 78% of the global market. Huada Jiutian and several other companies are ranked second in the global EDA industry with full-process tools in some fields or leading advantages in local fields.The third-tier companies mainly focus on point tools for certain specific fields or uses, and there is a clear gap between the overall scale and product integrity and the companies in the first two echelons.
Domestic EDA market domestic production process is accelerating. According to CIDI think tank data, my country's total sales of the EDA industry from 2018 to 2020 were approximately RMB 4.49 billion, RMB 5.52 billion and RMB 6.62 billion, respectively, achieving continuous growth. Among them, in 2020, my country's independent EDA tool companies' operating income in the local market was approximately 760 million yuan, an increase of 65.2% year-on-year. Among them, domestic manufacturer Huada Jiutian has full advantages in the fields of analog circuit design full-process EDA tool system, digital circuit design EDA tool tool, flat panel display circuit design full-process EDA tool system, wafer manufacturing EDA tool tool. In 2020, it followed the first echelon of the three major manufacturers, and its market share in domestic EDA tools was 6%. With the development and growth of my country's integrated circuit industry and the continuous advancement of independent and controllable semiconductors, domestic EDA tools are expected to continue to develop rapidly and the domestic production rate continues to increase.
Production control category: rapid growth under the background of intelligent manufacturing, domestic manufacturers have advantages in specific vertical industries
production control software is the technical support for realizing intelligent manufacturing. Intelligent manufacturing focuses on the manufacturing links, with intelligent production as the main line of development, and production control software is most closely linked to intelligent manufacturing. Production control software can reduce manufacturing costs by increasing the utilization rate of manufacturing equipment, improve product manufacturing quality, and shorten product manufacturing cycles, thereby improving the level of manufacturing process management and achieving efficient, energy-saving and agile response in production.
China DCS market concentration has increased, and domestic manufacturers occupy a leading position. In 2019, China's DCS market share began to concentrate on the leader. my country's enterprise central control technology accounted for 27% of the DCS market in 2019 and has a strong competitive advantage in process industries such as chemicals and petroleum. From 2011 to 2019, Zhongkong Technology ranked first in the overall market share of the domestic DCS market for nine consecutive years. Zhongkong Technology's market share grew from 13.0% in 2011 to less than 1 percentage point ahead of the second place market share, and grew to 27.0% in 2019, exceeding 11 percentage points ahead of the second place. Domestic DCS manufacturers can meet changes in customer needs more in a timely manner and provide more targeted services than foreign manufacturers. With the continuous advancement of China's intelligent manufacturing, the degree of localization of DCS is expected to further improve.
MES software market has many suppliers and the market is highly fragmented. my country's MES industry has been rising for a short time and its development history is relatively short. According to IDCh data, the total market share of China's Manufacturing Execution System (MES) software in 2020 reached 3.09 billion yuan, with an annual compound growth rate of 24.3%, a significant increase over the past three years. Domestic mainstream manufacturers include Baoxin Software, Baichu Electronics, Dingjie Software , Nengke Co., Ltd., Saiyi Information and other companies, and each has its own advantageous areas.
pays attention to the improvement of MES' domestic penetration rate and the evolution of the market competition landscape. As a software with a high degree of personalization and customization, MES has high implementation costs and complex and expensive maintenance costs, resulting in a low penetration rate among small and medium-sized enterprises with long-tail . According to IDC data, the total market share of China's Manufacturing Execution System (MES) software in 2020 reached RMB 3.09 billion, with an annual compound growth rate of 24.3%, a significant increase over the past three years. We believe that with the acceleration of domestic industrial transformation and upgrading and the accelerated construction of smart factories, the penetration rate of MES products is expected to gradually increase.
From the perspective of competitive landscape, according to IDC data, Siemens , Baoxin Software, and SAP rank in the top three in China's MES software market in 2020. Among them, Baoxin Software ranks second with a market share of 7.6% with its deep cultivation in the steel industry and its expansion in the pharmaceutical industry; Dingjie Software, Central Control Technology, etc. ranked fourth and seventh. The core of MES software is an in-depth understanding of the industry's production process, and its knowledge-how constitutes a competitive advantage for MES manufacturers. Referring to the competitive landscape of foreign MES manufacturers, we believe that domestic manufacturers will work hard in the advantageous sub-sectors, and their respective leading companies will appear in different vertical industries.
.3 Information Technology Innovation: The process of domesticization is unstoppable, and the industry Information Technology Innovation continues to deepen
The basic software and hardware industry chain is taking shape and is evolving from "available" to "easy to use". Information innovation is the innovation of information technology application. It is in line with the "863 Plan", "73 Plan " and "nuclear high-level" and is a long-term solution for the development and upgrading of my country's IT industry. Since 2020, my country's information technology industry has begun to be fully promoted, and the replacement of foreign products has been achieved from the three levels of basic hardware - basic software - application software. After extensive pilot projects and applications in the field of the Party, government and military, the information and innovation industry has basically been formed, and the situation of "deficiency in my country's ICT industry has been greatly improved. The reliability of Xinchuang products has been significantly improved, and is accelerating its evolution from "available" to "easy to use".
Multiple architectures have developed in parallel, and the domestic CPU industry has begun to take shape. After more than 20 years of continuous research and development and iteration, the domestic CPU has changed the situation of corelessness. Currently, six major CPU manufacturers have formed three different technical paths, namely Haiguang and Zhaoxin, which adopt the X86 architecture, and Kunpeng and Feiteng , which are independently developed under the authorization of ARM instruction set , as well as Loongson and Shenwei , which are based on the open source architecture MIPS and Alpha, which develops independent instruction set . From a performance and ecological perspective, Haiguang and Zhaoxin can enjoy the ecological advantages of x86 on the desktop and server side and have high performance. From the perspective of independent controllability, Loongson and Shenwei independently develop instruction sets based on open source architecture, their independent controllability is very high. Feiteng and Kunpeng both obtained permanent authorization for the ARM v8 instruction set, achieving a good balance in performance, ecology and autonomous control.
product iterates rapidly, and sales continue to rise. Loongson announced the launch of the LoongArch instruction set in April 2021, officially giving up the MIPS architecture authorization. The LoongArch instruction set has more than 2,500 independent instructions, which can translate MIPS, ARM and X86 instructions, and is successfully used in the LoongArch 3A5000 processor. In 2020, Loongson achieved operating income of 1.082 billion yuan, a year-on-year increase of 122.87%; Haiguang DCU series products were officially released in March 2021 and will be widely used in big data processing, artificial intelligence, commercial computing and other fields in the future. In 2020, Haiguang achieved operating income of 1.022 billion yuan, a year-on-year increase of 169.53%; according to data at the Feiteng Ecological Conference, Feiteng CPU delivered 1.5 million chips in 2020, a year-on-year increase of 650%, and its revenue reached 1.272 billion yuan. Feiteng expects that chip delivery will exceed 2 million pieces in 2021 and revenue will exceed 2 billion yuan.
operators and banks have increased their efforts to purchase domestic servers, and the curtain of industry information innovation has been opened. Following the full launch of party and government information creation in 2020, 2021 ushered in the first year of industry information creation. Among the centralized procurement projects of the three major operators, the proportion of domestic servers continues to increase. In the latest centralized procurement, the number of domestic servers purchased by China Telecom , China Mobile and China Unicom is 24823, 28957 and 496.91 million respectively, accounting for 35%, 21% and 40% of the total procurement volume, respectively, marking the further widespread application of domestic servers in the telecom industry. In August 2021, Bank of China Co., Ltd. released the "National Core Server Selection" project, mainly targeting the procurement of domestic servers equipped with Kunpeng and Haiguang chips. Server types include computing servers, balanced servers, storage performance servers, and storage capacity servers. After the three major operators purchased domestic servers in large quantities, financial institutions represented by Bank of China also released large-scale procurement orders for domestic servers, marking that Xinchuang has begun to gradually implement the financial industry.
Domestic operating system forms a two-legged pattern, with Kirin and Tongxin occupying an absolute share. At present, Qilin and Tongxin have completed the adaptation work with six major domestic CPUs, Kunpeng, Feiteng, Loongson, Haiguang, Zhaoxin and Shenwei, and have actively established their respective software and hardware ecosystems. The Kirin operating system is combined with Zhongbiao Kirin and Galaxy Kirin, backed by China Electronics , and formed a PK ecosystem with Feiteng, a subsidiary of China Electronics, and has strong channel and resource advantages in the party, government and military markets.According to the official website data of Kirin software , Kirin operating system has now adapted to a total of 352,454 software and hardware products. Tongxin UOS is integrated by many operating systems of Deepin and ZTE, and has a certain user base based on Deepin OS, and has great advantages in the civil field. Relying on the three adaptation centers of Beijing, Guangzhou and Wuhan, the number of compatible adaptation combinations of Tongxin operating systems has reached more than 100,000.
Huawei Ora built domestic digital infrastructure and accelerated the prosperity and development of the operating system ecosystem. On September 25, 2021, Huawei released the open source operating system Euler for digital infrastructure. On November 9, Huawei and all the community partners jointly donated the Euler open source operating system (openEuler) to the Open Atom Open Source Foundation. In terms of commercial promotion, Huawei has made it clear that it will not make the commercial distribution of Ora, but will further open up its capabilities, spare no effort to fully empower OSV (operating system manufacturers) partners, and set up the Ora Operation Support Department to help core OSV improve their capabilities. At the same time, it forms synergy in the market and prioritizes the integration of core partners' products in the solution. And expand marketing promotion by combining sales and sharing Huawei channel resources. Starting next year, Orla will also promote OSV commercial products through various models such as server pre-installation and combination sales. At present, operating system manufacturers such as Tongxin and Kirin have launched commercial distributions based on Euler, which have been widely used in core systems in the government, operators, finance, energy, electricity, and transportation industries. We believe that Huawei fully empowers its partners and will fully promote the ecological construction of domestic operating systems and drive the prosperity and development of domestic basic software.
domestic database has been successfully implemented and enriched. According to statistics from Yiou Think Tank, there are 53 typical projects in the field of information and innovation databases that have been published since January to September 2021. Domestic databases represented by Dameng, Renmin University of China Jincang, Alibaba, etc. have gradually entered the financial and energy industry markets, and have a lot of project construction experience in various industries. For example, Alibaba's self-developed OceanBase database has established cooperative relations with dozens of banks; Huawei's self-developed GaussDB has also cooperated with financial institutions such as Industrial and Commercial Bank of China and China Merchants Bank since 2015. With the further improvement of the domestic database industry ecosystem, the market share of domestic database manufacturers is expected to continue to increase.
.4 Intelligent driving: The conditions for intelligent automobiles are gradually maturing, and the industry has entered the stage of commercialization and implementation
Automatic driving vehicles are rapidly increasing in volume, and China's growth rate is leading the world. According to IDC's forecast, the global shipment of L1-L5 grade autonomous driving vehicles is expected to reach about 54.25 million in 2024, with an average annual compound growth rate (CAGR) from 2020 to 2024 reaching 18.3%; the market share of L1 and L2 grade autonomous driving in 2024 is expected to be 64.4% and 34.0% respectively. According to IHSMarkit data, the penetration rate of autonomous driving systems in China's passenger car market level 2 and above has rapidly increased from 3.0% in 2018 to 13.0% in 2020, and is expected to reach nearly 34.2% by 2025. Sales data for the first quarter of 2021 statistics by the China Association of Automobile Manufacturers show that the penetration rate of new L2 models in China has reached 30.49%, higher than expected. According to JPMorgan Chase's research, from now until 2025, China's assisted driving and autonomous driving market size will achieve an average annual growth rate of 33%.
Automatic driving is in a critical stage of leapfrog development from L2 to L3 level. Judging from the mass production plan of autonomous driving of major car companies around the world, 2020-2022 is a critical period for most car companies to break through the L3 level. At the L3 level, the system needs to completely take over the vehicle in a specific scenario, freeing the driver's hands, feet and eyes, which will greatly increase the complexity of the system, which will correspondingly bring about a large demand for software and algorithms.
National policies promote intelligent driving and propose clear development goals. According to the plan of my country's "Intelligent Connected Vehicle Technology Roadmap 2.0", in terms of autonomous driving, the target L2 and L3 autonomous driving will reach 50% of the sales of new cars in 2025 and 70% in 2030.In 2025, L4-level autonomous driving will be commercially used in specific scenarios and limited areas such as "highways, dedicated lanes, parking lots, parks, ports, mining areas", and new vehicles account for 20% in 2030, and will be widely used in expressways and large-scale applications on urban roads. After 2035, L5-class driverless passenger cars will begin to be used. Since the beginning of this year, policies related to smart driving have been continuously strengthened. The "National Comprehensive Three-dimensional Transportation Network Planning Outline" released by the State Council in February emphasized strengthening the research and development of intelligent transportation vehicles and promoting the application of intelligent connected vehicles. In November, the Ministry of Transport issued the "14th Five-Year Plan for Comprehensive Transport Services", focusing on accelerating the promotion and use of autonomous driving technology. In the same month, the first pilot program for commercialization of autonomous driving services in China was opened in Beijing, marking the official entry of my country's autonomous driving industry into the stage of commercialization.
Technology giants continue to increase their investment in intelligent driving and accelerate industrial development. smart car field has gathered all kinds of chip players. Nvidia, Qualcomm and other companies have made large-scale layouts in the automotive main control SOC chip field in recent years, launching series of chips for ADAS, autonomous driving and smart cockpit fields, taking the lead in the rapid implementation of traditional chip companies in various fields. In addition to foreign giants, a large number of companies such as Huawei, Horizon, Hei Sesame, Xinchi, Xinqing Technology have emerged rapidly in China. As the core of the decision-making process of intelligent driving, the improvement of its maturity is expected to accelerate the commercialization of intelligent driving and drive the rapid development of software and hardware downstream of the industrial chain.
Qualcomm: Make all-round efforts in smart cars, reaching cooperation with BMW
Qualcomm's latest Snapdragon Ride platform supports L1-L5 autonomous driving, supports multi-chip superposition use, assisted driving below L3 provides 30 TOPs of computing power, and provides 700 TOPs of computing power for the L4-L5 autonomous driving system, and the mass production time node is 2022. In November 2021, Qualcomm clarified two important strategic directions in the future, autonomous driving and smart cockpits, at the investor conference. Qualcomm expects the automotive business to grow significantly in the next few years. In the next few years, Qualcomm's target market size will increase from the current US$3 billion to US$15 billion in 2026, with an annual compound growth rate of 36%. Among them, intelligent networking, smart cockpits and autonomous driving will be the main growth trends. At the same time, Qualcomm also announced a cooperation with BMW on intelligent driving. BMW's next-generation model will adopt Qualcomm's Snapdragon Ride autonomous driving platform, including Qualcomm's central computing SoC and other core components. The new model will be mass-produced in 2025. Zhongke Chuangda is an in-depth partner of Qualcomm's smart cockpit platform. With the expansion of Qualcomm chips in fields such as intelligent driving, the company's business is expected to increase accordingly.
Nvidia: Launches a new generation of autonomous driving computing platform DRIVE Atlan, and the mass production progress of the Orin series is accelerated
In April 2021, Nvidia released the new autonomous driving chip Atlan. The computing power of a single chip can reach 1000TOPS, which is nearly 4 times higher than Orin's computing power, exceeding the computing power of most L4-level autonomous driving vehicles today. Atlan chips will provide samples to developers in 2023 and load them in large quantities in 2025. The smart driving SoC Orin released earlier by Nvidia has also entered its delivery period. According to Desai Sive, on September 28, the first IPU 04 circuit board equipped with an OrinX SoC was successfully launched at Huinan Smart Factory; on October 5, the IPU 04 integrated with two OrinX SoCs was also officially launched. According to the information released by Nvidia at the October Yunqi Conference, the current car company customers who adopt the Nvidia Orin series solutions include Mercedes-Benz, Volvo, NIO, Xiaopeng Motors, Ideal Automobile, SAIC Zhiji and R Auto.
Huawei: "Alpha S Huawei HI Edition" new car was released, equipped with Huawei's autonomous driving technology
On April 17, 2021, Huawei and BAIC's high-end brand of new energy vehicle, Jihu, jointly released the "Alpha S Huawei HI Edition" equipped with Huawei's intelligent driving technology. The "Alpha S Huawei HI Edition" model is not only equipped with Huawei HI solution, but also the first smart electric vehicle equipped with Huawei lidar solution.The biggest highlight of the "Alpha S Huawei HI version" is that it is equipped with Huawei's autonomous driving technology, which has technically reached the level where the vehicle can judge the road conditions and drive by itself throughout the entire journey. The Alpha S Huawei HI version will be equipped with 3 96-line automotive-grade lidars, 6 millimeter-wave radars, 12 cameras, and 13 ultrasonic radars, and will also be equipped with Huawei chips with computing power up to 352 Tops. In addition, the Hongmeng OS intelligent interconnection cockpit has been developed for vehicle-computer interaction, supporting up to 24 application ecosystems, including Changlian Telephone, Gaode, Kugou Music, Kuwo Music, etc., using interactive applications higher than mobile phones to achieve integration of human-vehicle interaction. Break the dilemma of difficult update of vehicle computer applications and ensure that the application can be updated frequently like a mobile phone. We believe that this car is an important support for Huawei’s five new products to be commercialized, and it is expected to further see more implementation of Huawei’s autonomous driving technology products in the future.
.5 Network security: The prosperity remains vigorous, and pay attention to data security
Investment in network security continues to increase under the promotion of the policy. "Three-year Action Plan for High-Quality Development of the Cyber Security Industry (2021-2023) (Draft for Comments)" was released, which clearly stated that by 2023, the scale of the network security industry will exceed 250 billion yuan, with an annual compound growth rate of more than 15%. Compared with the 2019 plan, the target scale has been expanded by 25%. Network security investment in key industries such as telecommunications accounts for 10% of the investment in informatization. On July 9, Qiu Wei, director of the Software and Information Services Department of the Shanghai Economic and Information Commission, said at the 2021 World Artificial Intelligence Conference that he was negotiating with the Cyberspace Administration of China that in the "14th Five-Year Plan" for Cyberspace Security released this year and the action plan for the upcoming network security, it is further clarified that the proportion of governments and public enterprises and institutions in network security shall not be less than 10%.
Investment analysis: We recommend focusing on the industrial Internet and industrial software fields that benefit from the accelerated penetration of intelligent manufacturing, the information innovation and network security fields driven by the long-term demand for independent control and information security, and the intelligent driving field under the deterministic trend of intelligent connected vehicles.
product services cover multiple dimensions, and in-depth application of thousands of industries. With the rapid development of the network security industry and the improvement of product business capabilities of network security enterprises, network security products and services have expanded from the traditional network security field to cloud, big data, Internet of Things and other fields, covering industrial manufacturing, Internet, finance, etc. At present, my country's network security products and services have covered multiple dimensions such as basic security, basic technology, security systems, and security services. The product system is becoming increasingly complete and its technical strength is becoming increasingly enhanced. (Report source: Future Think Tank)
The concentration of the network security market has increased, and the strongest enterprises are getting stronger. According to CCIA statistics, my country's cybersecurity market CR1 was 7.79%, CR4 was 26.4%, and CR8 was 41.36%, and the overall market concentration increased slightly. According to the classification standards of industrial concentration by American economist Bain, my country's cybersecurity industry CR8 has exceeded 40%, demonstrating that my country's cybersecurity market has transformed from competitive to low-concentration oligopoly.
There are many types of network security products, and each has its own advantages in the segmented fields. points, the network security hardware market is concentrated relatively high, with the market share of single products exceeding 20%. Among them, Dexinshui has the first market share in the fields of unified threat management (UTM), security content management hardware and virtual private network hardware. In terms of the software market, the competitive landscape is more fragmented, and other products have not shown any absolute leader in the absence of software security gateways.
Data security is expected to become a new addition to the network security market. On June 10, 2021, the 29th meeting of the Standing Committee of the 13th National People's Congress voted to pass the "Data Security Law of the People's Republic of China", which is a major achievement of my country's basic laws in the field of network security and data. Since the introduction of the Data Security Law, policies have been paying attention to data security continuously. On November 14, the State Internet Information Office issued the "Regulations on Network Data Security Management (Draft for Comments)" and solicited public opinions from the public.
draft for soliciting opinions covers many aspects such as personal information protection and Internet platform operator obligations. For the first time, personal communications are distinguished from non-personal communications, and companies are required to explain the frequency or timing of third parties collecting personal information. For the first time, it is proposed that the platform needs to publicly solicit opinions for the formulation of a privacy policy. On December 1, the Ministry of Industry and Information Technology issued the "14th Five-Year Plan for Big Data Industry Development", which focused on "building a solid line of defense for data security", and put forward two major tasks and goals: improving the data security guarantee system and promoting the development of the data security industry. According to the data of CADI Consulting, the big data security market will grow rapidly with the expansion of the scale of big data application. It is estimated that by 2021, the scale of the big data security market will reach 6.97 billion yuan. We believe that as my country's digital transformation accelerates its pace of economic digital transformation, data is becoming a key factor of production and will also face more data security threats, and the data security protection market will grow rapidly.
3 Investment analysis
In the wave of technological upgrade, we will seize the certainty needs under the policy dividends and select high-quality tracks with strong performance certainty. Follow the policy guidance of the "14th Five-Year Plan" and take "new infrastructure" as the core to accelerate the cloud, intelligence and digitalization of enterprises. It is recommended to pay attention to sub-sectors with high prosperity and performance support.
In 2022, we expect the computer industry to continue to interpret a structural market. We recommend paying attention to five prosperous tracks:
Industrial Internet: As the product of the deep integration of the new generation of information and communication technology and the industrial economy, it reflects the transformational force of the Internet from the consumption field to the production field, and is an important focus for promoting industrial transformation and upgrading and developing the digital economy. The 14th Five-Year Plan takes the industrial Internet as a key industry in the digital economy and has been implemented in many industries. It is expected that it will maintain rapid growth in the next five years.
Industrial Software: Industrial Software is the only way for my country to move from a "manufacturing power" to a "manufacturing power". During the "14th Five-Year Plan" period, the importance of industrial software has risen to the national strategic height. As one of the "new five foundations", it is the object of key breakthroughs. At present, the degree of domestic production of R&D and design industrial software in my country is still relatively low, and core technologies need to be caught up and broken through. Production control industrial software is developing rapidly, and under the general trend of intelligent manufacturing, it is expected to usher in a full increase in penetration rate. Under the dual pull of policies and demand, we expect industrial software to maintain a high prosperity in the long run.
Intelligence: Under the impact of the external environment, the importance of independent control of basic software and hardware is becoming increasingly prominent. The Party and Government Information Innovation started in 2020 and has ushered in explosive growth in performance by domestic software and hardware manufacturers, driving the increasing prosperity of the industrial ecosystem. With the verification of large-scale shipments, the information innovation innovation products are in the stage of transformation from available to easy-to-use. With the full launch of the industry's information innovation and innovation relay party and government information innovation in the second half of 2021, it is expected that information innovation-related manufacturers will still maintain rapid growth in performance.
Intelligent driving: The global automotive industry's electrification and intelligence penetration is accelerating, and my country has put forward clear goals for the development of autonomous driving technology and application. Currently, autonomous driving is in the over-acceleration stage of L2 to L3, which correspondingly brings a large demand for software and algorithms. At the same time, the layout of industrial giants such as Qualcomm, Nvidia, and Huawei in the intelligent driving industry is accelerating, which is expected to drive the accelerated development of the industry.
Network Security: Network security legislation is implemented intensively in 2021, and the introduction of the "Data Security Law" and the "Personal Information Protection Law" continue to boost the industry's prosperity. The importance of data security in the big data era is becoming increasingly prominent, and the urgent need for network information security is increasing. As my country's economic digital transformation accelerates, data is becoming a key production factor, while it will also face more data security threats, and the data security protection market will grow rapidly.
(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)
selected report source: [Future Think Tank]. Future Think Tank - Official Website
