電信行業(yè)：循序漸進(jìn)的進(jìn)程

1、ChinaNeutral (no change)Telco - OthersProgressing step by stepIn this report, we review the 2019 results and some 1Q20 results of Chinese telecom companies, and review some recent developments in the Chinese telecom industry.China will continue to speed up the roll-out of 5G and related applications

2、 to offset the economic impact of the COVID-19 pandemic in the short term and to advance manufacturing in the medium and long term.Rolling-out 5G in scale opens a renewed telecom industry cycle, and upstream suppliers to infrastructure have started to benefit from the increased CAPEX by Chinese tele

3、com operators. We believe that the CAPEX upswing this time will be milder, but that the industry recovery is intact.In general, the sector has outperformed the market ytd. The messages from CCLs and cooling module suppliers indicates that the 2Q20 performance of the equipment supply chain remains so

4、lid. Telecom operators, especially China Mobile 0941.HK, may get market attention during the uncertain macro environment as defensive plays.The coming “two sessions” and drafting of 14th Five-Year Plan for 20212025 are short- and medium-term catalysts for the sector.Highlighted companiesAsiaInfo Tec

5、hnologiesADD, TP HK$11.66, HK$9.68 closeChina TowerADD, TP HK$2.22, HK$1.70 closeZTEADD, TP HK$29.03, HK$23.70 closeP/E (x)Dec-20FDec-21FDec-22FAsiaInfo Technologies12.3911.098.97China Tower38.1530.6327.01ZTE18.8215.9212.18P/BV (x)Dec-20FDec-21FDec-22FAsiaInfo Technologies1.431.301.17China Tower1.46

6、1.421.38ZTE2.242.021.94Dividend YieldDec-20FDec-21FDec-22FAsiaInfo Technologies2.18%2.70%3.34%China Tower1.31%1.63%1.85%ZTE1.39%2.03%1.64%Summary valuation metricsMark PoT (852) 3698 6318E HYPERLINK mailto:markpo.hk markpo.hkAlex LiT (852) 3698 6256E HYPERLINK mailto:alexli.hk alexli.hkWong Chi ManT

7、 (852) 3698 6317E HYPERLINK mailto:cmwong.hk cmwong.hkAnalystsChina will continue to speed up 5G investmentChina is determined to speed up New Infrastructure Investment, and the 5G network is treated as the network infrastructure connecting all new applications, such as Big Data, AI and IoV. Through

8、 the development of 5G and related applications, China aims to boost new and upgraded consumption models to mitigate the impact of the COVID-19 outbreak in the short term and to advance manufacturing in the medium and long term. In addition to infrastructure roll-out, the MIIT will encourage telecom

9、 operators to promote 5G terminal use by measures such as: a) offering discounts on package upgrades, and b) allowing installment payments based on credit. Also, the Chinese government and telecom operators are calling on private companies to engage in the development of 5G to enrich the application

10、 scenarios of 5G technology.Rolling-out 5G in scale opens a renewed telecom industry cycleTo hasten the roll-out process and reduce financial pressure, the telecom services providers China Mobile, China Unicom, China Telecom and China Broadcasting Network are adopting a co-sharing and co-building mo

11、del regarding the 5G network roll-out. China Telecom and China Unicom will deepen “co-sharing and co-building” to reduce CAPEX, as they want to expand their cooperation to 4G DAS, equipment rooms, optical fibre, pipelines, etc. China Broadcasting Network has plans to cooperate with State Grid of Chi

12、na. The four telecom operators want to cooperate in rural areas to reduce construction costs. Even though there is scale-down in 4G investment, the increase in 5G investment will result in an 11.7% yoy increase in the CAPEX of Chinese telecom operators to Rmb334.8bn. We still expect telecom-related

13、CAPEX to gradually increase in the coming years, which is still positive for the supply chain. We reiterate the four stages of the 5G investment cycle: a) the construction and infrastructure segment will benefit first; b) equipment manufacturers, especially wireless-related names, will benefit and t

14、hen optical cable products will pick up after the installation of wireless equipment in 2020F and 2021F; c) new IT systems and management software will be required; d) and in the later stages of the 5G construction cycle, the telecommunications services providers will reduce CAPEX slowly and earn mo

15、re revenue from innovative business.Telecom operators may get market preferenceTelecom operators, especially China Mobile, are defensive plays, especially since they had solid results in 1Q20 during the COVID-19 pandemic, and they offer consistent dividends and stable earnings. China Mobile may be t

16、he first choice for investors looking for yield plays. (Recall that the ex-dividend date for the 2019 final dividend of HK$1.723 is 25 May 2020.) Both China Mobile and China Telecom made commitments to maintain a stable dividend in 2020. Some development of new applications, such as 5G messaging and

17、 DC/EP, may emerge at a faster pace.The coming “two sessions” and draft of 14th FYP will grab the markets attention in short and medium termThe coming “two sessions” (annual sessions of the NPC and National Committee of CPPCC) in mid-May will capture the markets attention because the central governm

18、ent may release an updated “Report on the Work of the Government” and “Report on Chinas National Economic and Social Development Plan” with more details on its “New Infrastructure” and 5G plans. The market is also waiting to see if the central government will increase the “speed upgrade and tariff r

19、eduction” requirements. We may see increased requirements for the fixed broadband tariff reduction because of the COVID-19 pandemic. The 14th FYP draft for 20212015 will show the direction of the TMT sector.Powered by the EFA PlatformTable of contents HYPERLINK l _TOC_250032 Overview 5 HYPERLINK l _

20、TOC_250031 China speeds up new infrastructure investment 5 HYPERLINK l _TOC_250030 Co-building and co-sharing 6 HYPERLINK l _TOC_250029 China still leading 5G 6 HYPERLINK l _TOC_250028 Review of market performance: Chinese telecommunications names have outperformed YTD 7 HYPERLINK l _TOC_250027 Shor

21、t- and medium-term direction 8 HYPERLINK l _TOC_250026 Telecom Operators 9 HYPERLINK l _TOC_250025 China Mobile 0941.HK 12 HYPERLINK l _TOC_250024 China Telecom 0728.HK 12 HYPERLINK l _TOC_250023 China Unicom 0762.HK 13 HYPERLINK l _TOC_250022 China Broadcasting Network unlisted 13 HYPERLINK l _TOC_

22、250021 Network Infrastructure Services 15 HYPERLINK l _TOC_250020 China Tower 0788.HK; ADD; TP: HK$2.22 15 HYPERLINK l _TOC_250019 CCS 0552.HK; ADD; TP: HK$6.48 16 HYPERLINK l _TOC_250018 Non-Hardware 17 HYPERLINK l _TOC_250017 AsiaInfo 1675.HK; ADD; TP: HK$11.66 17 HYPERLINK l _TOC_250016 Inspur 05

23、96.HK; ADD; TP: HK$3.29 18 HYPERLINK l _TOC_250015 Equipment Manufacturers 19ZTE 0763.HK; ADD; TP: HK$29.03; ZTE-A 000063.CH; HOLD; TP: Rmb43.55 20 HYPERLINK l _TOC_250014 Huawei unlisted 20 HYPERLINK l _TOC_250013 Ericsson ERIC.US 21 HYPERLINK l _TOC_250012 Nokia NOK.US 21 HYPERLINK l _TOC_250011 W

24、ireless 22 HYPERLINK l _TOC_250010 Comba 2342.HK 22 HYPERLINK l _TOC_250009 MOBI 0947.HK 22 HYPERLINK l _TOC_250008 Trigiant 1300.HK 23 HYPERLINK l _TOC_250007 PCBs 24 HYPERLINK l _TOC_250006 Shennan Circuits 002916.CH 24 HYPERLINK l _TOC_250005 WUS Printed Circuit 002463.CH 24 HYPERLINK l _TOC_2500

25、04 Fastprint Circuit 002436.CH 25 HYPERLINK l _TOC_250003 Shengyi Tech 600183.CH 25 HYPERLINK l _TOC_250002 Optical Communications 26 HYPERLINK l _TOC_250001 YOFC 6869.HK; REDUCE; TP: HK$13.06; YOFC-A 601869.CH; REDUCE; TP: Rmb16.46 26 HYPERLINK l _TOC_250000 O-Net 0877.HK; REDUCE; TP: HK$3.23 272Te

26、lecommunicationsChina Telco - OthersMay 10, 2020China Mobile 0941.HK China Unicom 0762.HK China Telecom 0728.HKChina Broadcasting Network unlistedAsiaInfo 1675.HK Huawei unlistedWhale Cloud unlisted of Alibaba ALBB.US and ZTE 0763.HKInspur 0596.HK Shenzhen Tianyuan DIC Info 300047.CHNeusoft 600718.C

27、H CCS 0552.HKSi-Tech Info 300608.CH GuoChuang 300520.CHBOCO Inter-Telecom 600289.CHDC Holdings 0861.HKOperatorsFigure 1: Telecom Value ChainInfrastructure servicesIT ServicesCCS 0552.HKDesign, construction, and maintenanceRunjian Communication Eastone Century 300310.Huaxing Chuangye 3000 Super Telec

28、om 603322.COpticalWirelessTelecoms Equipment ManufacturersHuawei unlisted ZTE 0763.HKEricsson ERIC.US Nokia NOK.US Datang Mobile unlistedHuawei unlistedOptical Fiber CableCorning GLW.US YOFC 6869.HKHengtong 600487.CH Furukawa Electric 5801.JP Fiberhome 600498.CH Futong unlistedFutong Xinmao 000836.C

29、H Prysmian PRY.IM Sumitomo Electric 5802.JP Zhongtian Tech 600522.CH Fujikura 5803.JPTongding Inter 002491.CH SDG Information 000070.CH Etern 600105.CHPotevio Fasten unlisted Tongguang 300265.CH Trigiant 1300.HK Nanfang Comm 1617.HKOptical Networks Equipment ManufacturerNokia NOKIA.FH Ciena CIEN.US

30、ZTE 0763.HKWireless System (Base Station)Fiberhome 600498.CHRadio Frequency (RF) SystemActivePassiRF subsystemActive Antenna UnitFilter (mainly)AnOptical ComponentII-VI IIVI.USFinisar FNSR.US Broadcom AVGO.US Lumentum LITE.US Accelink 002281.CH AAOI AAOI.USNeoPhotonics NPTN.US Sumitomo Electric 5802

31、.JP Fujikura 5803.JP Furukawa Electric 5801.JPHisense Broadband unlisted Zhongji InnoLight 300308.HK O-Net 0877.HKAcacia ACIA.USRaycus Fiber Laser 300747.CH JDSU JDSU.USFIT Hon Teng 6088.HKFingu Electronic 002194.CH Tat Fook 300134.CHGrenTech GRRF.US Comba Telecom 2342.HK MOBI 0947.HKDongshan Precis

32、ion 002384.CH Chunxing Precision 002547.CH Canqin Electronic unlistedHuawei unl Comba Tele CommScope Tongyu 002Optical Fiber PreformYOFC 6869.HKCorning GLW.US Prysmian PRY.IMShin-Etsu Chemical Co Ltd 4063.JP Furukawa Electric 5801.JP Sumitomo Electric 5802.JP Hengtong 600487.CHFujikura 5803.JPZhongt

33、ian Tech 600522.CH Tongding Interconnection 002491.CH Sumitomo Electric Industries 5802.JP FUJIKURA 5803.JPMOBI 0947Qorvo QRVO.USSkyworks SWKS.US Broadcom AVGO.USSanan Optronics 600703.CH Haite High-tech 002023.CH Win Semi 3105.TTVPEC 2455.TTPower AmplifierShenglu 00 Jianbotong Kathrein und Ericsson

34、 ER Hongxin Co Amphenol RFS unlistePCBShennan Circuits 002916.CH WUS Printed Circuit 002463.CH Fastprint Circuit 002436.CH Shengyi Tech 600183.CHFigure 2: 5G investment cycleTelecommunicationsChina Telco - OthersMay 10, 2020OverviewChina speeds up new infrastructure investmentFigure 3: Definition of

35、 new infrastructure used by the NDRCNew Infrastructure is an infrastructure system that follows a new vision of development, driven by technological innovation and based on information networks, in line with the requirement for high-quality development to provide services such as digital transformat

36、ion, intelligent upgrades, and integrated innovation. Specifically, the system contains three types of infrastructure:Information infrastructure (信息基礎(chǔ)設(shè)施), which is generated from next-generation information technologies, including:Communications networks infrastructure (通信網(wǎng)絡(luò)基礎(chǔ)設(shè)施), represented by 5G,

37、 IoT, the industrial internet, and satellite internet;New technology infrastructure ( 新技術(shù)基礎(chǔ) 設(shè)施), represented by AI, cloud computing, and block chain; andComputing infrastructure (算力基礎(chǔ)設(shè)施), represented by data centers and intelligent computing centers.Integrated infrastructure ( 融合 基礎(chǔ)設(shè) 施 ), which is u

38、pgraded from traditional infrastructure and supported by the in-depth application of technologies such as the internet, big data, and AI, including:Smart transport infrastructure (智能交通基礎(chǔ)設(shè)施); andSmart energy infrastructure (智慧能源基礎(chǔ)設(shè)施).Innovative infrastructure ( 創(chuàng)新基礎(chǔ)設(shè)施), which is public-welfare infras

39、tructure to support scientific research, technology development and product development, including:Major science and technology infrastructure (重大科技基礎(chǔ)設(shè)施);Science and education infrastructure (科教基礎(chǔ)設(shè)施); andIndustrial technology innovation infrastructure (產(chǎn)業(yè)技術(shù)創(chuàng)新基礎(chǔ)設(shè)施).SOURCES: CGIS RESEARCHNew infrastru

40、cture (or new types of infrastructure) investment has been a hot topic since Dec 2018, when a leadership meeting announced that China would speed up the construction of new infrastructure. The topic warmed up again in Mar 2020, as new infrastructure investment was treated as a tool to boost economic

41、 growth after the COVID-19 pandemic. Recently, the NDRC defined the concept of a modern infrastructure system and placed information networks, especially the 5G network, at the center of network infrastructure, connecting all applications of the new infrastructure.At the end of 2019, the market fore

42、cast 600k800k new 5G base stations in 2020. Based on the latest tenders initiated by the big three telecom operators, it will be about 550k. But we believe that the big three telecom operators will try their best to beat their targets and that China Broadcasting Network will build some 5G base stati

43、ons, adding about 50k, so the final forecast number is about 600k. We believe concerns about the lower-than-expected number of new 5G base stations have been partly priced in after the recent share price correction of 5G-related names. But we still expect China to speed up the 5G roll-out to offset

44、the economic impact of the COVID-19 pandemic and boost sustainable growth, and believe the acceleration is likely to continue for the next three years. The 1Q20 results and announcements by upstream suppliers of products such as PAs, PCBs and cooling modules indicate that equipment shipments should

45、kick off this quarter. Apart from direct investment in equipment, the market is expecting 5G to create derived demand and economic value. 5G is expected to create 3m direct jobs in China by 2025, Rmb24.8tr in direct economic output, and Rmb8.4tr in indirect economic value added in 20202025, accordin

46、g to CAICT. Similarly, in the U.S., 5G is expected to create 3m new U.S. jobs and US$500bn in economic growth by 2024, according to a report from CTIA.Co-building and co-sharingWe remain positive on the outlook for the 5G roll-out and maintain our view that the co-building and co-sharing agreement b

47、etween China Unicom and China Telecom will not have a major impact on the CAPEX cycle. Since their announcement about cooperation, both companies have praised their collaboration many times on different occasions.As at 5 Mar 2020, China Unicom had installed 66k 5G base stations, 23k co- shared with

48、China Telecom. China Telecom had installed 27k 5G base stations co-shared with China Unicom, for 50k co-shared 5G base stations in total. It is estimated that the two companies have saved Rmb10bn in total from the co- building and co-sharing arrangement. They save about Rmb200,000 for every co-built

49、 and co-shared 5G base station at the current cost.China Telecom and China Unicom plan to co-build and co-share 250k new 5G base stations by the end of 3Q20, with China Telecom building 140k and China Unicom building 110k. China Unicom management has highly praised the co- building, co-sharing schem

50、e, and said that it will expand “co-building and co- sharing” with China Telecom to 4G DAS, equipment rooms, optical fibre, pipelines, etc., to further sharpen their network competitiveness and value. China Telecom management also responded positively, saying that there was a necessity to cooperate

51、with China Unicom in many areas and that they already had a foundation of cooperation.China still leading 5GIn our previous report, we noted that China is leading 5G in three areas: 1) 5G spectrum planning, 2) 5G networks, by accelerating the construction of the 5G SA network, and 3) various 5G appl

52、ications. Our view remains unchanged.In Mar 2020, the MIIT issued a new plan for the use of the 700MHz band (7x02- 798MHz) from broadcast and television services to mobile communications systems, and started the clearance of 700MHz. It is expected that the China Broadcasting Network will be allowed

53、to use the 700MHz spectrum to launch 5G mobile communications systems nationwide in mainland China once the clearance is finished. China has also finished planning the allocation of the mmWave spectrum, but it has not been released. The MIIT said it will release the mmWave spectrum in good time. So

54、far, China has basically allocated the 5G spectrum across the low, middle and high spectrum ranges to deliver widespread coverage and support for all uses.China is also researching spectrum allocation for private 5G networks (i.e. local 5G networks) for 5G applications (especially the industrial int

55、ernet.) For Germanys “Industry 4.0” initiative, German regulator Bundesnetzagentur has allowed companies to apply for the use of private 5G frequencies in the range of3.7 GHz to 3.8 GHz since 21 Nov 2019. These topics are being widely discussed in China now. For example, the Guangdong provincial gov

56、ernment wants to strengthen the guarantee of frequency resources for private broadband networks, including applying to the central government to test private networks in the 5.97.1GHz bands, and exploring pilot applications for 5G private networks in key areas, such as government affairs, public sec

57、urity, emergency management, power grid, highways, major equipment manufacturing, and professional parks.To develop a high-quality 5G network, all four telecom operators in China aim to expand standalone (SA) 5G network coverage and capacity. Also, the MIIT in its “Circular on Promoting 5G to Accele

58、rate Development” supports telecom operators in 1) promoting SA as target architecture for 5G network deployment, and 2) controlling the construction scale of non-standalone (NSA) 5G networks. For the 5G SA networking mode, 5G NR is directly connected to the 5G core network without relying on the 4G

59、 core network and has the advantages of convenient interconnection, flexible and reliable service, etc. The big three telecom operators are all committed to realizing 5G SA commercialization by 3Q20. China Telecom was designated by the GSMA to lead the global 5G SAindustry chain to formulate and pub

60、lish the “5G SA Deployment Guidelines” in a timely manner.According to Reuters, the U.S. has drafted rules to allow Huawei and U.S. firms to work together on 5G. The U.S. lags behind in forming 5G standards, as the top telecommunications equipment suppliers are Huawei, Ericsson, Nokia, ZTE and Samsu