Zhitong Finance app learned that China Securities Co., Ltd. has released research reports stating that the performance growth of telecommunications operators is steady for the second half of the year, the current dividend return level is still attractive, the global computing power industry chain continues to improve, overseas cloud providers' capital expenditure guidance is optimistic, domestic multi-party demand continues to drive, and downstream demand for the internet of things and controller sector has gradually recovered.
Main viewpoints of Zhongxin Jiandao are as follows:
Looking back at the communication sector market in the first half of 2024, the communication index performed well due to the promotion of dividend stocks, AI computing power infrastructure and other sectors. Looking forward to the second half of the year, the performance growth of telecom operators is steady, the current level of dividend return is still attractive, and the prosperity of the global computing power industry chain continues to improve. Overseas cloud vendors' capital expenditures guidance is optimistic, and multi-party demand at home and abroad continues to drive, and the downstream demand for the Internet of Things and controller sectors has gradually recovered.
1. The performance growth of telecom operators is steady, and the level of dividend return is still attractive. The three major operators maintain a good level of performance growth rate. Capital expenditures began to decline in 2023 and are expected to continue until the next technological iteration (6G), further reducing depreciation and amortization and helping to release profits. Operators are actively guiding dividends, and China Mobile and China Telecom will increase their dividend payout ratio to more than 75% within three years, with good dividend returns.
2. The global computing power industry chain resonates, and the industry's prosperity cycle continues to rise. Driven by investment in AI infrastructure construction, various cloud vendors maintain an optimistic outlook on future capital expenditures. Next year, the demand for 800G optical modules continues to increase, exceeding market expectations, and demand for other network hardware such as 1.6T optical modules is also expected to increase rapidly. The penetration of silicon photonics technology and Ethernet solutions will bring about structural changes in the industry competition landscape. With the improvement of domestic chip capabilities and large model capabilities, as well as the development of artificial intelligence applications, domestic demand for computing power infrastructure is expected to continue to be driven. With the gradual improvement of domestic self-developed AI chip supply capabilities, the construction of domestic computing power infrastructure is ready to start, and the domestic computing power industry chain can basically achieve a closed loop, and domestic companies will benefit greatly.
3. The demand for the Internet of Things and controllers is picking up, waiting for the interest rate cycle to begin. In 2023, the intelligent controller and IoT module industry were affected by the lack of global economic momentum, inventory adjustments after economic supply chain disruptions, inflation pressures, and other factors, and industry demand was under pressure. Currently, with the end of inventory adjustments and the gradual recovery of global economic activity, coupled with the penetration of new technologies such as 5G RedCap, edge AI, V2X, and intelligence, relevant companies' performance has shown a good trend, and the growth rate of the sector is gradually recovering.
4. In addition to telecom operators, we also recommend focusing on 12 key companies. In addition, we also recommend paying attention to other related companies in the computing power, controller, and IoT module sectors.
5. Risk reminders: changes in the international environment; unexpected development of artificial intelligence; intensified market competition; exchange rate fluctuations; slower than expected development of the digital economy; weakened downstream demand, and so on.