Electronic Components Market Operation Status Analysis

At the beginning of October 2009, we clearly stated that 2010 will be a year of super boom. The main reason for this judgment is that the degree of prosperity of the electronics manufacturing industry has been restored to normal levels at that time, and the global economy has shown signs of stabilization, especially unemployment. The stable rate indicator will mean that consumer confidence will gradually be restored and demand will increase.

We believe that 2010 is the best year for e-business profits in the past decade, and it has also experienced a ten-year market. At present, the electronics industry is at a high level after the economy continues to rise, and its valuation is also at a historical high in the past 10 years. In the future, supply and demand will face risks, because the recovery of demand is the catalyst for rising economy. The reduction of production capacity is the core of the ultra-high prosperity and the main driving force for the future prosperity.

Valuation level: After two-wheel drive of EPS and PE, it is at a high level. Due to the characteristics of electronic components with general manufacturing, we believe that relative PB is a more reliable valuation index. In contrast, electrons have strong periodic fluctuations. , so PE does not apply. In terms of relative PB, the valuation of electronic shares reached the highest level since 2000, which is comparable to the industry's economic strength.

A-share electronics company's current average PE (2010) is more than 40 times, while in Taiwan's electronic manufacturing sector, PE is forecast to be 10 to 25 times in 2010, and the majority of electronic upstream PEs are lower than 20 times.

We believe that most of the electronics companies belong to the general manufacturing industry, but only grow faster.

At present, there are two aspects of electronic stocks that are expected to be high, and the overall lack of safety margins. The first is that the electronics industry is currently at a high level after the economy continues to rise. Second, valuations of electronic stocks are affected by the overall overestimation of the GEM and small and medium-sized board stocks, and the valuation level is also at historical highs in the past 10 years.

The industrial cycle is the risk that needs to be taken seriously from an industry perspective. Most of the electronics manufacturing industry is essentially a manufacturing industry. The sustained high industrial prosperity has led to the emergence of investment, and the industry ROE should have a trend of returning to the mean value. The third quarter will be the best period for the industry, which is the peaking process of the current round of profit.

The risk of declining industry sentiment has been recognized by most fund researchers. From the recent non-directional issuances of electronic companies, it can also be found that the fund's participation enthusiasm is low, and most of them are private equity or other institutional funds. This may indicate that the fund's preference for electronics is based on short-term and long-term investment judgments, not long-term adherence. We generally recognize that electronic manufacturing still has relatively high growth, but industry opportunities also need to be based on appropriate valuations. On the whole, we think we should talk about the wind and rain before talking about the rainbow.

Investment Logic: EMS companies in the EMS sector, touch screens and strategic emerging industries. EMS companies will have a better industry climate trend. Unlike most of the electronic upstream sectors, the EMS sector is not particularly brilliant in 2010. Therefore, the pressure on its adjustment is also relatively small. On the other hand, China's manufacturing advantage has not emerged in the short term. Therefore, companies with strong competitiveness will play the role of the leftover as the king and continue to develop rapidly. The companies that are worthy of attention include Goer acoustics, Zhuo Wing Technology, and Guangzhou Guoguang. The remaining non-EMS players include Sunlord Electronics and Tongfu Microelectronics.

The technology innovation in the display area is fast, and in particular, the touch screen will be widely used on iPads or similar products during the rapid increase in the penetration rate of smartphones. Tablets (iPad or iPadlike) are the most recent new products worth paying attention to. Touch screen companies, especially those who have the opportunity to enter the large-scale production system, Lai Bo Gaoke deserves special attention.

In the long term, we believe that killer applications are more likely to appear in areas related to strategic emerging industries, including LED lighting, electric vehicles, and various types of industry applications. These areas can provide continuous attention. Among them, the LED field is recommended to pay attention to Silan Micro, National Star Optoelectronics and Zhejiang Sunshine; in the power semiconductors and solar energy field, it is recommended to pay attention to Zhonghuan Group and China Microelectronics; the field of sensor parts can be concerned with Changjiang Electronics Technology; the electric vehicle field is concerned with the more comprehensive layout of Foshan Lighting.