Market NewsCitic Securities: consumer electronics demand is expected to pick up, valuation is low, proposed layoutThis article comes from: Citic Securities Research
The average monthly dynamic PE of consumer electronics index from January to now is 42x, and the dynamic PE is 26x on July 28th, 2022, which is higher than that of 24x on June 1st, 2022, but it is still at a historically low level. It is suggested that investors should focus on the high-growth VR/AR and smartwatch segments, among which, VR is in the stage of high certainty, and AR is starting rapidly at the initial stage of development. Smartwatch is expected to benefit from the continuous improvement of health functions and continue to grow.
Smartphone shipments rose in June compared with the same period last year, consumer demand is expected to gradually recover, the current time point valuation is low, the proposed layout. AIoT terminal: VR is in the stage of high certainty, and the quantity of AR is rising rapidly in the early stage of development. Smartwatch is expected to benefit from the continuous improvement of health functions and continue to grow. In the middle and upper reaches of the industry chain: we focus on tracking the monthly shipments and performance data of the optical industry chain. In June 2022, optical manufacturers shipped under pressure as a whole, and Apple is more certain than Android.
Smartphone terminal: June shipments increased compared with the same period last year, consumer demand is expected to gradually recover, the current time point valuation is low, the proposed layout.
According to the data of China Institute of Information and Communication, in June 2022, the domestic mobile phone market shipped 28.017 million units, which was + 9.2% year on year and + 34.7% month-on-month. The change in a single month changed from negative to positive for the first time since the beginning of the year, mainly due to the weakening of the epidemic and the gradual recovery of consumer demand. At the same time, the "618" activity stimulated demand, and Apple performed strongly. From January to June in 2022, the domestic mobile phone market shipped a total of 136 million units,-21.7% of the same period last year.
Looking forward to the whole year, we adjust the forecast of global / Chinese smartphone shipments in 2022 to 12.65 / 288 million units, which is-7% compared with the same period last year (12.94% / 291 million units, compared with the previous forecast of 12.94% / 291 million units and-5% to 12% compared with the same period last year). Globally: 2022Q1/Q2 shipments are 3.14 / 286 million, we expect 2022Q3/Q4 sales to be 3.20 / 345 million; domestic: 2022Q1/Q2 shipments are 0.74 / 67 million, we expect 2022Q3/Q4 sales to be 0.72 / 75 million respectively. Under the pressure trend of global smartphone shipments, we are optimistic about the reduction in costs brought about by the improvement of the technological maturity of the folding screen mobile phone market. We expect to ship 14.4 million folding screen phones worldwide in 2022, which is + 93% year on year, and is expected to exceed 65 million units in 2025 and 90% + CAGR in 2020-25.
At the valuation level, the average monthly dynamic PE of the Consumer Electronics (CITIC) index since January 2020 is 42x, and the dynamic PE is 26x on July 28, 2022, which is higher than that of 24x on June 1, 2022, but it is still at a historically low level. The proposed layout under the background of demand bottom recovery.
AIoT terminal: VR is in the stage of high certainty, and the quantity of AR is rising rapidly in the early stage of development. Smartwatch is expected to benefit from the continuous improvement of health functions and continue to grow.
We have tracked the data of VR active players and VR applications on Steam, one of the largest comprehensive game platforms in the world. In June, the top three active models were Oculus Quest2 / Value Index/ Oculus Rift S, accounting for 49.0% / 15.6%, 10.6%, respectively, and the month-on-month change was + 1.0/-0.2/-0.3pct.
In terms of applications, the number of VR applications launched by Steam in June was 6820, with a total of 1763 applications compared with + 3.11% and + 4.34% with + 0.92% and + 4.34% respectively.
In terms of shipments, according to data from wellsenn XR, Counterpoint, Canalys and Strategy Analytics, in the first quarter of 2022, global shipments of VR/AR/ smartwatches / TWS headphones / smart speakers were 275x8.2 pounds 3370x6820 / 35.3 million units (sets), respectively, year-on-year + 24% / + 39% / + 13% / + 17% Universe 4.3%. Among them, VR plate, first quarter domestic shipments 240000 (year-on-year + 243%), overseas shipments 2.51 million (year-on-year + 17%); AR plate, first quarter domestic shipments 23000 (year-on-year + 130%), overseas shipments 59000 (year-on-year + 23%), the domestic AR/VR market growth rate is high.
Looking forward to the whole year, we expect VR hardware shipments to reach 14 million units in 2022, wellsenn XR expects global AR hardware shipments to reach about 450000 units in 2022, and global AR hardware shipments in 2023 are expected to exceed the order of millions for the first time. We expect global smartwatch / TWS headphones / smart speakers shipments of 1.53x3.43 / 196 million units (units) in 2022, which are 10% year-on-year + 20%, 17% and 10% respectively. It is suggested that investors should focus on the high-growth VR/AR and smartwatch segments, among which, VR is in the stage of high certainty, and AR is starting rapidly at the initial stage of development. Smartwatch is expected to benefit from the continuous improvement of health functions and continue to grow.
In the middle and upper reaches of the industry chain: we focus on tracking the monthly shipments and performance data of the optical industry chain. In June 2022, optical manufacturers shipped under pressure as a whole, and Apple is more certain than Android.
Among them, Shunyu Optical Technology shipped 72.35 million mobile phone lenses in June (year-on-year-15.7%, month-on-month-20.1%), CCM shipped 40.35 million (year-on-year-21.4%, month-on-month-18.6%), car lens shipped 6.2 million (year-on-year + 25.3%, month-on-month + 2.7%). Qiu Ti Technology shipped 29.67 million mobile phone camera modules in June, year-on-year-22.3%, month-on-month-18.3% Dali had consolidated revenue of NT $3.39 billion in June, + 1.0% year-on-year and + 7.8% month-on-month, while Yujingguang achieved operating income of NT $1.15 billion in June, + 1.0% year-on-year and + 43% month-on-month.
We believe that Q2 is the low demand of the year, with the mobile phone market gradually repaired in the second half of the year, the performance of industry chain manufacturers is expected to rebound gradually. In the short term, the upgrade of mobile phone optical specifications is under pressure, but long-term high pixel, periscope, 3D sensing and so on are still expected to gradually infiltrate. We are optimistic about the continuous improvement of the competitiveness of domestic leading manufacturers, but we need to continue to pay attention to the ASP fluctuations that may be brought about by changes in the lens-end pattern. In the long-term logic, we also suggest that investors pay attention to RF, OEM, display and other plate-related manufacturers.
Risk factors: repeated epidemic situations at home and abroad; increased turbulence in the international situation; lower-than-expected demand; raw material price fluctuations and supply chain risk; lack of technological innovation risk; exchange rate fluctuation risk; industry competition intensified and so on.
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