A number of fund companies said that although the overall valuation of the current sector is at a high level, with the help of the New Deal, the long-term certainty and sustainability of the two major industries are improving, among which semiconductor materials and manufacturing equipment, as well as enterprise software in vertical fields are more optimistic about investment opportunities in sub-sectors.
The New Deal focuses on medium and long-term development.
Optimistic about industrial certainty and sustainability
Respondents generally believe that the New Deal is a continuation and fine-tuning of existing policies, mainly focusing on the medium and long-term development trend of the industry, which will further enhance the global competitiveness of domestic integrated circuits and software industries.
As a former employee of the integrated circuit industry, Yao Zhipeng, director of manufacturing investment in harvest fund, said that he was glad to see the government's further support for the industry. The New Deal reflects the government's support and attention to the field of integrated circuits and software, which can reduce the financial burden of related industries.
Jin Hongwei, director of stock investment in the investment department of Taikang Assets Public Offering Division, said that the New Deal was introduced under the new strategic background of Sino-US science and technology war and "double cycle", which will help attract more resources to invest in these two industries, and give them more opportunities to apply downstream for continuous improvement. Existing enterprises are expected to get more profits, and the two industries will also get rare development opportunities.
Yang Kun, manager of Nuoan New Economic Fund, said that with the help of the New Deal, the development pressure of related companies will gradually ease. In his view, the development of integrated circuits and software industries needs industrial ecology, which is obviously different from traditional industries such as steel, coal and real estate.
Zhang Lin, research director of Xinhua Fund, also said that the positive impact of the New Deal on the industry is more subtle and medium-and long-term. Although measures such as tax reduction and import tariff reduction will increase the company's net profit in a certain time dimension, policies such as talent training and introduction, R&D support and Industry-University-Research integration have far-reaching significance for industrial development. Therefore, we are optimistic about the certainty and sustainability of medium and long-term industrial growth.
Industrial challenges mainly come from the supply side.
Import substitution will not be achieved overnight.
Yang Kun said that at present, the problems faced by the integrated circuit industry in China are mainly insufficient investment, insufficient talent construction and less initial investment in key technologies. Overseas related enterprises have the advantages of first Mover, brand, market and cost compared with domestic counterparts; Although the talent echelon of domestic software industry is slightly better than that of integrated circuit industry, the software ecology is obviously backward, which needs to be done from the perspective of user habits and industry ecology. These are not tasks that ordinary enterprises can accomplish, and they need the top-down promotion of the country.
Yao Zhipeng believes that the main challenges of the two major industries at present come from the supply side. In his view, although China's integrated circuits and software have made great progress, from the current development stage and level, there is still a lot of room for improvement in some basic links of integrated circuits and some related aspects of artificial intelligence algorithm design in the software field, which requires the continuous efforts of future generations of practitioners and even some breakthroughs in basic science, in order to truly realize the high-level development of the industry.
Jin Hongwei believes that the main challenge facing the industry at present is the contradiction between the huge domestic demand for substitution and the obvious backwardness of industrial base development. It is not an overnight thing to complete the development of the industry and realize import substitution. "Take upstream semiconductor equipment as an example. At present, the market share of domestic manufacturers is less than 5%, and some core equipment purchases are completely dependent on overseas manufacturers. If there is an extreme change in the trading environment, it remains to be seen how to ensure the security of the short-term supply chain. " Jin Hongwei said.
Zhang Lin also believes that the challenges faced by the two major industries are that the number of outstanding talents, scientific research level and R&D conversion efficiency are not as good as those of developed countries, but the New Deal has given great support in these aspects. In addition, market cultivation and investment and financing policies also have a very positive impact on promoting enterprise development.
Sector valuations are generally at a high level.
Individual stocks still have opportunities for excess returns.
Since this year, integrated circuits and software have performed brilliantly. Yao Zhipeng believes that from the current valuation, integrated circuits have basically reached a historical high, and the overall software has exceeded the historical center level. On the one hand, the future performance depends on the prosperity of the industry, on the other hand, it depends on whether the market value of related industries has fully reflected the expectation of future growth space. "Overall, the valuation of the integrated circuit sector has reflected more medium-term optimistic expectations, and the software sector still has some room for market value improvement."
Jin Hongwei believes that the valuations of the two sectors are generally at a high level, especially semiconductors. A small number of stocks may have excess returns in the medium term because of their competitiveness and high growth; The overall valuation of the software industry is also high, but because there are many sub-industries, there is no shortage of individual stock opportunities.
Yang Kun believes that integrated circuit boards are in the initial stage in China, but they are relatively mature in the United States. It is acceptable for the capital market to give a certain valuation premium to the initial growth industries. In his view, the competition of integrated circuits is transnational, so from a global perspective, the market value of integrated circuit companies may be more reasonable. If the market value of some domestic companies has surpassed the world's leading companies, it can be considered that there is overestimation.
Zhang Lin believes that from the perspective of P/E ratio, the leading companies in integrated circuits and software sectors are currently at a high valuation level, but it is not accurate to measure the value of technology growth enterprises only by P/E ratio. A high P/E ratio does not mean that the valuation must be expensive.
He said that for technology growth companies, they should be valued more from the perspective of the future. "Overseas technology giants also have periods of high P/E ratio or even losses in history, but history has proved that the medium and long-term investment returns of excellent growth companies are huge."
Be optimistic about materials, equipment and enterprise software.
High-quality leading companies
Yao Zhipeng said that he is more optimistic about semiconductor materials and enterprise software in the vertical field, and the prosperity is expected to improve in the middle of the cycle. In the investment of emerging industries, he will combine the mid-cycle prosperity, industrial space and sector valuation to screen industries, and look for leading enterprises that can obtain the best industry value from the bottom up.
Yang Kun said that the software industry is more optimistic about companies whose products can gradually "go to the cloud", and the integrated circuit field is more optimistic about companies with excellent technical strength and large market space. Considering the large scale of fixed assets investment in the integrated circuit industry in the future, there is obvious room for the prosperity of related equipment companies to rise. "The short-term strategy mainly selects companies with fast performance growth, cash flow matching performance growth and fast technology iteration, while the medium-and long-term strategy mainly selects head companies with excellent internal management and incentive mechanism in place."
Jin Hongwei said that if you are relatively optimistic about the direction of cloud computing, industrial software, basic software and semiconductor materials, and choose some truly competitive and fast-growing leading stocks in sub-sectors, even if you have a high valuation in the short term, you can digest it through growth.
This article is from China Fund.