Summary of Key Points from the Conference Call Industry Overview - Industry Focus: The report centers on the China Technology and Communications sector, with a specific emphasis on AI opportunities in computing, networking, edges, and agents [1][30]. - Market Outlook: Despite three years of outperformance compared to MSCI China, there are high expectations and macro/sector risks anticipated for 2026 [1]. Core Insights and Arguments - Valuation Trends: H shares are preferred over A shares, with H shares trading 0.5 standard deviations above the 10-year historical forward P/E averages, while A shares are trading above 2 standard deviations [1][30]. - AI Opportunities: The report emphasizes embracing AI opportunities across various sectors, particularly in computing and networking, with localization in China being a significant factor [1]. - Risks Identified: Key risks include upstream supply issues, material cost increases, and downstream project delivery challenges [1]. - Stock Recommendations: - Hardware/Components: Luxshare, DSBJ, Lens Tech, Conant, TCL are preferred. - Semiconductors: Montage is highlighted. - Software: Kingdee is favored. - Communication Infrastructure: Eoptolink and TFC are recommended [1][2]. Market Projections - Smartphone Shipments: A forecasted decline of 5% YoY for global and China smartphone shipments in 2026, with an increase in average selling price (ASP) by 7% and 5% respectively [1]. - Foldable Smartphones: Anticipated shipments of foldable smartphones are projected to reach 20 million in 2025, 29 million in 2026, and 45 million in 2027, driven by the foldable iPhone [1]. - Camera Lens Shipments: Expected to reach 4.4 billion units in 2025, with a slight decline to 4.2 billion in 2026, and back to 4.4 billion in 2027 [1]. - AI Glasses: Global shipments are expected to reach 15 million in 2026, representing a 123% YoY increase [1]. - AI-PCB Demand: Total demand for AI-PCB is projected to be RMB 96 billion (US$ 13 billion) in 2026, with a growth rate of 101% YoY [1]. - Optical Transceiver Market: Expected to reach US$ 37.4 billion in 2026, with significant shipment increases [1]. Subsector Preferences - Sector Performance: Semiconductor sector is expected to lag behind hardware and communication infrastructure, with a projected earnings growth of 52% YoY for semiconductors in 2026 [23]. - Investment Strategy: Preference for semiconductor stocks, followed by communication and hardware, with IT services and software being the least favored [1][30]. Additional Insights - Foreign Investment Trends: Increased foreign investment in A-share tech names, with a notable rise in holdings in the overall A-share technology sector [13]. - IPO Activity: Anticipation of several IPOs in 1H26, which could provide quality tech names for investors [1][30]. - Market Volatility: Expected volatility in 1H26 due to high expectations for AI and potential market corrections [30]. This summary encapsulates the critical insights and projections from the conference call, providing a comprehensive overview of the China Technology and Communications sector's outlook for 2026.
中国科技通信 - 2026 年展望：把握计算、网络、边缘与智能体领域的 AI 机遇-China Technology Communications 2026 Outlook Embrace AI Opportunities in Computing Networking Edges and Agents