中国科技硬件展望：继续投资5G升级

1、Equity Research Asia Pacific | ChinaChina Technology SectorHardware outlook 2020: Stay invested for 5G ramp-upElectronic Components & Connectors | ThemeFigure 1: Key themes and stock ideas in 2020(O)5G Capex(O)(O)(O)(O)Apple(O)(O)(O)Multi-camSource: Credit Suisse research5G infrastructure ready to r

2、amp up. We anticipate 2020 to be the key inflection point for 5G where capex is expected to recover in China by 16%. We maintain our China 5G BTS net adds estimate at 136k units in 2019 but raise 2020E to 613k from 545k units. ZTE is likely to slow down its share in China when 5G initially ramps up,

3、 but its overseas market share is likely to recover due to 4G demand in emerging markets. We expect telco capex to shift from 4G to 5G rapidly, and by 2021E, 83% of total capex will be dedicated to 5G. We estimate 41% of 5G capex to be addressable by CCS.5G phones to drive replacement and upgrade. O

4、ur CS tech strategist forecasts global 5G smartphone shipments to be 250 mn/500 mn in 2020/21E, 121 mn/208 mn units to ship in China (48%/42% of total shipment). We see 5G as key to driving the replacement cycle for Chinas smartphone market. We raise our China smartphone shipment estimate to-4% YoY

5、from -6% in 2019 and now estimate +5% YoY for 2020E. In the Apple supply chain, we expect limited upgrade in acoustic/haptic, upgrade in casing, antenna for mmWAVE, and more triple-cam/ToF. In the Android supply chain, we expect multi-cam (tri-/quad-cam/ToF), under-display fingerprint, SBS/SLS acous

6、tics, more antenna, casing (3D glass+mid-frame) to be major upgrades. TWS earphones continue to be a promising driver.Trade truce likely priced in, while fund-flow driving sentiment and rerate. We see a rerate on HK/China tech sector to be also supported by (1) potential de-escalation of the US-Chin

7、a trade tension; (2) normalised impact of current trade tariff; (3) increase of weight of MSCI A-share inclusion; and (4) domestic substitution.Valuation lift to upcycle. We believe improving fundamentals and multiple factors should support the rerate in the tech sector. Our stock calls focus on key

8、 beneficiaries of 5G capex, Apple and multi-cam supply chain. We prefer the Apple supply chain to Android, given near-term inventory adjustment and ASP pressure in 5G phones. We prefer Hans Laser and ASMPT (iPhone replacement cycle, capex recovery), Lens and FII (iPhone casing) and Luxshare (Apple p

9、rojects). We like multi-cam players Sunny and Q Tech among the Android names. We like ZTE on 5G capex cycle but downgrade Sunway to NEUTRAL (from Outperform) on valuation.Research AnalystsKyna Wong852 2101 6950 HYPERLINK mailto:kyna.wong kyna.wongChaolien Tseng852 2101 6795 HYPERLINK mailto:chaolien

10、.tseng chaolien.tsengPauline Chen886 2 2715 6323 HYPERLINK mailto:pauline.chen pauline.chenClive Cheung852 2101 7069 HYPERLINK mailto:clive.cheung clive.cheungStephen Yin852 2101 6980 HYPERLINK mailto:stephen.yin stephen.yinDISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURE

11、S, ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that couldFocus charts

12、and tableFigure 2: Telcos capex shifting from 4G to 5GFigure 3: -4%/+5% YoY for 2019/20E China smartphone32713119923614632265 shipments45040035030025020015010050-Rmb bn160 mn units 140120100806040200Q1Q2Q3Q440%30%20%10%0%-10%-20%-30%20182019E2020E2021E4G Capex5G Capex2015 shipment2019 shipment2017 Y

13、oY2016 shipment 2017 shipment2020 shipment2015 YoY 2018 YoY 2019 YoY2018 shipment2016 Yoy2020 YoYSource: Company data, Credit Suisse estimatesSource: Company data, Credit Suisse estimatesFigure 4: CS estimates 250 mn/500 mn of 5G phones globally in 2020/21EFigure 5: We estimate global handset lens s

14、hipment to grow at 12% CAGR for 2019-21E600mn Units6,000mn units30%5005,00025%4004,00020%3003,00015%2002,00010%1001,0005%0-0%2019EApple Xiaomi Lenovo2020ESamsung OPPO ZTE2021EHuawei+Honor vivoOthers2013201420152016201720182019E2020E2021ERear main cameraRear sub cameraFront main cameraFront sub camer

15、aNew application cameraYoY%Source: Company data, Credit Suisse estimatesSource: Company data, Credit Suisse estimatesFigure 6: Glass-back casing to account for 48% of globalFigure 7: Luxshare stays as the major AirPod suppliersmartphone shipments in 2020E 0%0%9%0%10%6%04%6%0%0%6%12%39%39%41%36%39%11

16、%51%19%19%7%21%35%68%20%76%80%80%45%16%10%39%24%10%89%3%3%32%2%27%1%19%03%19%03%15%100%90%80%70%60%50%40%30%20%10%0%2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020EPlasticMetal casingGlass 2/2.5DGlass 3DCeramicOthers2021E140 (mn)120100806040200InventecLuxshareGoertek201720182019E2020E2021ESource:

17、 IDC, Credit Suisse estimatesSource: Company data, Credit Suisse estimatesFigure 8: Top stock ideas in 2020CompanyTickerPriorRating20E EPS (lc)PriorNewPriorTP (Ic)New Cur PriceUpsideKey Themes in 2020A-shareHans Laser002008.SZOO1.721.6249.853.544.321%iPhone replacement cycle, capex recoveryLens Tech

18、300433.SZOO0.630.6415.719.115.920%iPhone and glass casing leadershipLuxshare002475.SZOO1.251.3137.444.438.316%iPhone, AirPods, Apple WatchFII601138.SSOO0.981.0318.020.617.915%iPhone 5G casingSunway300136.SZON1.841.5242.351.745.414%Neutral on valuationO-film002456.SZUU0.450.456.711.316.2-30%multi-cam

19、, underdisplay fingerprintH-shareQ Tech Sunny ZTE (H)ASMP1478.HK2382.HK0763.HK0522.HKO O OOO O OO0.674.621.326.650.714.671.336.6513.4146.031.0133.016.6168.031.3133.012.5131.525.7110.633%28%22%20%multi-cam, underdisplay fingerprint multi-cam and new customer5G capex, share recovery in EMsiPhone repla

20、cement cycle, capex recovery and 5GNote: Priced as of 7-Jan-2020. O = Outperform, N = Neutral, U = Underperform. Source: Company data, Credit Suisse estimatesHardware outlook 2020: Stay invested for 5G ramp-up5G infrastructure ready to ramp upWe anticipate 2020 to be the key inflection point for 5G

21、where capex is expected to recover in China by 16%. We maintain our China 5G BTS net adds estimate at 136k units in 2019 but raise 2020 to 613k from 545k units. For 5G deployment in China, Huawei is likely to get 50% market share in 5G demand, followed by ZTE (20-30%), Ericsson, and Nokia. ZTE is li

22、kely to slow down its share in China when 5G rollout initially ramps up, but its overseas market share is likely to recover by 4G demand in emerging markets. We expect telco capex to shift from 4G to 5G rapidly, and by 2021E, 83% of total capex will be dedicated to 5G. We estimate 41% of 5G capex to

23、 be addressable by CCS and 4G addressable capex will decrease to 15% in 2021E, with a blended 37% of total capex addressable by CCS.5G phones to drive replacement and upgradeOur CS tech strategist forecasts global smartphone shipment to grow by 3% in 2020 after 3% decline in 2019. 5G smartphone ship

24、ments are likely to be 250 mn/500 mn in 2020/21E, 121 mn/208 mn to ship in China (48%/42% of total shipment). We see 5G as key to driving the replacement cycle for Chinas smartphone market. We raise our China smartphone shipment estimate to -4% YoY from -6% in 2019 and now estimate +5% YoY growth fo

25、r 2020E. In the Apple supply chain, we expect limited upgrade in acoustic/haptic, content upgrade in glass casing, upgrade in antenna for mmWAVE, and more triple-cam/ToF in 2H20 models. In the Android supply chain, we expect multi-cam (tri-/quad-cam/ToF), under-display fingerprint, SBS/SLS acoustics

26、, more antenna, 5G casing (3D glass casing + mid-frame) to be major upgrade trends. TWS earphones continue as a promising driver.Trade truce likely priced in while fund-flow driving sentiment and rerateWe see a rerate on HK/China tech sector to be supported by not only the fundamental thesis mention

27、ed in section one and two, but also driven by (1) the potential US-China trade truce when phase one deal is to be signed; (2) normalised impact of current trade tariff on the sector;full-year effect of the increase in weight of China A-share in the MSCI Emerging Markets (20% from November 2019); and

28、 (4) continuous effort on domestic substitution given threats of a US ban. We think the US ban, in the long run, will likely boost the pace of (1) domestic substitution for technology self-dependence, (2) talent acquisition and return to mainland China given the situation in the US, and (3) domestic

29、 demand for local brands driven by nationalism.Valuation lift to upcycleWe think 2020 is a big year to realise the 5G replacement cycle in the smartphone market and the ramp-up of 5G infrastructure. However, we are also aware of the risks of intensifying competition among 5G smartphones and tight su

30、pply in certain components which will lead to pricing pressure for components in 2H20. Our stock calls focus on key beneficiaries of 5G capex, the Apple supply chain and multi-cam cycle, and consider seasonality and coverage diversification. We expect both A-/H-share hardware coverage names to trade

31、 towards their upcycle valuation, but stay cautious on any profit-taking if trade tension is to intensify and raise uncertainties in the middle of the year. However, we still think blue-chip stocks with quality fundamentals and clear upgrade trends will outperform and stay resilient.We prefer Hans L

32、aser and ASMPT (iPhone replacement cycle, capex recovery), Lens and FII (iPhone casing) and Luxshare (Apple projects). We like multi-cam players Sunny and Q Tech among Android names. We like ZTE on 5G capex cycle. We downgrade Sunway to NEUTRAL (from Outperform) on valuation.We maintain our China 5G

33、 BTS net adds estimate at 136k units in 2019 but raise 2020 to 613k from 545k unitsWe raise our China smartphone shipment estimate to -4% YoY from -6% in 2019 and now estimate +5% YoY growth for 2020EWe see a rerate on HK/China tech sector to be also supported by (1) potential de-escalation of the U

34、S-China trade tension; (2) normalised impact of current trade tariff; (3) increase of weight of MSCI A-share inclusion; and (4) domestic substitutionOur stock calls focuses on key beneficiaries of 5G capex, Apple and the multi-cam supply chain.Valuation summaryFigure 9: A-share tech sector NTM P/E i

35、n our coverageFigure 10: H-share tech sector NTM P/E in our coverage70+1SD: 42.6Average: 31.160-1SD: 19.650403020103530252025.21510+1SD: 24.1Average: 18.0-1SD: 11.920.40201320142015201620172018201952013201420152016201720182019Source: Company data, IBES, Credit Suisse estimatesSource: Company data, I

36、BES, Credit Suisse estimatesFigure 11: Comp sheet of our coverage (hardware components and equipment players)Note: Priced as of 7 Jan 2020; O = OUTPERFORM, N = NEUTRAL, U = UNDERPERFORM.Source: The BLOOMBERG PROFESSIONAL service, Credit Suisse estimatesTable of Contents HYPERLINK l _TOC_250050 Hardw

37、are outlook 2020: Stay invested for 5G ramp-up3 HYPERLINK l _TOC_250049 5G infrastructure ready to ramp up3 HYPERLINK l _TOC_250048 5G phones to drive replacement and upgrade3 HYPERLINK l _TOC_250047 Trade truce likely priced in while fund-flow driving sentiment and rerate3 HYPERLINK l _TOC_250046 V

38、aluation lift to upcycle3 HYPERLINK l _TOC_250045 Valuation summary4 HYPERLINK l _TOC_250044 5G infrastructure ready to ramp up7 HYPERLINK l _TOC_250043 China telco capex to grow by 16% YoY in 2020E7 HYPERLINK l _TOC_250042 Raise China BTS shipment estimate8 HYPERLINK l _TOC_250041 Huawei maintains

39、its leadership, Samsung catching up9 HYPERLINK l _TOC_250040 Key upgrades in 5G equipment12 HYPERLINK l _TOC_250039 Stock picks: Infrastructure players to benefit from 5G capex cycle14 HYPERLINK l _TOC_250038 5G phones to drive replacement and upgrade15 HYPERLINK l _TOC_250037 -4%/+5% YoY for 2019/2

40、0E China smartphone demand15 HYPERLINK l _TOC_250036 250 mn/121 mn units 5G smartphones globally/China16 HYPERLINK l _TOC_250035 5G drives upgrade, but also pricing pressure18 HYPERLINK l _TOC_250034 Acoustic: Android acoustic upgrade to continue but not iOS20 HYPERLINK l _TOC_250033 Haptics: Luxsha

41、res share gains to continue, ASP to drop on limited upgrade20 HYPERLINK l _TOC_250032 Optics: CCM GM pressure stabilising while lens demand still robust21 HYPERLINK l _TOC_250031 Casing: Glass + metal mid-frame as 5G mainstream23 HYPERLINK l _TOC_250030 Wireless: More antenna for 5G phones24 HYPERLI

42、NK l _TOC_250029 TWS: promising demand, AirPod stays as the lead25 HYPERLINK l _TOC_250028 Wearables growth driven by smartwatches26 HYPERLINK l _TOC_250027 Fingerprint sensing module to continue migration to under-display solutions27 HYPERLINK l _TOC_250026 Display: rising contribution from China O

43、LED27 HYPERLINK l _TOC_250025 Stock picks: 5G upgrade beneficiaries28 HYPERLINK l _TOC_250024 Trade truce likely priced in, while fund-flow driving sentiment and rerate30 HYPERLINK l _TOC_250023 US-China trade de-escalation30 HYPERLINK l _TOC_250022 Near-term uncertainties, long-term implications32

44、HYPERLINK l _TOC_250021 A-share rally driven by improving multiple drivers33 HYPERLINK l _TOC_250020 MSCI A-share weight increase driving sentiment and long-term impact34 HYPERLINK l _TOC_250019 Valuation lift to upcycle37 HYPERLINK l _TOC_250018 Prefer 5G capex, Apple supply chain and multi-cam39 H

45、YPERLINK l _TOC_250017 AAC Technologies Holdings Inc42ASM Pacific Technology Ltd44 HYPERLINK l _TOC_250016 BOE Technology Group Co. Ltd46 HYPERLINK l _TOC_250015 BYD Electronic48 HYPERLINK l _TOC_250014 China ComService50 HYPERLINK l _TOC_250013 FIT Hon Teng Limited52 HYPERLINK l _TOC_250012 Foxconn

46、 Industrial Internet54 HYPERLINK l _TOC_250011 GoerTek Inc.56 HYPERLINK l _TOC_250010 Hans Laser Technology Co., Ltd58Huami Corp.60 HYPERLINK l _TOC_250009 Lens Technology Co., Ltd62 HYPERLINK l _TOC_250008 Luxshare Precision Industry Co., Ltd64 HYPERLINK l _TOC_250007 Q Tech66 HYPERLINK l _TOC_2500

47、06 Shenzhen O-film Tech Co., Ltd68 HYPERLINK l _TOC_250005 Shenzhen Sunway Communication Co., Ltd70 HYPERLINK l _TOC_250004 Sunny Optical Technology Group Co.Limited72 HYPERLINK l _TOC_250003 Tianma Microelectronics Co. Ltd74 HYPERLINK l _TOC_250002 Tongda76 HYPERLINK l _TOC_250001 Xiaomi Corporatio

48、n78 HYPERLINK l _TOC_250000 ZTE Corporation805G infrastructure ready to ramp upWe see 2020 as a key inflection point for 5G in China. The commercial 5G network turned live on 1 November 2019, with service packages ranging from Rmb128-599 for 30-300GB, with only 10 mn users pre-registered for 5G subs

49、criptions. The readiness of handsets seems to be ahead of infrastructure coverage; as such, we assume there will be a strong catch-up with the 5G rollout. We anticipate 2020 to be the key inflection point for 5G where capex is expected to recover in China by 16%. We expect meaningful tenders to star

50、t taking place in 1H 2020, and the standalone network to begin rolling out in 2H 2020.5G services continued to be launched in various parts of the world throughout 2019, with China commercially launching its services on 1 November 2019, and a few more countries in Europe joining the list of countrie

51、s that offer 5G coverage. In countries such as Korea and the US, where services were launched earlier in 2019 (April), coverage across cities has expanded with a forecasted rapid acceleration in 2020. Amongst major countries, Japan is set to launch its 5G services commercially in 1H20, before the Ol

52、ympics. Several other countries should join the list of countries offering 5G services in 2020. 5G spectrum is now available or will be available within the next six months with telco operators in most of the major countries globally, with a likely 5G rollout within six to 12 months of the spectrum

53、auction.We see 2020 as a key inflection point for 5G in China.Figure 12: Global key market spectrum in C-bandFigure 13: Global key market spectrum in mm WaveMHz3300340035003600370038003900400041004200MHz24000 24500 2500025500 26000 2650027000 27500 28000 2850029000 29500Australia Austria Brazil Cana

54、da China Czech France Finland Germany Hong Kong Ireland ItalyIndia JapanSouth KoreaSpain Switzerland TaiwanLicensedConsultationAuction/PlannedLicensed to TrialConsideringShared spectrum / local licencesUK USAustralia Brazil Canada China France Germany Hong KongItaly India JapanSouth KoreaSpain Taiwa

55、n UKUruguayUSLicensedAuction/PlannedLicensed to TrialConsultationConsideringShared spectrum / local licencesSource: GSA, Credit Suisse researchSource: GSA, Credit Suisse researchChina telco capex to grow by 16% YoY in 2020ECS global telecom team forecasts wireless capex to grow 3%/4% in 2019/20E and

56、 expects wireless equipment market to grow at 4% in both 2019/20E, due to some early signs of the equipment-to-capex ratio rising in markets such as China driven by 5G and 4G refarming. Since the China 4G capex cycle peaked in 2015, the three China telcos capex declined YoY consecutively until a mod

57、est recovery in 2019, and 5G capex is expected to reach a peak by 2021E. However, without a clear monetisation plan for 5G, profitability pressure made Chinese telcos hesitant on committing a significant amount to capex. China Telecom and China Unicom announced their Co-build, Co-share agreement in

58、an effort to reduce the heavy 5G capex burden with a single 5G network. Meanwhile, China Mobile also announced that it will control its 2020-22E capex to not substantially increase from its FY19 guidance of Rmb166 bn per year. Our China telco research team estimates 1%/15%/1% capex growth for 2019/2

59、0/21E for China Mobile, China Telecom and China Unicom, and China Tower, respectively, in aggregate. Despite the guidance and sentiment of capex being somewhat subdued, particularly in 2019, the total capex remains significant, reaching Rmb380 bn+ in both 2020/21E (including China Telecom).We addres

60、s the challenges for operators to roll out a 5G network including: (1) high capex (about 2x the total cost for 5G vs 4G under the same area of coverage), (2) increased utility expenses as energy consumption in 5G is higher than 4G (e.g., 2-3x higher for AAU), and (3) potential equipment design chang