Summary of the key points of the 13th Five-Year Plan in the fields of semiconductors, displays, communications, big data, etc.

Latest update time：2016-03-09

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1. Media: Internet and education receive additional policy support, further opening up space for industry development

Author: Zhong Qi, Sun Xiaowen

Event: On March 5, the "Outline of the 13th Five-Year Plan for National Economic and Social Development (Draft)" was officially released. The outline pointed out that "full coverage of urban and rural broadband networks will be achieved", "improving the new generation of high-speed fiber-optic networks, building advanced ubiquitous wireless broadband networks...promoting broadband network speed increases and fee reductions", "implementing compulsory education school standardization, popularizing high school education, and building world-class universities and first-class disciplines and other projects". We believe that the Internet and education industries will continue to benefit from policy support and we can actively pay attention to related investment opportunities.

Accelerating the penetration rate of Internet broadband is good for digital marketing stocks. The draft outline proposes to "improve the new generation of high-speed optical networks and promote broadband network speed increase and fee reduction". We believe that this move will improve the user experience of Chinese netizens. High network speed will also promote the development of a series of other derivative industries such as "Internet +" and big data industry. The market size of the Internet industry is expected to continue to increase. In addition, the draft outline also proposes to achieve "full coverage of urban and rural networks". As of June 2015, the number of netizens in my country reached 668 million, and the Internet penetration rate was 48.8%. By the end of the 13th Five-Year Plan, the Internet penetration rate is expected to continue to increase steadily. You can pay attention to the digital marketing sector, which is highly correlated with the Internet penetration rate.

The education industry remains the focus of the government, with a focus on early childhood education and vocational education. The draft outline continues to pay great attention to the education industry. Premier Li Keqiang clearly pointed out in the "Report on the Work of the Government" that it is necessary to "encourage the development of inclusive kindergartens", "vigorously develop vocational education", "accelerate the promotion of distance education", etc. We believe that the pressure on school-age children to enter kindergartens will increase after the universal two-child policy. In addition to public kindergartens, the policy encourages departments and units to run kindergartens and social forces to run kindergartens, which will be beneficial to the development of private kindergartens. In terms of vocational education, the current social development and Industry 4.0 require high-quality labor. However, the current supply and demand of labor in my country are not fully matched, and the transformation and improvement of vocational education are needed. "Vigorously develop vocational education" We believe that vocational education, especially private vocational education, has ushered in development opportunities.

2. Computer: Government big data, government cloud, human interaction, and network security receive key support

Authors: Zheng Hongda, Wei Xin, Xie Chunsheng, Huang Jingjing

From the draft of the 13th Five-Year Plan, we can see that the government attaches great importance to the cyberspace economy and the Internet+ strategy. The added value of strategic emerging industries accounts for 15% of the GDP. It mentions "forming a cyberspace where everything is connected, people and machines interact, and the sky and the earth are integrated, and developing a modern Internet industry system." Strengthening information security protection, it is particularly proposed to implement the national big data strategy and take big data as a basic strategic resource. And openness in government big data sharing. Therefore, the 13th Five-Year Plan points out the key support for government big data, government cloud, human interaction, and network security.

We believe that during the 13th Five-Year Plan period, the opening of government data is expected to largely solve the current problems of low data dimension and low commercial value in big data analysis, and may open up the entire big data industry chain from both the data source and monetization value.

As the next generation of revolutionary computer technology, artificial intelligence is expected to bring about great changes to existing industries. In the long run, the trend of artificial intelligence is irreversible, and the development of the industry is expected to drive industrial changes; in the short term, we are optimistic about artificial intelligence technology that is easy to achieve large-scale commercialization in the downstream.

With the advancement of the cybersecurity strategy, we believe that (1) the military industry and government departments, which currently have a large demand for cybersecurity products, are expected to continue to maintain strong purchasing power; (2) with the large-scale application of cloud services, the cloud security field is expected to become another driving force for the future development of the industry; and (3) the demand for information security may gradually extend to large and medium-sized B-end users.

3. Electronics: Strengthen information security and focus on industrial integration

Author: Chen Ping, Chen Jiming

The draft outline of the 13th Five-Year Plan released yesterday particularly emphasized the importance of information technology, proposing that "we must firmly grasp the trend of information technology changes, implement the strategy of building a strong cyber power, accelerate the construction of a digital China, promote the deep integration of information technology with economic and social development, and accelerate the development and growth of the information economy." The draft outline also proposed to strengthen information security protection, coordinate network security and information development, strengthen data resource security protection, scientifically implement cyberspace governance, and comprehensively protect the security of important information systems.

We believe that the importance of information technology development and information security emphasized in the draft outline of the 13th Five-Year Plan is highly consistent with the policy of vigorously developing the integrated circuit industry that the country has been advocating for the past two years . Hardware is the basis of all information networks, big data, and computing systems, and integrated circuits are the basic components of hardware, so the development of domestic integrated circuits is the cornerstone of realizing information technology modernization and information security.

To develop integrated circuits, the national level has already taken action. In 2014, the "National Integrated Circuit Industry Development Leading Group" was established with Ma Kai as the group leader, and the "National Integrated Circuit Industry Development Promotion Outline" was issued. In the same year, the "National Integrated Circuit Industry Investment Fund" with a total amount of more than 130 billion yuan was established. This fund is based on supporting the development of leading companies in various fields of the domestic integrated circuit industry.

Under the leadership of national power, national capital combined with social capital will promote more domestic and overseas integration of the domestic integrated circuit industry, which is also the only way to rapidly develop the domestic integrated circuit industry.

From the perspective of secondary market investment, the investment value of the integrated circuit field in the next two years lies in industrial integration, and we are optimistic about companies with platform value. As the industry's prosperity declines, it provides an excellent opportunity for Chinese capital to conduct overseas mergers and acquisitions. We believe that overseas mergers and acquisitions by Chinese capital in the semiconductor field will continue to appear in the next two years, and domestic listed platform companies are an important path for capital to realize returns, so we are optimistic about listed semiconductor companies with scarce platform value.

4. Communications: Ubiquitous broadband, open data, and network security - policy support is conducive to the acceleration of communications

Author: Zhu Jinsong, Xia Lusheng, Peng Hu

"Build a ubiquitous and efficient information network, accelerate the construction of a new generation of high-speed, mobile, secure and ubiquitous information infrastructure, promote the widespread use of information network technology, and form a cyberspace where everything is connected, people and machines interact, and the earth and the sky are integrated."

We believe that ubiquitous information networks are in urgent need of a new generation of information infrastructure. Software-defined networking (SDN/NFV) will further promote the upgrade of network system equipment, which will benefit network system equipment manufacturers such as Tsinghua Unigroup (acquired H3C) and ZTE.

"Improve the new generation of high-speed fiber optic networks, build advanced ubiquitous wireless broadband networks, accelerate the development and application of new information network technologies, and promote broadband network speed increases and fee reductions" "50,000 administrative villages have access to fiber optic networks" "Achieve full coverage of urban and rural broadband networks"

We believe that the increase in both quantity and price of optical fiber and cable last year and China Mobile's world-leading purchase of 110 million core kilometers of optical fiber and cable have already marked the return of spring for the domestic optical fiber network, and "building an advanced ubiquitous wireless broadband network" has also actively responded to the popularity of next-generation wireless 4.5G and 5G technologies at the 2016 Global Mobile Communications Exhibition MWC.

“Implement the national big data strategy, take big data as a basic strategic resource, comprehensively implement actions to promote the development of big data, accelerate the sharing, opening up, development and application of data resources, and help industrial transformation and upgrading and social governance innovation. Accelerate the opening up and sharing of government data and promote the healthy development of the big data industry.”

We believe that the promotion and implementation of the big data strategy will contribute to the smooth transformation and upgrading of social industries, and big data in the telecommunications field will benefit in many ways.

“Strengthen information security protection, coordinate the development of cybersecurity and informatization, improve the national cybersecurity protection system, strengthen the protection of important information systems and data resources, improve network governance capabilities, and ensure national information security.”

We believe that the foundation of information security lies in network security, reliability and stability.

Source: Haitong Securities Author: Zhong Qi, etc.

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