The Shanghai Composite Index is approaching 3,000 points! Is the best time to invest in 5G here?

Note! The following is only a personal opinion and is not intended as an investment reference! I am not responsible for any direct or indirect losses caused by the use of the content of this article!

Today, Monday, is really lively.

Thousands of miles away in Barcelona, ​​Spain, the MWC 2019 World Mobile Congress officially opened. Many manufacturers from all over the world showcased their latest products and technologies, setting off waves of enthusiasm.

Huawei, in particular, has swept the circle of friends and attracted a lot of attention with the stunning appearance of MATE X.

Huawei Mate X

The domestic stock market also maintained its upward momentum and continued to advance. The Shanghai Composite Index closed at 2961.28 points, up 5.60%, with a turnover of 466 billion yuan. The Shenzhen Component Index closed at 9134.58 points, up 5.59%, with a turnover of 574.6 billion yuan.

Several stocks related to communications also performed well:

A certain communication stock has been rising for 6 consecutive days

Everyone can't help but exclaim, has the bull market really arrived?

Xiaozaojun is not a financial expert, so I obviously cannot answer this question.

However, I would like to take this opportunity to talk to you about my personal views on 5G investment .

As 5G is getting closer, more and more people are beginning to pay attention to 5G. They are not only concerned about 5G technology and applications, but also about 5G investment, and want to know whether they can invest in 5G and share the dividends brought by 5G.

To sum up, the current stage of 5G is just waiting for the starting gun to sound.

Last June, the first phase of 5G standards was finalized, which was the world's first available 5G international standard and caused a great deal of excitement.

However, it is not the final complete version.

The 5G standard is divided into two phases. The second phase of the standard will not be determined until 2020 (most likely in June).

Timeline for 5G (IMT-2020) standards

The first phase of standards that have been completed are mainly aimed at eMBB (enhanced mobile broadband) scenarios, which are mainly for human use.

The second phase of standards is for uRLLC (ultra-reliable and low-latency communication) scenarios and mMTC (massive machine-type communication) scenarios, mainly for the Internet of Things scenarios ( these two scenarios are the more important value of 5G ).

Given the sluggish state of the communications industry, people are unwilling and unable to wait until 2020. Therefore, as soon as the first phase of standards was released, action has already begun.

If 2018 is the first year of 5G standards , then 2019 is the first year of 5G construction .

The construction of 5G infrastructure will be launched on a large scale this year. Operators will launch a large number of 5G pilot projects in various places, such as 5G railway stations, 5G airports, 5G stadiums, etc. This will be conducive to the maturity verification of 5G technology, and will also help the public understand and accept 5G, paving the way for the full deployment of 5G construction in the future.

The full rollout of 5G construction will definitely be in 2020, after the second phase of standards are completed.

Although many contents of the second phase of the standard can be implemented through software upgrades based on the network equipment built in 2019, it is inevitable that some things still need to be modified in the hardware. Therefore, it is not advisable to go all in when building the network in 2019.

The formulation and implementation of policies obviously also follow the standards.

According to industry speculation, the domestic 5G temporary license will most likely be issued on this year's Telecom Day (5.17), while the official license will not be issued until 2020.

Although the starting gun cannot be fired yet, the atmosphere can still be warmed up.

Based on China's advantages in 5G technology and the undoubted importance of 5G to national strategy, the government has high hopes for 5G and fully supports it.

Three months ago, the Central Economic Work Conference in December 2018 clearly proposed to "accelerate the pace of 5G commercialization" and listed it as a key task for 2019. After that, the Ministry of Industry and Information Technology also continued to speak out to support the construction of 5G, and also determined the " 5G temporary frequency band " and launched various measures to clear obstacles for the development of 5G.

The two sessions will be held soon , and this year is also the 70th anniversary of the founding of the People's Republic of China . Just think about it and you will know that there will be waves of positive policy stimulus in the future.

Currently, there has been progress in China-US trade negotiations. If the external environment improves, it will be icing on the cake and will bring positive effects.

So, how much will be invested in 5G?

According to the "5G Industry Development Prospects Forecast and Industry Chain Investment Opportunity Analysis Report" released by the Forward-looking Industry Research Institute, starting from the official commercial use of 5G in 2020, it is estimated that it will drive direct output of about 484 billion yuan that year, and will grow to 3.3 trillion yuan and 6.3 trillion yuan in 2025 and 2030 respectively, with an average annual compound growth rate of 29% over the past ten years.

The industry generally expects that China's investment in 5G network construction will be around 1.2 trillion yuan , an increase of about 55% over 4G.

The largest part of 5G investment will still fall on the main communication equipment. In other words, the mainstream communication equipment vendors in the industry will be the biggest beneficiaries. For our Chinese companies, it is actually Huawei , ZTE , and China Information and Communications Technology (Fiberhome + Datang).

Huawei is not listed, so investors cannot invest in it directly. However, you can pay attention to its supply chain ( there is a previous article that introduces it in detail, you can Baidu "Inventory of Huawei's 92 core supply chains" ).

Besides Huawei, of course, there is ZTE. ZTE 000063 has performed very well in recent days, and I believe many people have paid attention to it. After last year's turmoil, ZTE is currently keeping a low profile overall, but its strength is still there and it is worth paying close attention to.

ZTE Corporation's stock price trend

China Information and Communications Technology actually looks at the FiberHome system . Their main equipment is not very good, and their strength lies in optical communications .

In addition to the main equipment, 5G investment also focuses on optical communications and base station radio frequency .

The pictures are from the Internet and are for reference only

Especially optical communications, that is, optical fiber cables, as well as optical devices, are very important.

As the saying goes, fiber comes before base stations. The ultra-high speed of 5G cannot be separated from the support of optical transmission network. This month, China Mobile launched a centralized procurement project for optical cables, with a scale of more than 100 million core kilometers and a bid limit of 10.15 billion yuan. Before the launch of 5G, such a procurement was launched, which shows the importance of optical fiber.

In addition to the FiberHome group, the domestic companies with strong strength in optical communications include Changfei Optical Fiber, Hengtong Optics, Zhongji Innolight, and Accelink Technologies.

Base station RF, that is, RF antennas. The strong ones include Comba, Tongyu, and Mobi.

I don't know much about the companies involved in base station components such as filters, power amplifiers, and printed circuit boards, so I won't introduce them in detail. Benefiting from the boost from the antenna market, they should all have good performance.

In terms of terminals, Xiaozaojun believes that 5G will not stimulate mobile phone sales too much . The reason is what I said before, 5G is a bit "redundant" for existing mobile phone applications. Huawei MATE X is very popular, but everyone is staring at its folding screen, and no one cares about its 5G communication capabilities, which also explains the problem. However, the communication module and communication chip are still worth paying attention to. From a long-term perspective, I am more optimistic.

After all this talk, it's all about bearer network and access network. Is the core network as the main equipment worth investing in? My opinion is - not worth it. If you want to invest, invest in the cloud computing center. Don't invest in the core network. I won't explain the reason. Those who have read Xiaozaojun's article will understand.

In addition to the communication network itself, it also depends on the specific industry applications .

4G changes life, 5G changes society. The significance and value of 5G lies not in 5G itself, but in the capabilities it brings and the business model innovation that this capability may trigger.

Xiaozaojun has said before that 5G brings greater bandwidth to people's Internet access, which is likely to add fuel to the already popular video applications (such as video social networking, VR social networking, video surveillance, and image recognition). Other applications related to large bandwidth are also likely to undergo huge changes and growth.

5G itself is also an Internet of Things, and it will play a huge role in the application of the Internet of Things in various vertical industries. For example, Internet of Vehicles, smart manufacturing, smart cities, smart agriculture, smart medical care, smart energy, smart logistics, etc., all have huge business opportunities and may incubate powerful companies, even unicorn companies.

From a long-term investment perspective, I think it is better to invest in applications rather than the Internet .

The above are Xiaozaojun’s personal views on 5G investment.

Once again, I want to reiterate that this article is all personal opinion and does not constitute investment advice. In a nutshell, don't come to me if you lose money.

In fact, although the investment in 5G seems to be large-scale, the cycle should also be very long, and it will not be invested all at once in the short term.

I have said repeatedly before that we need to be rational about 5G . 5G is not a panacea. It has not yet found a popular application or a rigid demand point. How much value and return it can generate is still unknown.

A few days ago, an article titled "5G will be a complete failure" was widely circulated. The author expressed strong pessimism about 5G. Although the viewpoint may seem a bit extreme, some of the content does make sense.

No one knows what the future will be like. 5G and 5G investment are full of uncertainty. For uncertainty, all we can do is to be more rational. So, I would like to give you a poem as a conclusion:

Although 5G is good, it also has many risks;

Dare to advance and not dare to retreat, the leeks will shed tears.