As cloud computing, big data and AI land faster across industries, the intelligence wave is surging. In the secondary market, related stocks have shone and capital keeps flowing in. Many experts and institutions say that against the backdrop of building strength through technology, intelligence will be the core A-share investment theme of 2022 and the next five to ten years.
Policy keeps stacking up
The Central Economic Work Conference called for raising manufacturing’s core competitiveness, launching industrial foundation projects and fostering specialised innovative enterprises, plus accelerating digital transformation of traditional industries – likely to speed companies’ intelligent upgrading, as analysts noted.
Digital and intelligent transformation is the year’s policy keyword. The 14th Five-Year plan focuses on high-end chips, operating systems, AI algorithms and sensors, building 5G application scenes across intelligent transport, logistics, energy and healthcare. MIIT’s intelligent manufacturing plan targets basic digitalisation across large manufacturers by 2025 and intelligent transformation at leading firms; its software and IT services plan cultivates intelligent hardware, robots, connected vehicles, vessels, drones, wearables and smart homes; and four ministries jointly launched 2021 intelligent manufacturing pilot demonstrations. Locally, Beijing’s high-precision industry plan pushes ‘core-swapping, chip-strengthening, intelligence-endowing and fusion’, and Jiangxi issued its own intelligent manufacturing plan.
‘If the past decade was about digital transformation and the digital economy, the next decade brings the intelligence wave,’ said Bao Fan, founder and CEO of China Renaissance, at the Wuzhen Summit: chips, hardware, compute, systems and software are all innovating together, with intelligence spreading across smart consumption, smart industry, smart health, enterprise SaaS and intelligent technology. Roland Berger partner Wu Zhao called intelligence a continuing investment mainline – spanning not just smart products but smart manufacturing and supply chains upgraded by new technology and data. Sichuan Fortune Securities’ chief manufacturing analyst agreed intelligence is the core theme for 2022 and beyond.
The sector’s momentum shows in the numbers
Of 84 companies with positive 2021 earnings pre-announcements by late December, over 40% sit in electronics, software, machinery and automotive – GoerTek forecast net profit of RMB 4.24-4.53 billion; semiconductor Dongxin topped earnings-doublers at up to 1,128.68% growth; Jiahe Meikang forecast 233.88-327.92% and micro-inverter leader Hoymiles 73-102%.
Market performance followed: energy internet, intelligent vehicle, intelligent manufacturing, smart wearables and smart agriculture indexes gained 79.18%, 36.28%, 19.10%, 20.63% and 35.46% for the year, far outpacing the Shanghai Composite’s 4.17%. Of 305 stocks that doubled this year, over 40% sit in intelligence-related fields – semiconductor leader Goke Micro rose over 300%, with Xiaokang, Shuanghuan Driveline and Sifang all up more than 250%.
Capital is pouring in: intelligent vehicle company registrations rose 44.1% and financing events 93.3% in 2021; intelligent manufacturing registrations rose 71.8%; AI registrations 90.9%. Hiring surged too – job supply grew fastest in new energy power (451%), new energy vehicles (365%) and intelligent manufacturing (352%).
Where the opportunities burst out
Southwest Securities flags intelligent vehicles and smart energy as the emerging tracks with highest explosive potential – no clear technology gap with overseas rivals, easily perceived results, and clear marginal improvement. Intelligent cockpits commercialise first, with China’s cockpit market forecast past RMB 100 billion by 2025, growing much faster than overseas; multiple L3-plus models land in 2022, opening a new explosion cycle.
Energy internet benefits from carbon policy and the new energy boom: State Grid’s three-phase plans totalled RMB 551 billion, RMB 1.5 trillion and RMB 1.4 trillion with intelligent investment shares rising from 6.19% to 11.67% to 12.5%, and Southern Grid plans about RMB 670 billion of grid investment in the five-year period. Galaxy Securities points to storage, microgrids and virtual power plants, plus IoT sensing, smart O&M, charging stations and smart parks.
For industrial internet, policy plus organic demand should keep raising industrial software penetration. Cloud keeps growing fast – iResearch expects 45% growth in 2022, with China’s three-year growth of 32.6% far above the global 16.9% – and SaaS is the better business model and long-cycle growth line.
A caution from experts: invest rationally. Watch intelligence, but do not follow blindly – and beware companies hyping the concept.
Want to talk through what you just read?
We work end to end, from product design to launch. Tell us about your scenario and we can start there.
Shenzhen XZS Technology Co., Ltd. · Tel 0755-82494862 · 13760424861