CCBIS Opinion: Stick With Market Leaders Amid Uncertainties

Jul 12, 2018 09:00 JST

Source: CCB International Securities Limited

HONG KONG, Jul 12, 2018 - (ACN Newswire) - CCB International Securities Limited (CCBIS) released an analyst report on the China technology market in early July.

According to the report, CCBIS' top picks within the PRC technology space are Sunny Optical (2382 HK), Kingdee (268 HK), and Hikvision (002415 CH).

The report stated that Trump's protectionist stance has been the ongoing drag impacting stock performance of PRC technology names in 1H18. CCBIS expects export-driven technology names to continue facing uncertainties, which will suppress sector valuation till a resolution between both parties is agreed upon. Despite the uncertainties, CCBIS suggests investors stick with names that have cutting edge technologies and less exposure to US markets.

CCBIS expects rapid spec upgrades for PRC smartphone brands to continue, such as 3D sensing and innovative camera solutions, which will support higher ASPs for key components. Thus, CCBIS believes these upgrades will benefit leading PRC smartphone component suppliers, and CCBIS favours Sunny Optical (2382 HK, Outperform) the most within the PRC smartphone supply chain.

In addition, 5G is expected to kick-start in 2019F, and surveillance player Hikvision (002415 CH, Outperform) will benefit from the much faster connected networks.

CCBIS also believes PRC enterprise solution players are well positioned for multi-year growth with IaaS/SaaS players taking the centerstage. Among the high-flying cloud players in China, CCBIS believes Alibaba is the clear leader in IaaS while Kingdee (268 HK, Outperform) is the front runner to capture opportunities in the fragmented SaaS areas.

In conclusion, CCBIS prefers Sunny Optical in the hardware space given its leading position in handset lenses and camera modules, Kingdee for its unique position within the SaaS cloud market and cloud sales revenue growth potential over the next few years, and leading video surveillance player Hikvision for its continuous investments in innovative technologies and overseas expansion.

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Source: CCB International Securities Limited
Sectors: Daily Finance, Daily News