On April 20th, the semiconductor sector closed higher, with individual stocks such as Baiwei Storage and Cambrian U rising their limit at the end of the trading day. The stock prices of several stocks, including Northern Huachuang and Jinhaitong, reached new highs. The main net inflow into the semiconductor sector exceeded 900 million yuan.
According to Choice data, as of the close on April 20th, the semiconductor industry in Shenwan's second tier industry has increased by over 20% since the beginning of the year, with an increase of over 11% on the 20th. Individual stocks such as Jinhaitong, Jiangbolong, and Lianhe Technology have risen by over 80% so far this year.
Is the semiconductor sector rising strongly, and is the turning point of the semiconductor cycle that was hotly discussed at the beginning of the year coming?
Performance exceeding expectations stimulates growth
On April 20th, the semiconductor sector closed higher, with multiple industry chain stocks such as Baiwei Storage and Cambrian U rising their limit at the end of the trading day, with an increase of 20%. On the same day, the main net inflows exceeded 100 million yuan and 300 million yuan, respectively. The stock price of Northern Huachuang reached a new high in nearly a year during the trading session, while the stock price of Jinhaitong reached a historic high during the trading session. As of the closing date, the main net inflow of the semiconductor sector exceeded 900 million yuan, ranking 6th in the Shenwan secondary industry.
The strong uptrend in the semiconductor market has attracted market attention to the turning point of the semiconductor cycle. Previously, many fund managers expressed their views that semiconductors are expected to experience a turning point in the second quarter or second half of the year. Does the seven consecutive positive events in the semiconductor sector since March 29th indicate that a turning point is imminent?
Several public fund managers in South China believe that the turning point may not have truly arrived yet, and the recent rise is due to some leading semiconductor equipment companies exceeding expectations, as well as the driving force of the AI market, which has greatly reversed the pessimistic sentiment in the market.
Data shows that several stocks such as Northern Huachuang and Tuojing Technology, which have recently disclosed financial data, have achieved a year-on-year positive increase in net profit. According to the 2023 first quarter performance forecast of Northern Huachuang, the company's net profit after deducting non recurring gains and losses in the first quarter of 2023 increased by 221.82% to 260.44% compared to the same period last year. At the end of 2022, Tuojing Technology achieved a turnaround in net profit attributable to shareholders of the listed company, with a year-on-year increase of 438.09%.
Sudden increase in the number of semiconductor funds across all positions
Recently, driven by the strong rise of the semiconductor sector, several related funds rose by over 8%, and some of them have repeatedly set new historical highs in net worth. Among these funds that demonstrate the "extreme" upward trend, many of the top ten heavy holdings by the end of 2022 are all semiconductor stocks.
According to Choice data, the number of established funds with names containing "semiconductor" and "chip" exceeds 30 (calculated by merging different shares), with a total fund size exceeding 80 billion yuan. The scale of funds such as Huaxia Guozheng Semiconductor Chip ETF, Guolian Anzhong Securities All Index Semiconductor Products and Equipment ETF, and Guotai CES Semiconductor Chip Industry ETF all exceeds 10 billion yuan.
From the perspective of fund establishment time, more than half of the above-mentioned funds were established in 2021 or later. In addition, there are a considerable number of funds with names that do not include "semiconductors" or "chips" that have full holdings in semiconductor stocks. For example, Cai Songsong, who specializes in semiconductors, has developed multiple products such as the Nuoan Growth Hybrid, as well as the Oriental Artificial Intelligence Theme Hybrid and Southern Information Innovation Hybrid, which have seen outstanding net worth growth recently. A public fundraiser sighed, "Previously, the number of semiconductor products in the entire warehouse was still in single digits, but it has increased significantly in the past two years
During the early rise of the semiconductor sector, a reporter from China Securities News learned that some funds have chosen to moderately reduce their positions and engage in band based operations to adapt to the large fluctuations in the semiconductor sector and seize phased investment opportunities in the long-term trend.
Favorite segmentation areas show slight differences
For the subsequent trend of the semiconductor sector, many fund managers believe that although the turning point has not yet truly arrived, in the long run, there is room for growth in the semiconductor industry. However, there is a slight divergence in the direction of investment focus among fund managers in segmented areas.
Liu Huiying, the fund manager of the Technology Group of NuoAn Fund, believes that from the perspective of long-term industrial development, the autonomy and controllability of chips may still be a high profile track in the future, and short-term disturbances will not affect long-term growth. In 2023, there will be great opportunities for the entire semiconductor sector, from the equipment and material EDA sector dominated by independent and controllable semiconductors to the chip design sector dominated by downstream demand.
Liu Yang, the fund manager of Chuangjin Hexin Chip Industry Stock Initiation Fund, believes that the chip design sector is expected to experience an explosion in 2023, and will focus on digital chip design companies that represent computing power throughout the year. Since the second quarter of last year, chip design has entered a stage of rapid destocking, and the PE valuation of digital chips in the fourth quarter is significantly lower than the overall valuation level of the semiconductor industry, with a high value for money ratio. In addition, innovative energy storage often drives digital chips first. As a light asset industry, digital chips have high research and development costs in the early stages, but once sales increase in the later stages, profits will rapidly explode.
Kong Xuebing, a hybrid fund manager with a stable strategy and flexible configuration at Jinxin, believes that the more opportunities to overcome cyclical fluctuations come from breakthroughs in high R&D driven technology and the wafer precursor links (key equipment and components, materials, etc.) that embrace independent and controllable opportunities. This is the soul and core of long-term semiconductor investment. He believes that the semiconductor wafer manufacturing process, currently at the tip of the high-end manufacturing pyramid, is far from demonstrating its due value and has a high long-term success rate.
You Guoliang, Manager of Changcheng Jiujia Innovation and Growth Hybrid Fund, believes that in terms of segmentation, the core growth logic in the upstream of the semiconductor industry is the continuous improvement of autonomy and controllability. Therefore, there is an urgent need for autonomy and controllability, and the long-term growth space and certainty in the future are high. This mainly includes electronic design automation software in the upstream of the design process, and some equipment, materials, and equipment components in the upstream of the manufacturing process. From the downstream of the industry, automotive intelligence and national defense informatization are relatively certain directions for growth, and some companies have good cost-effectiveness based on their annual performance outlook.
Luo Yingyu, the ETF fund manager of Penghua Guozheng Semiconductor Chip, believes that the semiconductor industry chain is currently in a period of supply side contraction matching the demand side, further compressing the inventory of the industry chain. The downward pressure on prices is gradually easing, and the industry is expected to accelerate inventory clearance, with revenue and profits entering a turning point.
Source: China Securities Journal
