Huawei has fully completed the 5G-A key technology test of the IMT-2020 (5G) Promotion Group. The test results show that Huawei has made significant performance breakthroughs in several ultra-broadband uplink and downlink technologies for 5G-A. As an evolution and enhancement of 5G, 5G-A has achieved a tenfold increase in connection speed and latency, traditional network capabilities, and introduced revolutionary new technologies such as integrated perception, passive IoT, and intrinsic intelligence.
5G commercial use will move to a new level, and the industry chain is expected to enter a crucial period of development and maturity.
Major announcement by Huawei
On October 21, 2023, the China 5G Development Conference was held in Shanghai. At the conference, the Ministry of Industry and Information Technology announced that it would conduct a summary assessment of the “Set Sail City” for 5G applications in prefecture-level cities and above, gradually build a batch of benchmark cities, and accelerate the promotion of 5G applications from point-to-scale evolution, establishing 5G city benchmarks.
At the opening ceremony, Zhang Yunming, Deputy Minister of the Ministry of Industry and Information Technology, stated that China has built the world’s largest and most advanced 5G network. By the end of September, China had accumulated 3.189 million 5G base stations, with 737 million 5G mobile phone users accounting for 42.8% of all mobile phone users. The foundation of the digital economy is continuously solidifying.
Huawei’s Chief Strategy Officer for Wireless, Chen Chuanfei, stated at the forum: “The first commercial solution for 5G-A (also known as 5.5G or 5G Advanced) is ready. During the Global Mobile Broadband Forum held last week, Huawei launched the world’s first complete series of 5G-A solutions. The timing is right for 5G-A, and Huawei will work with the entire industry to accelerate the deep integration of 5G-A industry chains and commercial scenarios and jointly enter the new era of 5G-A.”
Additionally, on the evening of the 21st, “Huawei China” WeChat account announced that Huawei has fully completed the 5G-A key technology test of the IMT-2020 (5G) Promotion Group. The test results indicate that Huawei has made significant performance breakthroughs in several 5G-A ultra-broadband uplink and downlink technologies.
Wen Ku, the Chairman of the China Communications Standards Association, pointed out that 5G-A is a critical stage in the evolution from 5G to 6G. 2023 is a pivotal year in the “Fourteenth Five-Year Plan” and also a crucial year for setting international standards for 5G-A. Huawei’s completion of the 5G-A performance test is of significant importance for the formulation of 5G-A standards, related product development, and industry maturity.
Institutions Optimistic About 5.5G Investment Opportunities
Huawei previously announced that it hopes to launch a full set of end-to-end 5.5G network equipment for commercial use in 2024, marking the intermediate transition stage from 5G to 6G. With technology, policy, and industrial layout becoming increasingly clear, 5.5G concept stocks are generally favored by institutions.
Galaxy Securities stated that China’s digital economy ICT infrastructure construction is accelerating, and the ICT infrastructure market has strong demand certainty. As 5G transitions from the “investment period” to the “harvest period”, the expansion of 5G applications is expected to solidify, and the corresponding sector is expected to stabilize and rebound.
CITIC Securities believes that 5.5G is expected to open up industry application space, optimistic about the development opportunities of the three major operators, equipment manufacturers, and upstream component manufacturers.
On investor interaction platforms, listed companies’ progress in 5.5G business is frequently inquired.
Yonggui Electric has supplied products such as 5G base station power connectors. Shenglu Communications said the company has relevant technical reserves in the fields of 5.5G and 6G. Zhenyou Technology revealed that its core network technology can effectively support 5.5G, providing full cloud, new voice, new video, and MEC+X solutions.
Canqin Technology’s ceramic dielectric filter technology can be widely used in various application scenarios within the sub-6GHz band, including 4G, 5G, and 5.5G FDD architecture communication networks.
Shunluo Electronics currently has a variety of RF components suitable for 5.5G, including antennas, filters, duplexers, triplexers, couplers, etc.
High Growth 5G Concept Stocks Announced
According to the Securities Times·Data Bao statistics, there are more than 330 5G concept stocks on the A-share market. Since September, affected by Huawei Mate60 series products’ outstanding performance, several listed companies have revealed their “Huawei content”, and stocks in the Huawei industry chain (including 5G concept stocks) have continued to strengthen. Hengwei Technology, Shobeide, Guanghong Technology rose more than 50%, Yonggui Electric, Zhenyou Technology, Feilingsikosi, etc. rose more than 30%.
From the perspective of institutional attention, Zhongji Xuchuang, Tianfu Communications, and Lixun Precision have more than 30 institutions participating in the rating. China Mobile, ZTE, Industrial Wealth Union, and Shunlu Electronics, etc., 20 stocks have more than 20 institutions rating.
Among the stocks with high institutional attention, Zhongji Xuchuang, Tianfu Communications, ZTE, China Mobile, Industrial Wealth Union, etc., are industry leaders.
In particular, Zhongji Xuchuang is a leading global data center optical module supplier, providing 5G front, middle, and backhaul optical modules for telecom equipment customers. On the 22nd, the company disclosed its third-quarter report, with a net profit of 1.296 billion yuan in the first three quarters, a year-on-year increase of 52.01%. The net profit in the third quarter was 682 million yuan, a year-on-year increase of 89.45%. The company also stated that the current optical modules are mainly used in domestic and foreign AI fields, data centers, and telecommunications fields. Some new products under development are suitable for intelligent vehicles and autonomous driving scenarios.
ZTE is a major participant in China’s 5G scale commercial use. In the global 5G patent ranking published by LexisNexis, three Chinese companies are listed: Huawei in the first place, ZTE in seventh, and OPPO in eighth.
In terms of performance growth rate, based on the unanimous forecast of five or more institutions, there are 36 stocks with a net profit growth rate of more than 30% in the next two years. Among them, Ruiko Laser’s performance growth rate is expected to reach 740.21% this year, with an average performance growth rate of 396.48% in the next two years, ranking first. In addition, Dongtu Technology, Creative Information, Weijie Creativity, etc., nine stocks this year and the average performance growth rate of the next two years both exceeded 100%.
In terms of the increase in space from the latest closing price to the institutional target price, among the aforementioned high-performance growth stocks, Nandu Power and Zhichun Technology have a growth space of more than 100%, Xiangxin Technology, Zhongci Electronics, Yihua Shares, etc., five stocks have more than 50%.