Weak demand for electronic components terminal

Since November, the SW Electronic Index has not stopped falling. As of December 14, 2012, the SW Electronic Index has fallen by 7.9%, significantly underperforming the Shenzhen Component Index by 6.4 percentage points, and underperforming the Shanghai Composite Index by 10%. Up to now, the price-earnings ratio of TTM in the electronic sector has been 28 times. The valuation has slightly stabilized compared to the beginning of the month, but it is still at the lowest level in history. From a horizontal perspective, the valuation of the electronic sector in the current A-share market is still in the front rank, which is higher than the average valuation level of the market by 19.8 times.

The global semiconductor economy continues to decline. In October, global semiconductor sales fell 2.28% year-on-year, a slight increase of 1.72% month-on-month, and the decline rate narrowed slightly. From other indicators, North America’s BB value was 0.75 in October and Japan’s BB value was 0.65, both of which remained low, and the North American BB value has dropped to below 1 for five consecutive months. Analyzed from the order amount, semiconductor equipment orders in North America and Japan fell sharply by 19.8% and 26.1% year-on-year in October, respectively, and the decline rate further expanded. Changes in BB values ​​and orders growth indicated that the industry demand continued to decline.

Taiwan's electronic sector maintained a modest recovery in November, but the degree of business has declined from the previous month.

The overall sentiment of Taiwan’s electronic sector continued to rise moderately in November. Of the 18 Taiwanese electronics sub-sectors we track, 15 showed positive year-on-year growth; however, there was only a positive growth in the five segments. As a whole, the electronic prosperity of Taiwan's electronic sector remained stable in November compared to October. One reason for positive growth is the low base of last year, and the overall monthly prosperity of a single month has fallen from October. In terms of the growth rate, the number of plates that increased by more than 10% year-on-year was 9 and only 2 lines increased by more than 10% year-on-year.

Taiwan’s electronic sector accelerated its differentiation in November. The fastest year-on-year revenue growth in the Taiwan electronics sector in November was the FCCL sector, which represented a growth rate of 80% year-on-year; the growth rate of optical lens segment revenue reached 70%, and the growth rate of the two sectors increased by 10% from October. the above.

The number of touch screen panels increased by 26% year-on-year, showing a clear upward trend. The three sectors in which revenue declined in November were respectively small-sized panels, PCBs and NB foundry segments, which fell by 18%, 9% and 1% respectively. After entering November, Taiwan’s electronic sector again showed a marked differentiation. Monthly revenue of touch screens and optical lens panels hit record highs.

Investment Strategy. At present, the entire industry has become stable throughout the year. Although the low point of the cycle has passed, the overall operation of the industry in the third quarter was dull. Terminal demand did not increase rapidly, and the outlook for the traditional cyclical sub-industry was not optimistic. We believe that the current focus of the industry should still focus on the Apple industry chain, smart phones, tablet computers and LED lighting and other sections, the focus should be on the three quarterly report to maintain high growth in the enterprise.