Wire and cable: about to lead the forced short big market

Today, major media outlets collectively reported that domestic 3G licenses are expected to be issued by the end of the year. Influenced by this news, the 3G concept sector surged sharply, with almost all stocks in this sector hitting the daily limit. The expectation of the early issuance of 3G licenses is actually fully in line with the current policy background. Against the backdrop of the global financial crisis, the telecommunications industry has also entered a corresponding adjustment phase. According to insiders from operators, under the 4 trillion yuan policy to stimulate domestic demand, in order to promote telecommunications infrastructure construction and drive investment in other industries, the Ministry of Industry and Information Technology has advanced the license issuance time to the end of this year. The telecommunications operation industry is highly policy-driven. Telecommunications network construction is part of national infrastructure construction. Historical data shows that telecommunications asset investment fluctuates greatly and is closely related to national policies, with no predictable pattern. However, due to its strict market access policies, this monopoly also guarantees its profitability. The current telecommunications restructuring and 3G network construction will inevitably bring large investments in telecommunications fixed assets. The completion of telecommunications restructuring, the construction of 3G networks, and strong domestic demand for communication equipment provide good development opportunities for companies in the communications industry. The development of the communications industry is weakly correlated with macroeconomic development. Compared to other industries, the economic downturn also puts some pressure on the communications industry, but due to the special nature of this industry and strong domestic market demand, it provides a safe haven for companies in this sector during this special period. For the communications equipment industry, there may be short-term impacts on the demand and purchasing power for telecommunications equipment, which will affect companies to some extent. However, telecommunications infrastructure construction is national infrastructure construction, so in the long term, demand will not change. The reasons are as follows: First, for the domestic market, 3G represents a 1 trillion USD market with a 10-year lifecycle. Therefore, with the construction of 3G networks, China's mobile communication base station equipment market will face significant growth, with an expected growth rate of about 30%. Second, with the completion of telecommunications restructuring, each operator needs to build or optimize their own basic networks, and the demand for materials and equipment is indispensable, providing a large market space for equipment manufacturers. Under such an industrial background, the sharp rise of 3G-related stocks is entirely reasonable. Exploring potential 3G stocks is also a key task recently, and investors can closely watch the leading cable company Xinke Materials (600255).

　　Yongding Co., Ltd. hit the daily limit, and Zhongke Yinghua also hit the daily limit, opening up huge upside space for the power grid and communication construction sectors. In fact, during the "Eleventh Five-Year Plan" period, China will usher in a new peak in power grid construction, and the 4 trillion yuan policy to stimulate domestic demand may accelerate the issuance of domestic 3G licenses, allowing communication construction to catch up rapidly. Against this background, cables will become the main supporting products for power grid and communication construction. Therefore, it is not difficult to understand the one-word daily limit of Yongding Co., Ltd. and Zhongke Yinghua. Similarly, the second-tier leader in the wire and cable industry, Xinke Materials (600255), is no exception. The company's wire and cable subsidiary is a professional enterprise producing wires, cables, and communication cables. Its main products include: communication cables, plastic power cables, cross-linked power cables, irradiated cross-linked low-smoke halogen-free flame-retardant (fire-resistant) power cables, fire-resistant cables, plastic control cables, overhead cables, bare conductors, cloth wires, data cables, computer cables, irradiated cross-linked special cables, shielded cables, automotive connecting wires, UL electronic wires, power cords, ROHS environmentally friendly power cords, etc. The company's various products are strictly produced according to national standards, and communication cable products have passed the China Ministry of Information Industry's TIER product certification. The company will benefit from the acceleration of power grid construction and 3G communication construction in the future, with extremely broad development prospects!