Zhongtian Technology: Network Transformation Of Hundreds Of Billions Of Market To Be Divided

Three networks convergence, infrastructure construction first. With the pilot work of triple play started officially launched, related Equipment supplier Hopefully, it will benefit from the integration of three networks.

Zhongtian Technology (600522.SH) is such a device company. "Three networks integration has been discussed for a long time, and now the pilot scheme is finally announced. We are optimistic about the development opportunities it brings for the entire industry." Zhongtian Technology securities office staff said.

Zhang Bing, an analyst with CITIC Securities, believes that in the era of triple play, the upgrading of broadband is more urgent, and the optical communication industry will benefit significantly.

It is understood that Zhongtian Technology is one of the main manufacturers of optical fiber and cable equipment in China, occupying nearly 30% of the market share. 2009 annual report shows that optical fiber and cable business revenue is 1 billion 579 million yuan, an increase of 24.03% over the same period, the main revenue accounted for 42.39%, the power cable business income of 1 billion 738 million yuan, an increase of 25.04% over the same period, revenue accounted for 46.66%.

As a matter of fact, it includes Zhongtian Technology. Equipment dealer In terms of broadcasting and telecommunications, the big cake may be in front of us.

"From the point of view of network layout, there is still a certain gap between broadcasting and telecommunications, so in the future, radio and television will catch up in this area." Radio and television industry expert Wu Chunyong said. It is understood that the backbone of the broadcasting network is only 40 thousand leather long kilometers (Note: skin length kilometer is one of the length measurement methods of optical cable), which is too weak for Telecom 830 thousand skin long kilometers.

Analysts believe that from now on, the protection period granted by the state to radio and television is only two to three years. During this time, the broadcasting and television system must establish a network. After this protection period, radio and television will compete directly with telecom and mobile. This indicates that in just three years, the broadcasting system needs huge input. According to expert estimates, the transformation of radio and television network system means more than 600 billion of business opportunities.

"The largest investment in broadcasting and television will be the transformation of the access network, but the specific situation depends on radio and television investment plans for equipment." Galaxy Securities analyst Xu Yaowen believes.

In addition to radio and television, the demand for optical fiber and cable in the telecommunications industry is still strong. On the one hand, the continued expansion of 3G will increase the demand for transmission of optical fiber between base stations. On the other hand, in the "three networks convergence", telecom operators will speed up broadband construction, and increase fiber optic cable expenditures in the metropolitan area transmission network and access network.

Faced with hundreds of billions of investment in radio and television, telecom Hundreds of billions of investments have also been thrown out. In April 9th, the Ministry of industry and information technology, the State Development and Reform Commission, the Ministry of science and technology, the Ministry of finance, the Ministry of land and resources, the Ministry of housing and the State Administration of Taxation jointly issued the "opinions on advancing the construction of optical fiber broadband network", which put forward that "the investment in optical broadband network construction over 3 years is more than 150 billion yuan".

Thus, to achieve the convergence of three networks, both telecommunications and radio and television operators will increase bandwidth, which will bring greater market demand to Zhongtian Technology.

Kang Zhiyi, an analyst with the East China Securities communication and media group, said that the price of optical fiber collection has begun to fall this year, and the performance of the company will gradually decrease. However, with the increasing demand for triple play and the construction of national optical fiber broadband, the industry in the second half of this year is expected to regain its growth momentum. He expects the company's earnings per share in 2010 to be 1.21 yuan, and its valuation advantage is remarkable.

In fact, the three networks integration equipment category has also been favored by the Chinese Department fund. In the first quarter of this year, the Chinese industry picked up 3 million 990 thousand and 100 shares of 600498.SH, accounting for 2% of the outstanding shares, while the Chinese advantage Growth Fund held 4 million 542 thousand and 300 shares of Zhongtian Technology, accounting for 1.42%.

Risk warning:

The decline in fiber prices may exceed expectations, new product development risks and systemic risks in the stock market.