First, the Apple chain is unanimously expected to gradually form
Apple's WWDC implementation of the "local>cloud>third-party LLM" AI iPhone solution is expected to continue to stimulate the demand for replacement phones and start a 2-3 year iPhone sales upward cycle. For AI mobile phones, Apple's small step, the industry's big step, the consumer electronics industry has fully opened the era of AI terminals!
Fruit chain investment throughout this year and next year, with both performance flexibility and valuation flexibility:
(1) Volume: overall replacement demand + supply share increase
(2) Price: iPhone16/17 new phone value increase link
(3) Valuation: Low PE targets are expected to make up for the increase
The performance of the core companies of the Apple chain will hit a record high next year, more than 20 or 21 years. Behind the industry downturn, it has silently paid to increase its share and expand its categories, and its revenue volume has exceeded a 21-year high. Therefore, it is optimistic that the share prices of all core companies of the fruit chain will reach a record high in 2025, and this is only the beginning.
Establish a sense of space and look at the year:
Lixun, 25 years to see 17 billion profits, 30 times PE to 500 billion market value
Pengding, 25 years to see 6 billion profits, 30pe to 200 billion market value
Lens, 25 years to see 6 billion profits, 30 times PE to 200 billion market value
Lingyi, 25 years to see 3 billion profits, 30 times PE to 90 billion market value
Dongshan, 25 years to see 3 billion profits, 25 times PE to 75 billion market value
The fruit chain is small and beautiful, Hengmingda, Shihua Technology, Siquan New Materials, Zhongshi Technology, Anjie Technology
Fruit chain equipment, Genesis, Saiteng, Bozhong, United Win Laser, Jieput
In terms of rhythm, there is no downside to the release of the iPhone 16 in September. After the first test in September, it turned to the expected iPhone 17 innovation year and continued to perform. Optimistic about the three-year replacement cycle, the stock price is deduced definitively until September 25 before the launch of the iPhone 17.
Second, the expected difference of the fruit chain
Although the current market is still hot, in the long run, the current position of the fruit chain is still at a very low level. Over the past few years, we have had many exchanges with you. Today, I would like to summarize some of the market's differences on the fruit chain, mainly focusing on the following aspects:
First, in the short term, in July and August, especially before the September press conference, the market is in a vacuum of news and catalysts. During this period of time, the fruit chain lacks the support of shipments or company performance, how to view the market during this period?
Second, after the launch event in October this year, what is the specific sales of the iPhone 15? Will it exceed expectations? There is also a big divide in this regard.
Third, regarding next year's iPhone 16, it is generally believed that this is a time point for a major iteration of hardware. However, due to the increase in the price of components, including battery and cooling, the overall selling price of the iPhone 16 may come under pressure, which will affect sales. These are the three core concerns of the fruit chain at present.
Let's start by deciphering these three disagreements or concerns.
First of all, regarding the market in July and August, we believe that this period is not exactly a news vacuum. On the one hand, we have seen Apple increase some orders for A17 in TSMC in the early stage, and it will take about a month or two for the transmission of additional orders from chips to components. Therefore, we believe that July and August may see some domestic parts companies successively overtime. Secondly, the launch in September and the first month of October are also very important. In July and August, we may see some parts companies working overtime, and changes in utilization rate and production capacity will gradually appear. Closely followed investors may get some news one after another. Today, we also saw Goertek announce that it has raised the revenue target for equity incentives in the next few years, which is also a strong signal. Therefore, we believe that July and August are not a vacuum period for fruit chain news, but there may be some positive stimulus events.
The second concern is whether North American or global sales will exceed expectations in October. We believe that sales in North America are key, as only the North American market will be able to fully experience the new iOS operating system with the new device and AI features. Therefore, the first month of sales in North America in October is a very important point to observe. Sales in other regions are of little significance, especially in terms of total global sales. This time, the hardware of the iPhone 16 did not have a particularly large iteration, mainly because the operating system added AI functions. Therefore, it can be seen whether the iPhone that only adds AI functions this time will be favored by North American consumers. The first-month sales of new machines in North America is an important time to observe. According to the current information and industrial chain situation of Apple, we believe that the probability of listing in October is relatively high.
The third concern is the BOM cost pressure on the new iPhone 17 models next year. At present, it is difficult to predict how much the BOM cost will increase next year, because the changes and prices of the new parts of the iPhone 17 will not be finalized until the end of this year or the first quarter of next year. The second point is that under the premise of rising BOM costs, we have heard some messages from the industrial chain. For example, the middle frame may change from titanium alloy to other materials. Apple is also trying to control the BOM cost, so it remains to be seen whether the BOM cost will rise more than expected, or whether this increase will have a noticeable impact on sales. But what is certain is that Apple is trying to control the BOM cost in various ways, including the possibility that there will not be major changes in features such as optics. Therefore, we believe that the overall BOM cost is still hopefully manageable, and this is what we want to explain to you.
We have always emphasized that consumer electronics is supply that creates demand. If the features meet or exceed expectations, or if Apple's AR features meet the needs and bring convenience, consumers will still pay. So far, the trading of the fruit chain has been more to follow the trend of the Apple stock price in North America. But in our view, this is not the only factor. The core logic of the fruit chain lies in the huge demand for stock replacement. At present, there are about 1.4 billion iPhones in the world, of which less than 10% are iPhone 15 Pro and above, about 140 million units. Assuming that the penetration of existing users reaches 30% in three years, this means that there will be more than 400 million replacement needs in the next three years, minus the current 100 million existing users, and more than 300 million replacement needs in the future. This 30% ratio is a conservative forecast, according to this calculation, there will be about 330 million units in the next three years, about 100 million units per year. Apple has never had such a lot of pressure to replace its phones in the past 3 to 5 years. For the fruit chain, the market is expected to sell about 220 million units this year and about 240 million units next year. We think 240 million units will be very easy to achieve. On the one hand, there will be the fourth generation of the iPhone SE next year, which will bring at least 10 million units in sales demand. Coupled with the hardware iteration of the iPhone 17, 10 million new units were shipped, so the growth from 220 million to 240 million units is very easy. If the AI function exceeds expectations, it is also expected that more than 250 million units will be sold next year. This is what to expect from the fruit chain at the moment.
Third, pay attention to relevant listed companies:
(1) Assembly: Lixun Precision
(2) PCB: Pengding Holdings, Dongshan Precision
(3) Optics: Gao Wei Electronics, Sunny Optical Technology, Crystal Optoelectronics
(4) Acoustics: AAC Technologies, Goertek
(5) Battery: Zhuhai Guanyu, Desay battery
(6) Heat dissipation: Zhongshi Technology, Siquan New Materials
(7) Structural parts: Lens Technology, Xinwei Communication, Industrial Fortune Union, Lingyi Intelligent Manufacturing
(8) 3C equipment: Saiteng shares, Bozhon Seiko, Jingce Electronics
Lixun Precision: The largest consumer electronics precision manufacturing leader in mainland China, Apple's core supplier.
Lens Technology: The company is a supplier in Apple's industrial chain, and the scale is huge.
Lingyi Intelligent Manufacturing: The company's carbon fiber structural parts are used as key parts of the screen support plate, and customers include Apple.
Desay Battery: The main supplier of batteries for iPhones.
Shenyu Co., Ltd.: It has a high market share in the global market share of fine and ultra-fine RF coaxial cables for signal transmission in consumer terminals, and its customers include Apple and Samsung.
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