Market Cap 100: China 5-Year Plan beneficiaries see value surge in 2021

The "Asia Supply Chain Market Cap 100" conducted by DIGITIMES showed that 6 out of the 9 high-growth companies that enjoyed more than 100% growth in market cap last year are semiconductor or solar energy-related companies, and 7 out of the 9 are based in China. They are all beneficiaries of China's 14^th 5-Year Plan, in which industries such as semiconductors and those that can help reduce carbon emissions will enjoy policy incentives and government fund supports.

"Market capitalization performance reflects the sentiment and forward-looking perspectives of investors, the fact semiconductor companies have enjoyed significant growth was largely due to supply chain disruptions after the COVID-19 pandemic and the increasing importance of semiconductor recognized as a critical pillar for many countries national strategy and security," said Eric Chen, semiconductor analyst of DIGITIMES.

Environment protection is one of the goals that China's 14^th 5-Year Plan is going to achieve. By improving energy resources allocations and utilization efficiencies and reducing the emission of major polluting substances, it aims to improve the ecological environment. Companies related to renewable energy, EV battery and related infrastructures enjoyed significant growth in their share prices and market values.

Semiconductor manufacturers were under the spotlight too, because integrated-circuit is among the frontier technologies that China seeks to support and develop in the 14^th 5-Year Plan. The other frontier technologies include artificial intelligence (AI), quantum computing, life and healthcare, neural science, bio conservation, aerospace, deep-earth and deep-ocean science.

Among the 9 companies in this year's top 100 market cap rankings that enjoyed market-cap increases of more than 100%, India's Tata Motors (179%) and Lasertec from Japan (162%) are the only two non-Chinese firms that enjoyed double growth in market capitalization in 2021. Lasertec is the world's only EUV photomask testing equipment manufacturer, one that neither TSMC nor Samsung can do without in their advanced processing manufacturing operations.

Tata Motors share price surged 207% in 2021, thanks to the success of its EV model and market leadership status. Tata Motors produces EVs at much lower price levels than imported brand products and is the only company eligible for government subsidies for car fleet purchases. Tata's EVs are now enjoying the largest market share in India, and passenger vehicle market leaders Maruti Suzuki and Hyundai Motor India aren't expected to launch mainstream EVs in India before 2024-25, according to the Economic Times.

Semiconductor, renewable energy are value growth winners

The 7 Chinese companies that enjoyed triple-digit growth in their market cap in 2021 are all categorized either in semiconductor or electrical component sectors. They are Zhuzhou CRRC Times Electric (503%), Trina Solar (250%), Zhejiang Jingsheng Mechanical & Electrical (137%), JA Solar Technology (134%), Silergy (115%), Sungrow Power Supply (111%), and NAURA Technology Group (109%).

17 Chinese companies that were categorized under the semiconductor sector made it to the top 100 market-cap ranking in 2021, increasing by 4 from a year ago, and their total market value enjoyed a 63% growth from a year ago. The 5 Chinese electrical component companies also saw their market cap grow 69% during the same period, reflecting investors' optimism for the prospects of the EV battery/components and semiconductor sectors.

Zhuzhou CRRC Times Electric is a propulsion and control system and IGBT manufacturer spun off from China's government-owned train manufacturing company. The company announced an IPO plan in Shanghai A shares to raise CNY7.7 billion ($1.23 billion) in August, boosting investor sentiment and pushing up its capitalization by 5 folds. However, the return on capital of the share was questioned by some analysts.

Zhejiang Jingsheng Mechanical & Electrical is a semiconductor/PV/LED substrate equipment and LED substrate materials provider. It is among the companies that were categorized under the "third-generation semiconductor" sector, which was included in the industries to be supported by the Chinese government's 14^th 5-year plan (2021-25).

Silergy is a China-based IC design company with its stock listed on the Taiwan Stock Exchange. The company enjoyed record-high revenues and earnings in 2021, due to its strong pricing power in power-management ICs. DIGITIMES report indicated that Silergy has established close ties with foundry manufacturers in China and secured capacities to manufacture its products, and thus become a winner during the time when PMIC supply was extremely tight, and customers were scrambling to source quality products.

NAURA Technology Group is the largest semiconductor manufacturing equipment manufacturer in China with full-spectrum front-end product lines. Thanks to the country's policy drive for semiconductor self-sufficiency, the company saw its net profit more than double in the first 9 months of 2021.

Since semiconductors will continue to be the focus of the 14^th 5-Year Plan of the China government, the sector has attracted much attention and an influx of capital from investors over the past 1 year.

Solar energy-related companies benefited from being a focus of the 14^th 5-Year Plan.

Trina Solar is the world's second-largest PV products manufacturer. It also develops and sells smart micro-grid and multi-energy complementary systems and energy cloud-platform operations. The company predicted a 40-67% growth for its net profit in 2021, thanks to an advantage in large-size PV cell products.

Sungrow Power Supply is an inverter manufacturer for solar PV products, a sector that benefits from a significant increase in building green-energy infrastructure and solar energy plants. A Shanghai Securities Times report pointed out that solar energy will take up half of the government's planned CNY3 trillion (US$0.48 trillion) investments for "clean energy" adoption in the 2021-2025 period, and thus is expected to create huge business opportunities for companies related to solar energy materials and equipment.

JA Solar Technology is a China-based manufacturer of solar cells and PV modules/systems. JA Solar and Trina Solar have been the beneficiaries of the world's net-zero carbon emission policy push, enjoying robust demands for green energy and the Chinese government's policy incentives for clean energy.

China gets 59 out of 100 market cap companies

China has the largest number of companies that made it to the list. A total of 59 companies in the top 100 market cap ranking list are from China, up from 55 in 2020. Japan has 22 companies on that list, decreased by 3 from a year ago. South Korea and Taiwan each have 7 companies that made it to the top 100 rankings, while India, Indonesia, and Thailand have 3, 1, and 1, respectively.

Nevertheless, Delta Electronics Thailand PCL, the only Thai company on the list, is actually the subsidiary of Taiwan's Delta Electronics in Thailand (with the shareholding percentage of 63.78%). Because its shares are listed on the Bangkok Stock Exchange, and its operations are in Thailand, it is defined as a Thai company.

In the 2021 ASC 100 top market cap ranking list, Indonesia's Astra International and India's Maruti Suzuki India, Mahindra & Mahindra, and Tata Motors are all automobile manufacturers, reflecting the auto industry's important role in the two countries economies.

Source: Market data compiled by DIGITIMES, 2022/1

Source: Market data compiled by DIGITIMES, 2022/1

Source: Market data compiled by DIGITIMES, 2022/1

Editor note: DIGITIMES Asia released the "Asia Supply Chain Market Cap 100 Ranking," based on market capitalization data of listed companies that engage in manufacturing activities in the Asia supply chains with the cut-off date set on December 31, 2021.