\u3000\u3000 Chaozhou Three-Circle(Group) Co.Ltd(300408) (300408)
Deep cultivation of electronic ceramic electronic components, leading in comprehensive strength
Chaozhou Three-Circle(Group) Co.Ltd(300408) was founded in 1970, mainly engaged in the R & D, production and sales of electronic ceramic electronic components and basic materials. Since its establishment, the company has continuously researched, developed and produced new products, such as ceramic substrates, ceramic components for optical communication, MLCC, fuel cell diaphragm, ceramic packaging base, etc., developing from a single resistance product to a diversified product structure. The company has been selected as one of the top 100 Chinese electronic components enterprises selected by China Electronic Components Association for 32 consecutive years, and won the ninth place in the comprehensive strength of the top 100 Chinese electronic components industry in 2019.
Integration creates unique competitive advantage
The company has rich experience in the production of electronic ceramics and nearly 50 years of technology accumulation, forming a unique process and technical process. The company has been deeply engaged in the electronic component industry for decades, professional and dedicated, creating a unique competitive advantage, having the whole process production capacity from raw materials to finished products, and realizing the vertical integrated industrial layout.
The company's business blossoms at multiple points to jointly drive the company's performance growth
For communication components, as a cash flow business, the ceramic plug-in business benefited from 5g and data center, and the cover business continued to improve; The demand for semiconductor components and crystal oscillator is improving, and the company's PKG continues to expand its production and is in a state of rapid growth; New business ceramic cleaver and resistance paste have a good development momentum; Electronic components and materials, substrate business capacity expansion, business development smoothly, has become an important part of the company's revenue.
MLCC business expansion + product upgrading will become an important growth engine in the future.
MLCC has a huge market space, with a global market close to US $15 billion. China's supply and demand gap is huge. The huge downstream localization demand and relatively small supply proportion determine that China can grow at least two or more MLCC companies in the future. At present, Sanhuan mainly produces medium and large-size MLCC products, which are mainly used in home appliances, power supply, lighting, medical treatment and 5g communication equipment market. In addition, the company raises funds to invest in the production expansion and technical transformation project of high-quality multilayer chip ceramic capacitors for 5g communication, actively grasp the domestic substitution opportunity, and it is expected that in the next five years with the support of China's industrial policy, The company's MLCC business will usher in a period of rapid growth and become a new growth engine with great contribution.
Investment advice
We expect the company's revenue to be 6.318 billion / 8.024 billion / 10.286 billion from 2021 to 2023, and the net profit attributable to the parent company to be 2.136 billion / 2.676 billion / 3.383 billion, corresponding to the PE of 37.4x/29.9x/23.6x from 21 to 23 respectively. It is recommended to give a "buy" rating for the first time.
Risk tips
The downstream demand is less than expected, the development of new products is less than expected, and the MLCC competition pattern worsens.
