\u3000\u3000 Suzhou Dongshan Precision Manufacturing Co.Ltd(002384) (002384)
Efficiently integrate and expand FPC business, accurately acquire and enrich PCB layout. The company’s current business covers electronic circuits (soft board, hard board, rigid flexible combination board), photoelectric display (touch panel, liquid crystal display module, LED display device) and precision manufacturing (metal structural parts and components), and is oriented to downstream consumer electronics, new energy vehicles, communications and other fields. The company was established in 1980 and landed in Shenzhen Stock Exchange in 2010; In 2016, it acquired mflex, the world’s fifth largest enterprise in flexible circuit board and assembly. Efficient integration and lean management after acquisition; In the first year after the acquisition, Weixin doubled its revenue and turned losses into profits. In 2018, the company acquired multek, a PCB enterprise, and formed a full range of PCB product portfolio covering flexible circuit boards, rigid circuit boards and rigid flex combination boards.
The value of mobile FPC stand-alone has increased, and XR has brought new increment. Almost all parts of smart phones need FPC to connect them to the motherboard. In smart phones, due to the demand for internal space, the consumption of FPC has been gradually increasing. We can see the increasing trend of FPC consumption through the internal FPC consumption of Apple phones and Android phones (Huawei). In addition, with the promotion of 5g, the use of high value FPC antennas (MPI, LCP) is also increasing, which drives the synchronous improvement of FPC value. According to IDC’s prediction, AR / VR shipments from 2020 to 2024 account for 81.5% of CAGR. Looking forward to 2022, as many well-known brands plan to launch heavy new products, 2022 is expected to be the year of VR. The company has cooperated with mainstream VR equipment manufacturers and provided them with FPC and other products.
Automobile FPC has great potential to create the second growth curve. The main driving forces for the increase of on-board FPC consumption include 1) the trend of replacing wire harness with vehicle FPC; 2) The penetration of new energy vehicles, its PCB consumption is 5-8 times that of traditional vehicles. According to the data of Zhanxin PCB, the annual growth rate of on-board FPC is expected to be about 6% ~ 9% from 2016 to 2022; In 2022, the scale of vehicle FPC will increase to 7 billion yuan. According to ifixit data, it is estimated that the consumption of single vehicle FPC of new energy vehicles will exceed 100, of which the consumption of battery voltage monitoring FPC can be as high as 70. The company actively expands the production capacity of automobile soft board. In 2020, the company has more than 400000 on-board FPC supporting new energy vehicles, and is actively implementing the capacity expansion plan several times; At the same time, the company has excellent customer resources, provides FPC products of BMS system for new energy vehicles in North America, and actively expands other customers outside China.
The company actively adds Mini LED packaging and continues to promote the incubation of new products of precision manufacturing. The company’s led business continues to focus on small spacing RGB packaging, and actively layout Mini LED display technology and production capacity. According to arizton’s prediction, the global miniled market scale is expected to increase from US $150 million to US $2.32 billion from 2021 to 2024. In the field of precision manufacturing, the company mainly provides metal structural parts and components for customers such as communication, consumer electronics and new energy vehicles (including structural parts and components such as base station antenna and filter, heat dissipation parts and precision structural parts of new energy vehicles, metal structural parts and appearance parts of consumer electronics, etc.). Among the 2021 new energy vehicle customers of the company, the value of single vehicle increased rapidly; In the future, we will continue to strengthen the development of new energy vehicle business and continuously improve the value of single vehicle.
Profit forecast and valuation suggestions: we expect the company’s revenue from 2021 to 2023 to be 31.242 billion yuan / 35.557 billion yuan / 39.751 billion yuan; The net profit attributable to the parent company was 1.861 billion yuan / 2.315 billion yuan / 2.896 billion yuan, with a year-on-year increase of 21.6% / 24.4% / 25.1%; Corresponding to PE 22.2x/17.9x/14.3x. “Buy” rating is given for the first time.
Risk tip: the capacity expansion of on-board FPC is less than expected, and the incubation of new products of on-board precision manufacturing is less than expected
