Guangdong Ellington Electronics Technology Co.Ltd(603328) (603328)
The company is a leading enterprise in the PCB industry and has many well-known customers in downstream China and abroad. After years of market expansion and brand management, the company has become a leading enterprise in the PCB industry. In 2020, the company’s operating revenue was 2.451 billion yuan, and the net profit attributable to the parent was 224 million yuan. In the first three quarters of 2021, the operating revenue was 2.014 billion yuan, and the net profit attributable to the parent was 118 million yuan. The company’s main business is the manufacturing and sales of high-precision, high-density double-layer and multi-layer printed circuit boards. The company’s circuit boards can be divided into double-sided boards, four-layer boards, six layer boards, eight layer boards and above according to the number of layers. Products are widely used in automotive electronics, communication equipment, consumer electronics, computers, medical industrial control and other downstream industries. According to the semi annual report of 2021, the company’s customer base is widely distributed and there are many high-quality customers. The main customers include Continental, Ningbo Joyson Electronic Corp(600699) , Valeo, Jabil, Flextronics, APTIV, Huawei, Lite on, selkang, Shenzhen Kaifa Technology Co.Ltd(000021) , Wistron and Bose, all of which are leaders in their respective industries.
The prosperity of automobile PCB industry is rising, and the company’s business is expected to benefit from the “new four modernizations”: China’s automobile sales will continue to rank first in the world in 2020. China Automobile Industry Association predicts that China’s automobile sales are expected to exceed 26 million in 2021, with a year-on-year increase of 4%, of which new energy vehicles are expected to reach 1.8 million, with a year-on-year increase of 40%. At the same time, the prosperity of the Automotive PCB industry is rising, and the company is expected to benefit from the “new four modernizations” – intelligence, electrification, networking and sharing. The Automotive PCB business will usher in a broader market space and demand scale. The 2020 annual report of the company disclosed that the circuit board technology for automobile braking system developed by the company during the reporting period improved the safety and reliability of automobile circuit board; The company’s 2021 semi annual report disclosed that during the reporting period, the company’s R & D investment was 48.4707 million yuan. During the reporting period, the company added a number of R & D projects such as “R & D of PTFE and traditional FR4 substrate hybrid automotive radar circuit board”, “R & D of high-order HDI circuit board” and “R & D of skip via deep microporous circuit board process technology”. The company’s in-depth R & D and innovation is conducive to further enhance the company’s core competitiveness and consolidate the advantages of leading technology in the industry.
Mianyang SASAC became the actual controller of the listed company: on October 16, 2021, the announcement on the progress of equity transfer of controlling shareholders disclosed that according to the share transfer agreement, Eaton investment plans to transfer its 293741816 shares of the listed company, accounting for 29.42% of the total share capital of the listed company, to Harbin Jiuzhou Group Co.Ltd(300040) , with a transfer price of 8.9 yuan / share. After transferring to Harbin Jiuzhou Group Co.Ltd(300040) shares and giving up part of the voting rights, Eaton investment gives up 9.57% of the voting rights in total, holding 339376404 shares, with a shareholding ratio of 33.99% and 24.42% of the voting rights, and Harbin Jiuzhou Group Co.Ltd(300040) holding 293741816 shares, with a shareholding ratio of 29.42% and 29.42% of the voting rights. Eaton investment will no longer be the controlling shareholder of the listed company, Harbin Jiuzhou Group Co.Ltd(300040) will become the controlling shareholder of the listed company, and Mianyang state owned assets supervision and Administration Commission will become the actual controller of the listed company.
Investment suggestion: we estimate that the company’s revenue from 2021 to 2023 will be RMB 2.843 billion, RMB 3.554 billion and RMB 4.443 billion respectively, and the net profit attributable to the parent company will be RMB 159 million, RMB 380 million and RMB 553 million respectively. We give a “Buy-A” investment rating for the first time.
Risk warning: key customers rely on risk; Risk of product R & D falling short of expectations; Market competition intensifies risks.
