Investment advice
Industry strategy: we believe that the overall investment logic of the PCB industry next year should focus on the profit repair logic and grasp the reasonable valuation safety margin. Under the condition of meeting the first two conditions, manufacturers with layout in automobile, server, carrier board and other fields can pay more attention.
Recommended portfolio: considering the profit recovery space, safety margin of valuation and business layout of various companies, our recommended order is: Wus Printed Circuit (Kunshan) Co.Ltd(002463) , Shenzhen Kinwong Electronic Co.Ltd(603228) , Olympic Circuit Technology Co.Ltd(603920) , Jiangsu Xiehe Electronic Co.Ltd(605258) , Shennan Circuits Co.Ltd(002916) .
Industry perspective
The combination of supply and demand has created an industry growth of 22.6%, and the revenue of A-share PCB has increased significantly. From the electronic demand side, PC (23% year-on-year growth in the first three quarters), home appliances (8%, 5% and 14% year-on-year growth in sales of air conditioners, refrigerators and washing machines from January to October), new energy vehicles (177% year-on-year growth in sales from January to November), mobile phones (9.3% year-on-year growth in shipments in the first three quarters, ending the decline year-on-year for three consecutive years) saw high demand growth; on the supply side, the price of raw materials increased (the copper price has increased by more than 100% since the low point) restricts the supply of effective capacity in the middle reaches. Therefore, under the influence of both supply and demand, the year-on-year growth rate of the global PCB industry is expected to reach 22.6%, which is the largest growth year in recent 11 years. Under this background, the revenue of A-share PCB Companies has achieved universal high growth, and the average growth rate of all A-share PCB Companies has reached 30% And more than half of the companies increased more than the industry average, which shows the high outlook of the whole industry.
The marginal weakening of prosperity has been basically determined. Cyclical boom is one of the main driving factors for industry growth this year. From the perspective of marginal change, the boom will gradually begin to weaken: 1) in the short term, we investigated 15 PCB listed companies and some non listed companies. At present, we can observe that the boom has been significantly weaker than that in the first half of the year, and look forward to the future orders will continue to be under pressure, In addition, Q1 is the traditional off-season of PCB industry, so we believe that short-term marginal weakening is gradually taking place; 2) In the medium and long term, from a one-year perspective, we have reviewed the trend of three cycles in the past 15 years. Judging from the industry growth rate and A-share PCB revenue growth in the last and last rounds, the industry growth rate will narrow next year, and the revenue growth of A-share PCB companies will be under pressure.
Profit recovery is the main line of investment next year. Looking forward to the poor prosperity of the industry, we reviewed the reasons for the rise of the share price of PCB companies whose share price increased by more than 30% each year in the past 15 years, and classified them into three categories: “profit”, “valuation” and “profit + valuation”. According to the number of three categories each year, we believe that in the stage of industry change caused by cyclical prosperity, PCB industry investment should pay more attention to profitability. In view of the cyclical boom, the profit growth of the next year mainly comes from profit repair rather than revenue growth, because we believe that profit repair is the key main line of investment in the whole PCB industry next year. Therefore, we should focus on PCB companies whose profits are eroded by raw materials this year and have profit recovery space next year.
Long term focus on segments with strong growth attributes. On the basis of ensuring a certain profitability and repair ability, the segments with strong growth attributes can be taken as the long-term focus direction, mainly including three aspects: 1) with the improvement of the electronization of vehicles, The value of single car PCB is expected to increase several times (300 yuan / car → 3500 yuan / car); 2) next year’s Q2 server platform upgrade will use higher-level PCB boards, and the value will increase by 3 ~ 4 times; 3) the carrier board has a high prosperity this year, but at present, the whole market is still occupied by Japanese, Korean and Taiwan manufacturers. The two mainstream manufacturers in China are expected to account for no more than 5% in total, and there is sufficient domestic substitution space.
Risk statement
The prosperity has declined sharply; The price of raw materials remains high; Increased competition led to lower than expected profits
