Shengyi Technology Co.Ltd(600183) (600183)
Brief comment on the event
On December 28, the company held the 12th meeting of the 10th board of directors, deliberated and adopted the proposal on the guarantee provided by the holding subsidiary Suzhou Shengyi Technology Co.Ltd(600183) Co., Ltd. to its wholly-owned subsidiary. The company announced that, It is agreed that the holding subsidiary Suzhou Shengyi Technology Co.Ltd(600183) Co., Ltd. shall provide a joint and several liability guarantee of RMB 400 million to its wholly-owned subsidiary Changshu Shengyi Technology Co.Ltd(600183) Co., Ltd. (i.e. Shengyi Technology Co.Ltd(600183) subsidiary), which shall be subject to the contract signed by both parties. As of November 30, 2021, Suzhou Shengyi has provided guarantee for Changshu Shengyi (excluding this guarantee) RMB 60 million, and there is no guarantee for other companies.
Business analysis
Changshu Shengyi phase II is a key project next year, and the fund guarantee will help to put into operation. The projects put into operation by the company in 2022 include Songshan Lake plate project (with an annual output of 2.6 million square meters and an investment of 660 million yuan), Shaanxi Shengyi phase III Project (with an annual output of 7.2 million pieces, about 9 million square meters and an investment of 620 million yuan), Changshu Shengyi phase II (with an annual output of 11.4 million square meters and an investment of 950 million yuan), it can be seen from the scale of production capacity and investment that the scale of Changshu phase II project is relatively large, and more working capital support is necessary after it is put into operation. The financial guarantee provided by Suzhou Shengyi, the company’s holding subsidiary, to Changshu Shengyi will help Changshu Shengyi phase II project put into operation, and the smooth release of production capacity will provide support for the company’s performance growth support.
The countercyclical strong are expected to take the lead in getting out of the dilemma, and the large-scale superposition of high-end products contributes to growth. At present, the copper clad laminate industry has entered the downward cycle of price reduction, and it is difficult for industry players to avoid entering the growth dilemma. We found that the company can realize the rapid reversal of unit gross profit through control adjustment, so as to release the higher than expected performance growth. On this basis, The company also actively layout high-end products (high frequency has successfully entered the mainstream of the market. Driven by the shipment of special communication equipment and the change of server platform, high-speed will increase in volume. Miniled has entered the supply chain of major customers in North America and has increased in volume, and the expansion of packaging substrate production is to be released). After adding the capacity release of three projects next year, we believe that the company is expected to quickly enter the performance growth channel after short-term pressure, and the growth is worth it Look forward to it.
Investment advice
We expect that the net profit attributable to the parent company from 2021 to 2023 will reach 3.03 billion yuan, 3.16 billion yuan and 4.17 billion yuan respectively, corresponding to 18 times, 17 times and 13 times of PE. Considering that the company can take the lead in getting out of the unit gross profit dilemma and the valuation level is close to the bottom range in history, we look at the valuation repair opportunity of the company as an industry leader and continue to give a “buy” rating.
Risk statement
The prosperity of the industry is declining; Price decline; Capacity expansion is less than expected; The promotion of high-end products was less than expected.
