\u3000\u3 China Vanke Co.Ltd(000002) 916 Shennan Circuits Co.Ltd(002916) )
Matters:
The company released its annual report for 2021. In 2021, the company achieved a revenue of 13.943 billion yuan (20.19% YoY) and a net profit attributable to shareholders of listed companies of 1.481 billion yuan (3.53% YoY). The company plans to distribute a cash dividend of 9.5 yuan (including tax) to all shareholders for every 10 shares.
Ping An View:
The performance is in line with expectations, and the growth rate of IC carrier board is fast: in 2021, the company achieved a revenue of 13.943 billion yuan (20.19% YoY) and a net profit attributable to shareholders of listed companies of 1.481 billion yuan (3.53% YoY). In 2021, the company’s overall gross profit margin and net profit margin were 23.71% (- 2.76 pctyoy) and 10.62% (- 1.72 pctyoy) respectively. The company’s performance was in line with expectations. The decline in gross profit margin was mainly due to certain cost pressure caused by the rise in the price of upstream bulk commodities. The production capacity of some factories had not been fully released, but the depreciation increased. In terms of business, the revenue of PCB business, electronic assembly and packaging substrate business were 8.737 billion yuan (5.13% YoY), 1.94 billion yuan (67.22% YoY) and 2.415 billion yuan (56.35% YoY) respectively, and the gross profit margin was 25.28% (- 3.14 pctyoy), 12.56% (- 2.05 pctyoy) and 29.09% (1.04 pctyoy) respectively. The packaging substrate business benefited from the rapid development of IC localization. Expense side: in 2021, the company’s financial expense rate, sales expense rate, management expense rate and R & D expense rate were 0.77% (-0.54pctyoy), 1.67% (0.23pctyoy), 3.90% (-0.24pctyoy) and 5.61% (0.05pctyoy) respectively. The overall change of expense rate was within 1 percentage point, and the cost was well controlled. PCB production capacity: the construction of the company’s professional automotive electronics factory (Nantong phase III project) is progressing smoothly and has been put into operation in the fourth quarter of 2021. IC carrier: the company decided to invest in the construction of packaging substrate factories in Guangzhou and Wuxi. Among them, Guangzhou packaging substrate project plans to invest 6 billion yuan, mainly for fc-bga, RF, fc-csp and other packaging substrates. At present, the project is in the preliminary preparation stage; Wuxi high-end flip chip IC carrier product manufacturing project plans to invest 2.016 billion yuan, mainly for high-end storage, fc-csp and other packaging substrates. It is expected to be put into production in the fourth quarter of 2022. In the long run, the general trend of 5g construction is still in progress. As the core PCB supplier of 5g base stations, the company can enjoy industry dividends in the future.
The company’s products cover storage chip packaging substrate (EMMC), micro electromechanical system packaging substrate (MEMS), RF module packaging substrate (RF), processor chip packaging substrate (wb-csp, fc-csp) and high-speed communication packaging substrate, and have formed packaging substrate production technology and process with independent intellectual property rights, It has established an operation system suitable for the field of integrated circuits, and has become a qualified supplier of the world’s leading packaging and testing manufacturers such as rimoonlight, Ankun technology, Jcet Group Co.Ltd(600584) and so on. According to the data of Tuopu Industry Research Institute, the global market share of Jcet Group Co.Ltd(600584) , Tongfu Microelectronics Co.Ltd(002156) and Tianshui Huatian Technology Co.Ltd(002185) three Chinese packaging and testing manufacturers accounted for 26.7% in the first three quarters of 2021. Benefiting from the development of semiconductor industry, especially in the future, the demand for high-performance packaging substrates such as FCBGA, FCCSP and SIP will increase. The total output value of the packaging substrate will reach 19 billion 549 million US dollars in 2025, and the 20202025 year compound growth rate will be 13.92%. At present, the global market share of China’s Chinese mainland is less than 3%. With the gradual release of the capacity of upstream storage plants, the company will continue to benefit from the process of IC localization.
Investment strategy: the construction of 5g base station is a major industrial trend. The significant improvement of communication PCB technical requirements and process will greatly improve the entry threshold of manufacturers. In addition, the company’s IC carrier capacity is gradually released, which will continue to benefit from IC localization. We maintain the 22 / 23 year profit forecast unchanged and add a 24 year profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.846/2.187/2.573 billion, corresponding to 27 / 23 / 19 times of PE, maintaining the “recommended” rating of the company.
Risk tips: 1) 5g progress is less than expected: 5g, as a hot spot in the future development of the communication industry, may have less than expected risks in the future; 2) Macroeconomic fluctuation risk: PCB is the key electronic interconnect of electronic products. If the global economic growth slows down or even lags in the future, the market demand will inevitably slow down or even shrink; 3) Risk of uncertain trend of Sino US trade friction: if the trade friction between China and the United States worsens further in the future, it will have a certain impact on industrial chain companies; 4) The production expansion progress is less than expected: the company’s fund-raising and investment projects are advancing orderly at this stage, but there may still be a risk that the production expansion progress is less than expected. 5) Increased risk of Environmental Protection Verification: if the issuer needs to bear corresponding responsibilities due to environmental pollution events, it may have an adverse impact on production and operation.
