\u3000\u30 Shenzhen Zhenye(Group)Co.Ltd(000006) 36 Guang Dong Fenghua Advanced Technology (Holding) Co.Ltd(000636) )
Focusing on the component industry for more than 30 years, it has cast China's MLCC leader, and its performance has increased significantly in 21 years. The company was founded in 1984 and listed in 1996. The company has a relatively complete industrial chain. At present, it is an electronic component enterprise with the largest scale in China's chip passive component industry, the most complete production support of component products and strong international competitiveness. The company's products are widely used in consumer electronics, communications, computers and intelligent terminals, automotive electronics, power and industrial control, medical and other fields. The performance forecast of the company in 2021 disclosed that the net profit attributable to the parent company was RMB 930-1 billion, with a year-on-year increase of 159.26% - 178.78%.
Raise funds to expand the production capacity of high-end products and grasp the development opportunity of supply chain localization. The company invested 7.505 billion yuan to build the high-end capacitor base project of MLCC Xianghe industrial park with a monthly output of 45 billion pieces, and invested 1.012 billion yuan to build the technical transformation and expansion project of 28 billion chip resistors, so as to promote large-scale development with large projects. Electronic information industry is a strategic emerging industry supported by the state. The state has clearly proposed that the independent guarantee rate of core basic parts (components) and key basic materials should reach 70% by 2025. The continuous increase of national policy support will further promote the rapid development of the industry. The production expansion project focuses on the high-end MLCC market, which will comprehensively enhance the company's overall market competitiveness.
Downstream demand is strong, and the company's main business continues to benefit. With the increase of application demand in downstream markets such as 5g, automobile electrification and intelligence, industrial control automation and the Internet of things, the application demand of electronic components continues to grow. On the basis of continuously stabilizing and expanding the home appliance application market, the company focuses on the expansion of high-capacity and high reliability products in the high-end application market, including communication field, 5g base station, automotive electronics, new energy, large server and other application fields.
Optimizing the product structure and improving the "three rates" of the company will have greater price elasticity in the recovery cycle of MLCC. The new management of the company has done a lot of work in the planning of the company's product structure and customer structure, focusing on improving the "three rates": (1) continuously improve the market share of the company's main products, and further improve the market share of the company's main products with the release of production capacity of expansion projects. (2) Continuously improve the proportion of high-end products, and the company has made great breakthroughs in batch supply of high-end products such as high capacity and vehicle regulations. (3) Set the goal of improving the self supply rate of key materials, continue to increase investment in the field of electronic materials, and improve the company's electronic material technology and capacity scale. MLCC high-capacity materials have made a breakthrough.
Investment suggestion: the company is a leading manufacturer of MLCC in China, raising funds to expand MLCC and chip resistor business. With the increase of application demand in downstream markets such as 5g, automobile electrification and intellectualization, the application demand of electronic components continues to grow. On the one hand, the boom of MLCC declined, and the product price of MLCC was under pressure in the second half of 21 years; On the other hand, Guang Dong Fenghua Advanced Technology (Holding) Co.Ltd(000636) is still in the state of production expansion, and the depreciation and other expenses of the newly expanded production line are high. We reduced the net profit attributable to the parent company from 21 to 23 to 9.70 (- 22%), 13.51 (- 16%) and 1.708 (- 24%) billion yuan, corresponding to pe19x / 14x / 11x, maintaining the "buy" rating.
Risk warning: the progress of production expansion is less than expected, the demand is less than expected, and the risk of MLCC price fluctuation
