On March 25, Shennan Circuits Co.Ltd(002916) (securities code: Shennan Circuits Co.Ltd(002916) ; securities abbreviation: Shennan Circuits Co.Ltd(002916) ) released the record form of investor relations activities. The company accepted the investigation of institutional investors on March 23 and held the 2021 annual online performance briefing on March 25 to answer the questions concerned by investors.
pcb business accounts for more than 60% of operating revenue
Before the disclosure of the annual report. The company achieved an operating revenue of 13.942 billion yuan in 2021, with a year-on-year increase of 20.19%; The net profit attributable to shareholders of listed companies was 1.48 billion yuan, a year-on-year increase of 3.53%; The basic earnings per share is 3.02 yuan / share. The company’s profit distribution plan for 2021 is: Based on the total share capital on the equity registration date when the profit distribution plan is implemented in the future, a cash dividend of 9.50 yuan (including tax) will be distributed to all shareholders for every 10 shares.
It is reported that in 2021, the company’s PCB business accounted for 62.66% of its operating revenue, of which the communication field accounted for the main proportion, the revenue proportion of data center and automotive electronics continued to increase, and the industrial control and medical field maintained stable development. Affected by the slowdown of communication market demand in 2021 and the company’s further expansion in the non communication market, the proportion of communication in PCB business revenue decreased year-on-year. Packaging substrate business accounts for 17.23% of operating revenue, including module packaging substrate, storage packaging substrate and processor chip packaging substrate. In 2021, the company made breakthroughs in technical capacity and capacity release of storage packaging substrates, improved the technical capacity of fc-csp packaging substrates and realized mass production, and further optimized the product structure of the company’s packaging substrate business. PCBA business accounts for 13.91% of operating revenue, mainly including communication, medical industrial control, automotive electronics, data center and other fields.
pcba and PCB business gross profit margin decreased year on year
Why did the revenue of PCBA business achieve great growth in 2021, but the gross profit margin decreased year-on-year? According to the introduction, the company’s PCBA business adopts turnkey and contract sales modes according to the needs of customers. Among them, the turnkey mode in which the company organizes the procurement of raw materials and delivers products after production increases compared with 2020, and the change of PCBA business structure affects the year-on-year growth of PCBA business revenue scale and the year-on-year decline of gross profit margin. In addition, in the context of the slowdown in the demand of the communication market in 2021, while meeting the needs of customers in the existing communication market, the company strengthened the development of other non communication markets, and the revenue of medical treatment, automotive electronics, data center and other fields increased. At the same time, affected by the global supply shortage of some electronic components and the obstruction of international logistics due to the epidemic, the supply chain cost increased, which had a certain impact on the gross profit margin of PCBA products.
In addition, affected by the slowdown of communication market demand in 2021, the overall capacity utilization of the company’s PCB business decreased compared with the same period in 2020, and the allocation of unit fixed cost increased; The structure of communication PCB products was adjusted, and the low gross profit PCB products increased year-on-year. At the same time, the gross profit margin of the company’s PCB business decreased year-on-year due to the rise in the price of some main raw materials and the climbing of the connection of Nantong PCB new factory.
the following are the main contents of investor relations activities:
company has become the world’s leading supplier of RF power amplifier PCB for wireless base stations
q1: what’s the position of Shennan Circuits Co.Ltd(002916) in PCB industry
answer: company has been deeply engaged in the printed circuit board industry for more than 30 years, with three main businesses: printed circuit board, electronic assembly and packaging substrate. The company is a key high-tech enterprise of the national torch plan, the first national technological innovation demonstration enterprise in the printed circuit board industry, the national enterprise technology center, the chairman unit of China Electronic Circuit Industry Association (CPCA) and the chairman unit of the Standards Committee. At present, the company has become the world’s leading wireless base station RF power amplifier PCB supplier, China’s leading processor chip packaging substrate supplier, and a characteristic enterprise of electronic assembly manufacturing. According to the prismark Industry Report in the first quarter of 2021, the company ranked eighth among the global PCB manufacturers in 2020.
q2: what are the leading advantages of the company’s packaging substrate business in the market segment
answer: company’s packaging substrate business has established a quality system suitable for the international semiconductor industry after years of development, accumulated rich operation experience, and has a relatively rich talent reserve and a solid customer base.
q3: please introduce the product positioning of the company’s existing and under construction packaging substrate factories
answer: currently, the company has two packaging substrate factories in Shenzhen and one in Wuxi, of which the Shenzhen packaging substrate factory mainly produces surface mold group packaging substrate products; Wuxi packaging substrate factory is mainly for storage packaging substrates, and has the technical ability of fc-csp products and has realized mass production. The company has packaging substrate projects under construction and planning in Wuxi and Guangzhou. Among them, Wuxi high-order flip chip IC carrier product manufacturing project is mainly for fc-csp packaging substrate and some high-end storage packaging substrate products, and Guangzhou packaging substrate project is mainly for fc-bga packaging substrate, RF packaging substrate and fc-csp packaging substrate products.
q4: data center and automotive electronics, as the main areas of the company’s PCB business, achieved rapid development in 2021. What are the company’s main product types in these two aspects
answer: company’s products used in data center mainly include backplane and high-speed multilayer board, and products used in automotive electronics mainly include high-frequency microwave board, rigid flexible combination board and thick copper board.
2021 net profit attributable to parent company was relatively stable year on year
q5: in 2020 and 2021, the revenue increased by more than double digits, but the profit remained stable. What is the reason? What measures does the company take to improve the gross profit margin and competitiveness of its products
answer: affected by the demand adjustment of the communication market, the product structure of the company’s PCB business changed in 2021, and the products with low gross profit increased compared with the same period.
With the construction of new factories and the reserve of personnel in new bases, fixed costs such as labor, depreciation and energy increase. At the same time, the price rise of bulk commodities and raw materials and the fluctuation of supply and demand relationship in the supply chain bring certain cost pressure to the company. The above factors together led to a relatively stable year-on-year net profit attributable to the parent company in 2021 while the company achieved a large increase in revenue scale. With the further improvement of the capacity utilization of the company’s new climbing plant, the optimization of order structure, the improvement of internal quality, the improvement of digital and intelligent operation and management efficiency, and the maintenance of high investment in R & D technology, it will help to improve the profitability and competitiveness of the company.
q6: the net cash flow from operating activities increased by 30.10% year-on-year in 2021. What are the main reasons
answer: the increase in net cash flow from operating activities of the company in 2021 is mainly due to the increase in customer receipts due to the growth of the company’s sales scale.
q7. The company’s operating revenue increased by 20.19% in 2021, but the net profit increased slightly. Can you explain the main expenses
answer: with the construction of new factories in Nantong and Wuxi and the personnel reserve of new bases, the expenditure of fixed costs such as labor, depreciation and energy increases.
q8: what is the proportion of the net profit of the main subsidiaries in the net profit of the company in 202 7
answer: the net profit of the company’s main subsidiaries accounts for about 35%. See the chapter “analysis of major holding and participating companies” in the company’s annual report for details.
q9: the revenue of the company’s electronic assembly and packaging substrate business increased rapidly in 2021. Can you explain the main reasons
answer: in terms of substrate business, the new Wuxi packaging substrate factory climbed smoothly, customer demand was strong, and the load of Shenzhen factory continued to be full; In terms of electronic assembly business, the development of customers in target areas was smooth, and the proportion of turnkey business structure increased.
pcb business currently has capacity utilization higher than 80%
q10: what is the capacity utilization rate of each business segment at present? What stage has the industry cycle of each sector reached
answer: packaging substrate is in full production at present, and the utilization rate of PCB capacity is more than 80%. The situation of each factory is slightly different. PCB (including packaging substrate) is the basic component of the electronic information industry. According to prismark’s report, it will maintain a compound growth rate of 4.8% from 2021 to 2026, of which the compound growth rate of packaging substrate is 8.6%. For detailed industry analysis, please also refer to the company’s annual report.
q11: can you introduce the application fields covered by the downstream of the company and the main well-known customers
answer: company focuses on the manufacturing of high and middle end products and has a wide range of downstream applications. Among them, it is a leading manufacturer in the fields of communication (mainly referring to enterprise level application scenarios such as wireless network, transmission network, core network and fixed network broadband), data center, industrial control and medical treatment, automotive electronics and semiconductors.
q12: what breakthroughs will the company make in technological innovation in 202 7
answer: in 2021, the company’s fc-csp product technical capacity was steadily improved and mass production was realized; Storage products have achieved mass production.
q13: can you introduce the company’s current strategic measures in R & D investment
answer: the company has always maintained the strategy of leading technology and has invested in R & D in the market areas targeted by the company, especially in fc-csp, fc-bga, automotive electronics PCB, data center PCB and other fields.
q14: what are the current application segments of the company’s medium and high-end product PCB business
answer: company focuses on the manufacturing of high and middle end products and has a wide range of downstream applications. PCB business covers communication (mainly refers to enterprise level application scenarios such as wireless network, transmission network, core network and fixed network broadband), data center, industrial control medical treatment, automotive electronics and other fields.
Nantong phase III has been put into operation and is still climbing
q15: what are the challenges and difficulties encountered by the company’s main business in the market
answer: the company has three main businesses. The packaging substrate and electronic assembly business have maintained rapid growth. The PCB business was affected by the slowdown in China’s communication demand in 2021, with a slight growth of 5.1%. At the same time, the company has also vigorously explored the data center, automotive electronics and other markets, and achieved rapid growth. In the long run, the company has confidence in the growth of new fields and new markets and the competitiveness of the company.
q16: how is the climbing condition of Nantong phase III? Can IC carrier phase II be put into operation in the third quarter? How about the overall demand and product structure of communication in the first quarter of this year
answer: Nantong phase III has been put into operation in Q4, 2021. At present, it is still climbing and making normal progress. According to the normal time plan, the IC carrier board is expected to be put into operation in Q4. The company is making every effort to make Q3 put into operation in advance. The communication demand in the first quarter of this year is similar to that in the fourth quarter of last year. Comparatively speaking, China’s communication demand is still slowing down, and overseas communication is growing normally.
q17: what are the difficulties and solutions of the company in developing new markets and new products such as automotive electronics and high-end packaging substrates
answer: automotive electronics and high-end packaging substrates have a long certification cycle and high requirements for the technical ability of packaging substrate products. The company will keep close contact with customers and master their needs in time; At the same time, the company will increase investment in R & D and related fields.
q18: is the shortage of 1q22 raw materials alleviated compared with last year? Can you quantify it? Which raw materials do the shortages mainly gather in? When is mitigation expected
answer: at present, the supply of PCB and sub business materials of the company is normal, and the supply of chips and components in the electronic assembly business is tight. The company ensures the safety and stability of the supply chain by appropriately increasing the reserves of key materials and establishing diversified supply sources.
will take various measures to resist the impact of rising raw material prices
q19: what are the effects of macro-economy on the company’s business and what are the controllable aspects
answer: pcb, as the basic industry of electronic information manufacturing industry, is highly related to the macroeconomic cycle. On the whole, the global epidemic, China US economic and trade relations and global economic growth are facing some uncertainties, and the pace of relevant demand has slowed down. The company pays close attention to macroeconomic changes and actively responds to them, constantly improves its operation management ability, strengthens the management of inventory, accounts receivable and cash flow, and enhances the company’s ability to deal with risks. At the same time, we are also vigorously exploring new markets and new fields and continuously optimizing the layout of market structure.
q20: has the epidemic affected the company’s factory capacity in Shenzhen, Nantong, Wuxi and other places and the construction of Guangzhou? How much impact? Is there any shutdown now
answer: according to the relevant requirements of epidemic prevention, the company has solidly promoted various epidemic prevention measures and steadily arranged production and operation, which can meet the needs of customers and the impact is relatively controllable.
q21: how does the price rise of raw materials and inflation expectations affect the company? Is the price transmission mechanism of the company’s products smooth? How much room for price increase
answer: the company has many kinds of raw materials, mainly copper clad laminate, semi solidified sheet, gold salt, copper ball, dry film, ink, copper foil, etc. the price of raw materials of the company has remained stable in the near future. The company will continue to pay attention to the price changes of copper and other bulk commodities in the international market, maintain active communication with suppliers and customers, and optimize the order structure, improve process capacity, accelerate technological innovation Strengthen raw material inventory management and other means to continuously improve internal operation efficiency, appropriately increase key material reserves, establish diversified supply sources and other means to ensure the safety and stability of the supply chain and resist the impact of rising raw material prices.
will continue to focus on the field of electronic interconnection and promote the construction of three major projects
q22: what is the company’s view on the prospect of automotive electronics? What are the company’s core competencies in the face of intensified market competition
answer: automotive electronics market is one of the key areas of the company and has broad development prospects. The technology, quality, supply chain and other advantages accumulated by the company in the original communication and other fields will well meet the intelligent trend in the field of automotive electronics.
q23: can you introduce the main development direction and objectives of the company this year
answer: company will continue to focus on the field of electronic interconnection, focus on the “3-in-one” strategy, grasp the development opportunities of PCB downstream market and semiconductor industry, and promote the construction and climbing of Nantong phase III automotive electronics factory, the substrate project for high-end flip chip in Wuxi and the construction of a new base for semiconductor packaging substrate in Guangzhou. The company will actively respond to the uncertain macro-economic growth in 2022.
q24: what is the company’s strategic layout for the data center sector in the next three years? What is the current business development
answer: with the superposition of global digital wave and covid-19 epidemic factors, the market demand of data center is growing rapidly. The company continues to be optimistic about the growth of the data center market. The company will continuously optimize the product structure with the upgrading of the new generation server platform; Promote the orderly climbing of Nantong phase II plant to provide capacity space for the development of data center business.
