\u3000\u3 China Vanke Co.Ltd(000002) 916 Shennan Circuits Co.Ltd(002916) )
Event: Shennan Circuits Co.Ltd(002916) released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved an operating revenue of 13.943 billion yuan, a year-on-year increase of 20.19%; The net profit was 1.481 billion yuan, a year-on-year increase of 3.47%. In 2022q1, the company realized an operating revenue of 3.316 billion yuan, a year-on-year increase of 21.68%; The net profit was 348 million yuan, a year-on-year increase of 42.73%.
Comments:
The market revenue of the company’s data center continued to increase, and the introduction of automotive electronics customers was smooth: in 2021, the order amount of the company’s PCB business data center increased by 45% year-on-year; Among them, the switching and upgrading of the new generation of server platforms have been promoted in an orderly manner, the value of related products has been higher, the proportion of demand has increased steadily, and the product structure has been continuously optimized. Nantong phase II production capacity climbed smoothly, providing capacity space for the subsequent development of data center business. In 2021, the company made significant progress in the development of automotive electronics customers, and the order amount increased by 150% year-on-year. 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. We believe that the company’s automotive electronics business is expected to provide a long-term profit growth point for the company.
High growth of packaging substrate business, strategic layout of new bases and new factories: in 2021, the company’s packaging substrate business achieved a main business revenue of 2.415 billion yuan, a year-on-year increase of 56.35%. The company’s production and supply of module packaging substrates remained stable; Significant breakthroughs have been made in technical capacity, customer development and capacity release of storage packaging substrates. The annual orders of storage products have increased by 140% year-on-year. Wuxi substrate factory has climbed smoothly and has entered a stable stage of mass production. In addition, the introduction of the company’s customers in the field of fc-csp is smooth. We believe that this business is expected to lay a solid foundation for the company’s subsequent long-term development.
The downstream market continues to grow: with the continuous upgrading and application expansion of 5g communication, artificial intelligence, cloud computing, smart wear, smart home and other technologies, the global demand for chips and chip packaging has increased significantly. As an important material for chip packaging, packaging substrate has also entered a period of rapid development with the increasing demand of downstream application fields, and the market prospect is good. At the same time, with the increasing investment and construction of China’s semiconductor industry chain, the demand for packaging substrates is increasing. According to Prismark, the growth rate of packaging substrate is the highest among printed circuit board industry from 2021 to 2026, and the composite growth rate of packaging substrate in Chinese mainland is 11.6%, which is higher than that in other regions.
Profit forecast, valuation and rating: the company is affected by the price rise of upstream raw materials, and the epidemic has restrained the production and logistics of the supply chain. We lowered the net profit forecast of the company from 2022 to 2023 to RMB 1.813/2 billion, a decrease of 17.74% / 18.41% compared with the previous time. The net profit forecast of the new company in 2024 was RMB 2.649 billion, corresponding to pe27 / 22 / 19x. Maintain the “buy” rating.
Risk tip: customer import is less than expected, 5g construction is less than expected, and the gross profit margin is at risk of decline.
