Shengyi Technology (600183): CCL Period Attribute Dilutes High Frequency and High Speed Opens Growth Space
The key points of investment are superior in comprehensive strength and widely distributed downstream.
The company’s industry leader is generally solid, with 18 years of revenue of 119.
800 million, ranking second in the world, is expected to catch up with Chao Jiantao to become the first in the world.
In 18Q4, the average price of the company’s main products has been strategically reduced. We believe that the average price of the company’s products will stabilize after entering 2019, and the profitability will improve after the production capacity is increased.
From the perspective of product categories, the company actively lays out high-end copper clad laminate products and PCB fields on the basis of steadily developing the existing mature copper clad laminate technology. It purchases a complete set of PTFE process technology and equipment solutions from Japan’s ZTE Corporation; its subsidiaries, Shengyi Electronics and Huawei,Samsung and others have customer relationships with PCB production capacity of 950,000 feet / month.
The upstream raw materials are strengthened, and the cost side is improved.
The three major raw materials for the copper-clad laminate industry are copper foil, glass fiber material and resin.
In terms of copper foil, domestic PCB copper foil production capacity will increase in 2019. In addition, copper ore prices have fallen and will stabilize in 2019. Copper foil supply and demand conditions and prices are improving.
In terms of fiberglass materials, the domestic electronic yarn production capacity is excessive, the price continues to fall, the price is at a historical low level, and there 西安耍耍网 is still a slight downward trend.
In terms of resin, epoxy resin is a petrochemical product. Due to environmental pressure and insufficient production capacity, prices are on the rise, but they are already at historical highs.
Based on the upstream raw material prices and supply and demand conditions, we predict that the cost side of the copper clad laminate industry will improve.
The downstream PCB stabilized, benefiting the copper clad laminate industry.
After the domestic PCB industry experienced the market downturn in 18Q4, after the Spring Festival in 2019, PCB prices have stabilized, and some corporate orders have shown a warming trend.
The global PCB industry as a whole is still in an upward cycle. China is a copper-clad laminate production center, and downstream demand will increase.
We expect that in 2019, as the world’s largest copper clad laminate company, the upward trend will continue in the trend of stabilization and recovery in the downstream industry.
For the first commercial use of 5G, the demand for high-frequency copper clad laminates caused by base stations and terminals has increased significantly.
Traditional copper-clad materials are difficult to meet the high-speed performance required for 5G substrate construction. High-end copper-clad products have been enriched for a long time and the technical barriers are high.
The company has already laid out the high-frequency and high-speed field, and has strong scientific research capabilities. It has taken the lead in mastering core technologies among domestic-funded enterprises, and independently researched and developed hydrocarbon materials to replace power amplifiers, reaching mass production.
The subsidiary Nantong Special Materials produced high-frequency communication substrates. Trial production was successfully carried out in November 2018, and high-frequency high-speed boards were put into production in January 2019, achieving a breakthrough in domestic production of high-frequency high-speed boards.
By 5G Dongfeng, the company is expected to achieve rapid growth in the medium and long term.
Investment suggestion: It is expected that the company’s net profit attributable to its mother in 2019-2020 will be 11 respectively.
400 million, the current sustainable corresponding PE is 24.
4x coverage for the first time gives Buy rating.
Risk warning: raw material prices, PCB growth rate is less than expected, 5G construction is less than expected.