Shennan Circuit (002916): Total revenue exceeded 20 billion mark within five years and profit elasticity was greater than revenue

Shennan Circuit (002916): Total revenue exceeded 20 billion mark within five years and profit elasticity was greater than revenue

Event: 2018 revenue of 7.6 billion, + 33% annually, net profit attributable to mother 6.

97 ppm, ten years + 55%.

Q4 single quarter revenue 22.

0.6 billion, + 8% MoM, + 53% in ten years, net profit 2.

2.5 billion, previous + 106%, + 17% MoM.

The analysis is as follows: Q4 reached a new high in a single quarter, and the number and price of datacom PCBs increased. The reasons for the increase in performance include four aspects: PCB, IC carrier board, and electronic assembly have achieved steady growth in three businesses; communications, industrial medical care, and servers.The demand for PCBs increased due to the sales of downstream products; Nantong’s smart manufacturing plant climbed more than expected, and its production rate gradually increased. It shifted from major defective products in the early stage to high-value products, and automation brought about a shortened cross-linking period.The promotion and reduction of labor, the monthly output value in December is about 50-60 million yuan, and the current crop rate is about 80%. It was originally expected to break even in the fourth quarter and extended in the first three quarters, but in fact Q4 profit was more than 10 million;The capacity will be further expanded; the report gradually introduces a long-term equity incentive plan, which improves the overall operating efficiency, and the team has set a model for internal optimization of state-owned assets.

On the customer side, orders from customers such as ZTE and Ericsson continued to grow; Huawei’s order structure was optimized; the carrier board business gradually introduced customers of storage products; industrial control medical services, servers and other customers saw significant growth.

At present, the new project in Wuxi is at the stage of mechanical and electrical installation, and it is planned to start production at the end of June. The customer system certification has also begun. The carrier board project is one of the company’s major sources of growth in the medium and long term.

In Q4, the gross profit margin and net profit margin in the single quarter increased by approximately 1 percentage point from the previous quarter.

The growth of gross profit margin mainly comes from the improvement of product structure and production line efficiency. The company’s subsequent downstream customer upgrades of 4G products, service storage, and industrial control medical products gradually introduce new customers and new technologies. 5G & pre5G began to invest a small amount, which spurred the company’s product added value.Overall improvement; at the cost side, the company’s high-layer PCB and carrier board yields are stable, and individual series of products have been improved, such as steel flexible bonding boards, storage boards for carrier boards, PCBs with more than 20 layers, and new generation communication products.In addition, the new factory automated production line has brought about two major cost reductions: direct labor (reduced labor and increased production, 24-hour operation) and direct materials (reduced scrap rate).

At the same time, the price of copper clad laminates is in the bonus period. After the capacity is gradually released, the procurement costs gradually decrease, especially the domestic copper clad laminate suppliers continue to grow in the high-frequency and high-speed field.

In addition, the Q4 company has no expansion project, the cost accrual is reduced, and the operating rate is increased to dilute costs.

The demand for telecommunications PCBs has a long span and large elasticity, and high barrier business enjoys a fine pattern. It is about to enter a sweet period of industry outbreak: in the second half of 2018, the throughput of base stations in mainland China increased by more than 50%, and the global 4G penetration rate was less than half.4G’s continued deployment, upgrades, and expansion are the main sources of demand for telecommunications PCBs.

In addition, 2019 is the first year of 5G-scale pre-commercialization in China and the world, and equipment has begun to place orders. The construction plan of the IoT base station in mainland China also brings supplementary demand.

Benefiting from the high growth of Internet traffic, the penetration of cloud computing, the global server expansion volume has increased rapidly for nearly 9 quarters, and the global Internet giants ‘capital expenditure continued to increase in the fourth quarter of 2018. We believe that although the volume of server volume will increase in 2019,It will be slightly extreme, but it will still maintain a positive growth trend.

There are four major barriers to communications PCB products: equipment, technology, capital, 苏州桑拿网 customers, seven major technical difficulties such as backplane production, and some solutions involve the company’s own patents, at least requiring experienced personnel, transformed equipment, andThe running-in production line, the stable yield of mass production and compliance with the requirements of profitability can not be achieved in a short time by buying equipment for trial production. This is basically applicable to products with more than 16 floors and more than 3,000 yuan / square meter.

The main players in the military high-layer board market are foreign companies, such as New Mayer, ISU, TTM, etc. These companies have stalled or are in a state of dislocation due to scattered distribution and investment expectations. Shennan Hudian Dongshan is a domestic investorFor scarce players, it is difficult for 北京桑拿洗浴保健 privately-owned private companies to enter the bureau in the short term. In the first two years when the penetration rate of new generation communication equipment gradually increased, the industry status and relative stability of Shennan Circuits. This year, orders from customers such as Ericsson have increased significantly.It is predicted that by 2022, the global PCB market in the telecommunications category will have a market space of 13.7 billion U.S. dollars, assuming that Shennan doubles its current market share to 10%, corresponding to about 9.5 billion yuan in revenue.

The national team of the IC carrier board is gradually exerting its strength. The increase in localization rate brings 7 billion yuan in incremental revenue. In terms of IC carrier board, the company is an enterprise with scarce domestic capital and passing the technical ability test and certification of major customers.Up to now, the memory chip capacity of 300,000 pieces / month corresponds to about 3.

The IC carrier board capacity is 80,000 to 40,000 square meters per month, and the average price is between 2600 to 3,000 yuan per square meter.

According to preliminary statistics, the total capacity of the existing and expanded large-scale IDM memory chip production lines in mainland China is about 830,000 pieces / month, of which 350,000 pieces / month are currently under construction and 470,000 pieces / month are under construction.

Looking at the demand for IC substrates corresponding to these capacities, based on the results of industry research, the total demand for IC substrates corresponding to storage and production lines under construction and construction in mainland China is about 10.

70,000 square meters per month, or 1.28 million square meters per year, corresponding to a market space of about 3.6 billion square meters per year.

The global carrier board market is approximately USD 7.5 billion, with a leading market share of approximately 15%, corresponding to approximately RMB 7.8 billion in revenue. At present, Shennan ‘s market share in the overall IC carrier board market is less than 2%, with a growth of approximately RMB 6-7

The competitive advantages of Shennan’s carrier board business compared to the traditional top ten (accounting for 80% of the carrier board market) are mainly reflected in cost and price, nearest response, capital, and the necessity of localization of core industries.

Domestic replacements must replace the semiconductor down cycle from scratch.

A model for optimizing the internal efficiency of conventional assets. In the long run, there is still room for multiples of revenue: the company’s comparative advantage lies mainly in technology research and development accumulation, customer barriers, talent teams, and further improved automated production capabilities.

The long-term equity incentive plan launched by Democracy, the automation factory selected by the Ministry of Industry and Information Technology, etc., show that the company’s management efficiency has gradually improved, and it is a model enterprise of “industry luck itself capable” in state-owned capital.

In the long run, the company ‘s IC carrier board still has 7 billion U.S. dollars in incremental revenue space. With reference to Xinxing, Jingshuo and other carrier board leaders, it took about 8-12 years from investment to growth into a global leader, considering the support of ShennanBetter capital, talents and infrastructure environment, we assume that Shennan will complete this goal in 8 years, and the company will start to deliver the carrier board business in batches after the factory relocation in 2015, which is to complete this goal in 2023, and the revenue will reach about 85 Ten thousand yuan.

In 2023, according to the market space data of civilian government agencies, we conservatively assume that Shenzhen’s market share will reach 10%, or 9.5 billion yuan.

The total revenue of the two block businesses is about 180 trillion.

Automotive board, industrial control medical, and aerospace. The global market space will be about 17 billion US dollars (prismark) by 2023. It is assumed that Shennan’s market share in these three areas will maintain the current market share of the global PCB market in 2018.About 1.

5%, which is about 1.8 billion yuan in revenue.

Electronic equipment assembly follows the calculation of 900 million revenues in 2018, a compound annual growth rate of 10%, and approximately 1.4 billion revenues by 2023.

Calculated in this way, by 2023, the company’s total revenue will be about 95 + 85 + 18 + 14 = 21.2 billion, with a compound growth rate of 23% in 2018-2023. Based on a net interest rate of 11% (product upgrades, automated expansion of management scale and efficiency)The profit was 2.3 billion yuan, with a compound growth rate of 28% in 2018-2023.

Investment suggestion: Net profit is expected to be 6 in 18-20 years.



5 billion, EPS2.4/3.


4 yuan, the current sustainable corresponding PE is 49.



0X, giving a 45X estimate for 2019, with a target price of 148 yuan and a “buy” rating.

Risk warning: downstream demand is lower than expected; new capacity expansion exceeds expectations.