Shennan Circuit (002916): Performance Maintains High Growth, Convertible Bonds Raise Funds to Expand Capacity Again

Shennan Circuit (002916): Performance Maintains High Growth, Convertible Bonds Raise Funds to Expand Capacity Again

Event: Shennan Circuit announced the 2019 annual performance forecast, and the company expects to achieve net profit attributable to mothers in 201911.

500 million-12.

USD 900 million, an annual increase of 65% -85%; it is expected to achieve net profit attributable to mothers in the fourth quarter of 20192.

83 ppm-4.

23 ppm, an annual increase of 26% -88%.

深圳桑拿网 Printed circuit boards: capacity expansion and structural optimization.

In the first half of 2019, printed circuit boards accounted for about 74% of the company’s overall revenue and were the main source of revenue.

The first-phase factory of Nantong Datacom was put into production in the second half of 2018, and it will contribute new capacity in 2019.

Shennan Circuit continued to improve its product structure from 2016 to 2019. The average price of printed circuit boards in the first quarter of 2019 reached 3,567 yuan / square meter, which is equivalent to an increase of 30,88 yuan / square meter in 2018.

On December 30, 2019, the company issued an announcement and successfully issued RMB15.

2 trillion convertible bonds, the raised funds will be mainly used for several general high-speed high-density multilayer circuit board investment projects (second phase), the main products of this project are 5G communications products, high-density multilayer printed circuit boards for servers,After the project is completed, the printed circuit board production capacity will be increased to 580,000 square meters per year. At the same time, the company expects that the average sales price of the second phase of the datacom project will exceed the first phase of the datacom.

We believe that the second phase of the datacom project can be put into operation, and the company is expected to usher in rapid revenue growth again.

Package substrate: high-margin products, and new production capacity has begun to be released.

The company’s package substrate business has a higher gross profit margin, which was 27 in the first half of 2019.

8%, accounting for 10% of the company’s overall revenue.

Shennan Circuit’s IPO projects include Nantong Datacom’s first-phase factory and Wuxi packaging substrate factory.

Among them, the Wuxi packaging substrate factory has been connected for trial production in June 2019, mainly for storage products.

With the release of Wuxi’s production capacity, we believe that if the storage market picks up, the company’s packaging substrate revenue is expected to increase significantly.

R & D and capital expenditure remain high.

The company invested R & D in the first three quarters of 20193.

77 trillion, an annual increase of about 51%; the cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets was about $ 1.5 billion, compared with only 7 in the same period last year.

9.7 billion, an increase of 89% in ten years.

The company continues to lift heavy weight on high-end products such as package substrates, while the second phase of Nantong’s production expansion will significantly increase the company’s printed circuit board production capacity.

We judge that the company’s high R & D investment and high capital expenditure strategy are expected to continue to increase the wave of PCB localization.

Profit forecast and investment advice: We revise the company’s profit forecast and expect the company’s operating income to be 101 in 2019-2021.

8.3 billion (+33.

9%), 131.

1.4 billion (+28.

8%) and 164.

2.8 billion (+25.

3%); net profit attributable to mothers is 11.

9.2 billion (+ 71%), 15.

6.6 billion (+31.

3%) and 19.

7.9 billion (+26.

4%); EPS are 3.

51 yuan, 4.

61 yuan and 5.83 yuan; based on the closing price on January 10, 2020, the corresponding PE is 40.

44 times, 30.

79 times and 24.

37 times, according to the comparable company estimation method, we give the company 35-40 times PE in 2020, corresponding to a reasonable value range of 161.

5 yuan -184.

58 yuan, maintaining the rating of “permanent market”.

risk warning.

Market competition has intensified, and 5G construction progress has fallen short of expectations.