Shengyi Technology (600183): 5G domestically produced alternative core target capacity release is steadily advancing
[Key points of investment]The domestic-funded copper-clad laminate is an absolute leader, with an annual production capacity exceeding 100 million.
After more than 30 years of development, the company’s copper clad sheet production has grown from an annual output of 600,000 square meters at the beginning of the plant to more than 88.6 million square meters in 2018.
According to the statistics and rankings of the United States Prismark survey agency on the global hard copper clad laminates, the company’s sales of hard copper clad laminates has jumped to the second place in the world.
At present, the company’s copper-clad laminate business mainly has three expansion projects, namely Shaanxi Shengyi Phase II, Jiangxi Shengyi Phase I and Jiangsu Shengyi Special Materials, which will all be put into production in 2019, which will help the company’s production capacity exceed 100 million square meters./year.
The prices of upstream raw materials have gradually stabilized, and the company’s revenue is expected to grow steadily.
On the upstream side of copper clad laminates, the prices of electronic copper foil and electronic fiberglass yarns have a downward trend. Although the price of voltage remains high, the price increase in a short period of time is very low. The stability of the main raw materials upstream of the copper clad laminate industry is beneficial to the cost of downstream copper clad laminate companiescontrol.
On the downstream side of copper-clad laminates, the trend of PCB industry capacity shift to China will continue. As the core raw material of PCBs, copper-clad laminates will closely follow the pace of PCB development, and industry leaders will fully benefit.
For Shengyi Technology, the company’s stable gross margin fully demonstrates its strong bargaining power and cost control capabilities. In the future, the stability of upstream raw material prices will make it easier for the company to make purchases. The high prosperity of the downstream PCB industry is expected to drive company performanceSteady growth.
5G + intelligent driving promotes the development of high-frequency CCL, and the company’s forward-looking layout is expected to fully benefit.
At the base station side, high frequency is an inevitable trend in the development of the communications industry, and low-loss CCL is essentially significant.
With the continuous development of global communication technology, the demand for high-frequency copper-clad laminates in the communications industry has increased significantly, and the development space for high-frequency copper-clad laminates is broad in the future.
On the vehicle side, intelligent driving is 都市夜网 developing rapidly, and millimeter-wave radar has become the standard configuration for intelligent driving cars.
Because millimeter-wave radars have higher sending and receiving frequencies, there are higher requirements for the high-frequency communication materials used.
Millimeter-wave radar will definitely use high-frequency communication material products.
With the rapid development of the intelligent driving market, millimeter wave radar is expected to become another large downstream application market for CCL.
The company has been in high-frequency CCL layout for many years. The substrate antenna and millimeter-wave radar CCL technology are leading.
The company’s Jiangsu Shengyi Special Material subsidiary plans a production capacity of 1.5 million square meters per year, all of which are high-frequency CCL production capacity. The product types include PTFE and hydrocarbon resin CCL.Full production in one year.
The company’s forward-looking layout has taken full advantage. The development of the industry scale in the future and the trend of domestic substitution will fully benefit the company.
[Investment recommendation]Based on the judgment that the company’s future production capacity can be released quickly, we have raised the company’s revenue and net profit attributable to its mother for the years 2019-2021.
It is expected that the company’s operating income for 19/20/21 will be 139.
1.7 billion, net profit attributable to mothers was 11.
97 ppm, EPS is 0.
80 yuan, the corresponding price-earnings ratio is 24/20/17 times.
The company is a domestic leader in copper clad laminates. Through the stability of upstream raw material prices and the improvement of product structure, the company’s performance promotes stable growth.
The company’s high-frequency CCL has been expanded in batches, and the potential for domestic substitution is great. It will definitely benefit from the development of 5G in the future.
We are optimistic about the company’s future development prospects, covering for the first time, giving the company a 30-fold estimate for 2019 and a six-month target price of 16.
8 yuan, raise the level to “buy”.
[Risk reminder]The price of upstream raw materials will rise; new capacity will be released less quickly than expected; 5G construction will be slower than expected.