The company grew steadily in 202Q1, and large-scale orders achieved results during the transformation. It maintained that the “buy” rating company in 202Q1 achieved operating income of 1,502 million yuan, YoY +15.6%, net profit of 157 million yuan, YoY +28.2%, net profit after deducting non-return mother's net profit of 156 million yuan, YoY +40.1%. The company overcame the two major problems of changing its business strategy from being technology-driven to being cost driven and direct sales customer reserves. Operating conditions improved, and profits returned to growth. We maintained our 2022-2024 earnings forecast. We expect the company's net profit to the mother in 2022-2024 to be 85/10.4/1.21 billion yuan, YoY +54.2%/22.0%/16.4%, EPS is 0.98/1.19/1.39 yuan. The current stock price corresponds to PE 10.2/8.4/7.2 times, maintaining the “buy” rating.
The capacity utilization rate of 2022Q1 has maintained a high level, and the capacity utilization rate of Zhuhai Chongda Phase II and Dalian Phase II capacity companies is being promoted in an orderly manner. Overall, the capacity utilization rate of Chongda in Shenzhen is at a high level of about 85%. Among them, the capacity utilization rate of Chongda in Shenzhen is around 87%, and the capacity utilization rate of the first phase of Zhuhai is 70%. The profitability of 2022Q1 has further increased, with a single-quarter gross profit margin of 26.9%, QoQ+1.0 pct, net sales margin of 11.5%, and QoQ+1.3 pct. Among them, the profit growth of subsidiary Prunow drove the increase in minority shareholders' equity, with 2022Q1 reaching 2.18 yuan and YoY +7.9%. Looking ahead to 202Q2, the company's product shipments outside of East China were basically unaffected by the epidemic. The company is actively developing large domestic customers and mass markets. Sales in mainland China increased from 19% in 2014 to 38% in 2021. Due to the low technical level of domestic PCB SMEs, the company is one of the few enterprises with leading technology in the industry and can supply various products such as high multi-layer boards, HDI boards, and soft and hard composite boards. Since the current high-end PCB production capacity is relatively limited, the company plans to expand production in Zhuhai Chongda Phase II and Dalian Phase II in 2022.
The company's operation has entered a new stage. The company's operation has reached a new stage under the two-pronged approach of cost control and customer expansion. Cost control and customer expansion have achieved results. On the cost side, the company reduced the unit cost of the product through a series of measures such as increasing product prices, controlling the cost per work section, increasing the patchwork area and increasing the material utilization rate. On the customer expansion side, orders from core customers such as ZTE and Hikvision, which were previously reserved, have entered the mass shipping stage. On the product application side, the share of the company's automotive PCB business is expected to increase further. Currently, automotive PCB boards are mainly used in communication and entertainment systems and automotive electronic systems. Direct customers include Leading Cars, Anbofu, BYD, etc. The first phase of Zhuhai will increase production capacity reserves related to new energy vehicles in the future.
Risk warning: Higher prices of raw materials erode costs, downstream demand falls short of expectations, PCB yield falls short of expectations.