The release of production capacity drives revenue growth. The company released its semi-annual report. In 2022, H1 achieved operating revenue of 745 million yuan, an increase of 23.15% over the previous year, mainly due to the release of new production capacity and continuous optimization of the product structure; the company achieved net profit of 46 million yuan, an increase of 6.28% over the previous year. Among them, Q2 achieved net profit of 26 million yuan, an increase of 1.79% over the previous year and an increase of 26.50% over the previous quarter, reversing the month-on-month decline in performance in the first quarter. The company's performance overcame the impact of the epidemic and achieved contrarian growth.
Gross margin declined, and R&D investment continued to increase. In 2022, H1's gross margin was 16.06%, a year-on-year decline of 3.74pct. This was mainly due to fluctuations in raw material prices and other factors, which led to a 28.89% year-on-year increase in operating costs. Looking at the cost side, H1's cost rate in 2022 was 7.91%, a year-on-year decrease of 1.60 pct, of which financial expenses were -01 billion yuan, a year-on-year decrease of 0.06 million yuan, mainly due to exchange rate fluctuations; R&D expenses reached 37 billion yuan, an increase of 18.62% over the previous year. The company continued to increase R&D investment in platinum plates, planar transformer boards for fast charging of consumer electronics, thick copper plates for soft and hard power, embedded resistors, embedded inductors, etc.
One-stop service combined with the release of new production capacity. At present, the company has formed an industrial layout with three production bases: the Shajing Plant, the Songgang Plant, and the Heshan Plant. Among them, the Shajing Plant mainly produces small batches and R&D models, the Songgang Plant mainly produces medium to medium batches, and the Heshan Plant mainly produces mass production. The company can provide one-stop services from R&D to batch production. The new 400,000-square-meter circuit board renovation and expansion project at the Heshan plant is expected to be ready for use by the end of this year. The project mainly produces high-value-added products such as high-density, multi-layer, flexible, and high-frequency circuit boards. The gradual release of new high-end production capacity will further enhance the company's product technical advantages. It is expected that the company's performance will continue to grow with the release of high-end production capacity.
Customers are expanding smoothly, and overseas investment is seeking cost advantages. In terms of customer development, in the field of mobile phone fast charging, the company has successfully established business dealings with several mainstream mobile phone terminal customers at home and abroad; in the field of advanced material applications, the company's embedded blocking products have been mass-produced, certified by customers, and is actively expanding other mainstream customers at home and abroad. While expanding new customers, the company has also strategically laid out overseas production bases. It plans to set up a subsidiary in Thailand with capital of no more than 75 million US dollars. Thailand has cost comparative advantages in terms of land, plant, manpower, and taxes. This investment will improve the company's overseas layout, better serve overseas customers, increase the company's share of overseas markets, and further enhance the company's core competitiveness.
[Investment advice]
The company mainly provides customized PCB products for customers in segments related to the electronic information manufacturing industry, including single panel, double panel and multi-layer board. According to the complexity of technology, process and other dimensions, it can also be divided into high-frequency high-speed boards, thick copper plates, rigid-deflected boards, flexible boards, etc., which are mainly used in the fields of communications, industrial control, consumer electronics, automotive electronics and medical electronics. According to the company's industry prospects, downstream demand, and performance in the first half of the year, we expect the company's revenue for 2022/2023/2024 to be 1,607/19.84/2,455 million yuan respectively. The estimated net profit of the company to the mother is 1,06/1.28/157 million yuan respectively, EPS is 0.60/0.73/0.89 yuan respectively, and the corresponding PE is 32/26/22 times respectively, giving a “increase in holdings” rating.
[Risk Reminder]
The repeated impact of the epidemic;
Downstream demand fell short of expectations;
Risk of rising raw material prices.