Today, the market fluctuated in a narrow range throughout the day. Led by semiconductors, PCB concept stocks strengthened rapidly, with 002217.SZ up more than 9 per cent and 688401.SH and 301377.SZ up more than 5 per cent.
In terms of the lengthening cycle, the PCB plate has risen by only 5% since November 2022, outperforming Shanghai and Shenzhen by 13% in the same period.
Guojin Securities believes that from the monthly rise and fall of major manufacturers at home and abroad on the PCB industry chain, we can see that whether it is upstream PCB raw materials (copper foil, fiberglass cloth, resin), middle and lower reaches of PCB, the whole industry chain generally rebounded in November and then entered a depressed state of return, which stems from the fact that the whole industry chain has not yet ushered in fundamental essential repair.
However, as the limited improvement in demand in the 22Q4PCB industry is verified, the cycle runs to an accelerated bottoming out.
From a fundamental point of view, the PCB industry has not ushered in a fundamental repair, and the monthly revenue disclosed by Taiwan manufacturers in mid-December and the forecasts of end product shipments by authoritative consulting bodies also illustrate this point: the monthly revenue of upstream copper foil and fiberglass cloth increased significantly month-on-month, but the monthly revenue of CCL and PCB links showed a weak growth trend, which shows that the improvement intensity of downstream demand is limited.
At the same time, from the point of view of the terminal, it showed a month-on-month improvement in the fourth quarter of last year, but it is still significantly lower than the same period last year, which shows that the current improvement in PCB demand is mainly due to the traditional peak season inventory (month-on-month increase), while terminal demand has not changed substantially (still under pressure from the same period last year).
Under such circumstances, it is necessary to guard against the risk of overdrawing 23Q1 demand in the current restocking behavior, but the increase in the price of raw materials in the upper reaches of PCB at the end of October last year will aggravate the confrontation between supply and demand and trigger negative demand feedback from downstream to upstream, thus accelerating the bottoming out of the entire industrial chain. Therefore, from the perspective of dynamic changes, the repair of the industrial chain still takes time, but the acceleration of bottoming out will usher in essential repair.
Looking forward to this year, Guojin Securities expects the growth of PCB demand to be sluggish. It is expected that in 2023, the global demand for smartphones will be + 2.8%, China-0.9%, PC global-2.3%, and auto China + 3%. It can be seen that the growth rate of basic consumer products has improved but is not optimistic.
Although the basic demand of PCB is under pressure, we can also see some subdivision innovation or high-speed growth opportunities.
According to IDC, global shipments of folding mobile phones are expected to reach 23.73 million units in 2023, an increase of 51.4% over the same period last year, of which shipments of folding phones in China are expected to reach 4.15 million units, an increase of 33.2% over the same period last year.
In the wearable field, IDC predicts that global shipments of wearable products in 2023 are expected to reach 5.5% compared with the same period last year, of which small innovative products such as wearable pendants will grow by 33% year on year, while global shipments of VR and AR devices are expected to reach about 15.5 million and 5 million units in 2023, an increase of 23% and 70% respectively.
At the same time, automobile intelligence is in the stage of enlightenment, and the increment of PCB value of 50000RMB / car has not yet been realized (it is expected that the value of the whole car is about 1500 yuan / car), which is expected to be accelerated in 2023. While the new server platform upgrade is imminent, the number of PCB layers will be upgraded from 12-16 tiers to 16-20 tiers, and the value will be increased by at least 50%.
In addition, the profitability of the PCB industry has improved significantly, and the valuation of the industry is at the bottom.
In 2022, the gross profit margin and net profit margin of PCB plate gradually improved in the first three quarters, of which Q3 gross profit margin reached 21.53%, net profit margin reached 9.91%, both higher than the electronics industry, and the profitability was good. Under the gradual easing of the pressure on the cost side, waiting for the recovery of downstream demand to drive the recovery of the plate.
In terms of valuation, the valuation level of the PCB plate is generally lower than the historical average and median level, and nearly half of the enterprises are valued below the 20% quantile level. The industry valuation as a whole is close to the historical bottom and already has greater investment value.
Guojin Securities pointed out that the demand of the PCB industry is still under pressure this year, and the focus can be placed on sub-areas of innovation, such as automobiles (thick copper plates for high current and high voltage, incremental market for SiC liners, domain controllers for upgrading automotive PCB to HDI), servers (higher layers of PCB boards for new platform upgrades, higher CCL, lower profile copper foils), packaging substrates (domestic alternative opportunities). It is suggested that we should pay attention to the direction of long-term growth, and pay attention to Shanghai Power shares, Shengyi Technology, Lianrui New Materials, Xingsen Technology, Shennan Circuit and other subjects with subdivision opportunities in the field.