Issue: Jiantao Laminate, the world's leading supplier of copper-clad panels, issued another price increase notice on October 18, 2016, increasing the price of all sheets by 10 yuan. On the evening of October 20, a listed domestic PCB company announced that it had signed a strategic cooperation agreement with South Asia Electronics (the third largest copper clad plate factory in the world) to stabilize the procurement of raw copper-clad sheets. The company issued an announcement to revise its results forecast for the third quarter of 2016. The net profit for the third quarter of 2016 is expected to be 152-166 million yuan, an increase of 230%-260% over the previous year. Comment: Since the beginning of the year, copper foil has completed two rounds of price increases. It is expected that in 2017, the situation where copper foil is in short supply and prices are rising will continue to ferment. According to media reports, the current lithium battery copper foil and standard copper foil (raw materials for circuit boards and copper clad plates) markets are already in a state of being priceless. The supply of copper foil is very tight, and there is even a phenomenon where companies rush for goods with cash. Up to now, the price of lithium battery copper foil has soared to 78 yuan/kg, rising 6 yuan/kg. Industry manufacturers expect it to rise above 80 yuan/kg by the end of the year as a probable event. The price of standard copper foil soared from 60 yuan/kg to 76-78 yuan/kg, an increase of 30%, and is expected to continue. We believe that under factors such as environmental protection, long delivery cycles for core equipment, limited technical personnel, and intensive expansion capital, copper foil production is facing a 2-year expansion cycle. The current dilemma cannot be solved in the short term. It is expected that until the end of 2017, the copper foil market will continue to be in short supply and rising prices. The price of copper-clad sheets continues to rise, far exceeding the cost increase brought about by copper foil. Jiantao Laminate is the leader in the copper-clad plate industry (market share is about 14%). The company issued another price increase notice on October 18, 2016, increasing the price of all sheets by 10 yuan. The price of Jiantao's copper-clad sheets has increased cumulatively from less than 100 yuan at the beginning of the year to 140 yuan/sheet, an increase of more than 40%. Considering that copper foil accounts for about 40% of the cost of copper clad plate, if the price of copper foil rises by 30%, the price of copper clad plate can cover the cost pressure, and a price increase of up to 40% will significantly improve the performance flexibility of copper clad plate suppliers. Downstream PCB suppliers have signed long-term cooperation with copper clad plate manufacturers. Downstream demand is strong. On the other hand, on the other hand, on the evening of October 20, a listed domestic PCB company announced that it signed a strategic cooperation agreement with South Asia Electronics (the third largest copper clad plate factory in the world) to stabilize the procurement of raw copper clad plates, which to a certain extent proves that downstream demand in the PCB industry chain is strong, and orders for copper clad sheets are optimistic. We judge that downstream PCB demand is picking up, and segments such as automotive electronics, new energy vehicles, LED small spacing, and communication base stations are developing rapidly, and have become a new driving force for downstream demand in the PCB industry. According to our estimates, the demand value of the global automotive PCB market in 2016 to 2018 is expected to reach 1442, 1878, and 259.1 billion yuan, with a compound growth rate of about 34%. Jin An Guoji is the leading domestic medium and heavy copper clad plate leader, benefiting from the price increase cycle. The performance began with Cash An Guoji as a leader in the domestic copper clad board segment (medium and thick copper clad plate), with a scattered customer base and strong bargaining power. Against the backdrop of improvements in upstream and downstream supply and demand in the PCB industry chain, it is easier to shift the pressure of cost increases downstream and obtain higher profit margins. Future profitability is expected to continue to improve, and performance elasticity is huge. The company recently announced the revised earnings forecast for the third quarter of 2016. The net profit for the third quarter of 2016 is expected to be 1.52 to 166 million yuan, an increase of 230%-260% over the previous year. The main reason is that along with the expansion of production capacity, the company's copper-clad plate production and sales have further increased; at the same time, under the impetus of downstream demand growth factors, the company's product sales prices have increased significantly recently, further increasing overall profitability, so the year-on-year increase in the company's operating performance has increased compared to expectations. The company's performance has further proven our judgment on investment opportunities in the [copper foil] - [copper clad plate] - [PCB] industry chain. Recently, the price increase of copper foil and copper clad plate has exceeded expectations, and the company's performance for the next three years has been raised. The total production capacity of the company's three copper clad plate production bases in Shanghai, Lin'an and Zhuhai was about 33 million sheets last year. With the successive releases of the Hangzhou Phase I project production capacity (production capacity of about 2 million sheets/month), the annual production capacity will reach more than 40 million sheets in 2016. If Hangzhou Phase II production capacity is released next year, the total production capacity is expected to reach more than 50 million sheets. The company has plenty of equipment and plants, and the production expansion cycle is far smaller than that of small manufacturers. Under strong market demand, production capacity is expected to expand rapidly and seize more market share first. The recent price increases for copper foil and copper clad plates have all exceeded expectations. We have raised the company's performance forecast for the next three years. Net profit for 2016 to 2018 is 3.2/8.0 billion yuan, EPS is 0.44/1.10/1.80 yuan respectively, and PE corresponding to the current stock price is 48/19/12X, respectively, maintaining a “buy” rating.