The volume and price of copper clad laminate rose, and the annual results in 2016 were in line with expectations. In 2016, the company achieved a total operating income of 3.05 billion yuan, an increase of 19.83% over the same period last year, an increase of 597% in operating profit and a net profit of 340 million, an increase of 531% over the same period last year, which is in line with our expectations. Among them, revenue in the fourth quarter reached 970 million, an increase of 31% over the previous quarter, a net profit of 184 million, and a sharp increase of 157% over the previous quarter. It is verified that under the favorable conditions of the continuous rise in the price of copper foil upstream and the recovery of downstream PCB demand, the company's copper clad laminate production, sales and product prices have both effectively increased, net profit has continued to increase, and profitability has been further strengthened.
The contradiction between supply and demand of fiberglass cloth and copper foil persists. The production capacity of fiberglass cloth is 82.56 million meters, which has cost advantage.
Since the second half of 16, electrolytic copper foil, the main raw material of copper clad laminate, has been in short supply, and rising prices have stimulated copper clad laminate manufacturers to raise prices one after another to transmit cost pressure; in 2017, the contradiction between supply and demand of electronic grade glass fiber and glass cloth has intensified under the condition of going out of inventory and factory shutdown for cold repair, and prices have been rising, and relay copper foil has become a pain point in the shortage of copper clad laminate raw materials. After the electronic grade fiberglass cloth project reaches production, the annual production capacity of the company will reach 82.56 million meters, and 1 stroke 3 can achieve self-supply, which has a significant cost advantage.
We believe that the shortage of copper foil and fiberglass cloth will overturn the rising price of copper plate. The company can flexibly adjust the product structure, maintain a high operating rate, cooperate with the new production capacity to achieve a simultaneous rise in volume and price of copper clad laminate and increase profits.
The downstream demand trend of PCB is better, the effect of price increase is conducted smoothly, the company is oriented to small and medium-sized customers, and the price increase is flexible.
Automotive electronics, new energy vehicles, LED small spacing, communication base stations and other subdivisions have rapidly developed into a new driving force for the growth of downstream demand in the PCB industry. Due to the uptrend of demand in the downstream of PCB, the price increase effect of raw material-copper clad laminate-PCB industry chain is conducted smoothly. The company faces the small and medium-sized customer group, the bargaining power is strong, the copper clad laminate price increase flexibility is big, the annual performance high growth can be expected.
Risk hint
The price increase of the product is not as expected, the production expansion is not as expected, and the demand in the downstream market is weak.
Maintain a "buy" rating
The company is a medium-thick copper clad laminate bibcock, which is a highly elastic variety in the price rise cycle of raw materials. It is estimated that the 18-year net profit in 2017 is 1.534 billion for 10.10 Celsius and 1.39 million for eps, respectively, and the current share price corresponds to PE of 15CP10X, maintaining the "buy" rating.
