This report is read as follows:
The company has PCB closed-loop ecological chain, CCL, PCB, chemical and real estate businesses to build a new aircraft carrier battle group in the era of PCB, and enjoy the dividend of PCB industry transfer and demand growth.
The target price is HK $67.44, covering the overweight rating for the first time. The company diversified its business and adopted comparable PE valuation for CCL, PCB and chemical sector, and comparable PB valuation for real estate sector. After taking into account the 20% discount for integrated companies and 12% discount for Amuri H shares, the target price was HK $67.44, covering the overweight rating for the first time.
The company has PCB closed-loop ecological chain, four major business achievements PCB competitive era of the new aircraft carrier battle group. The company is the world's first CCL manufacturer, the country's first PCB producer, with a complete industrial chain from upstream chemical raw materials to laminates and printed circuit boards, with the best cost advantage. PCB and CCL business are the main profits of the company, the chemical business ensures the company's raw material supply and cost advantages, and the real estate business provides stable cash flow to support the continuous launch of new production capacity. On the basis of opening the PCB closed-loop ecological chain in the early stage, we will increase the production capacity of CCL (+ 15%) and PCB (+ 26%), continue to expand the scale of enterprises, and consolidate and enhance the leading position of the industry.
The environmental protection storm is coming again, and the chemical industry is booming. In recent years, environmental protection problems have occurred frequently throughout the country, and environmental protection policies have been gradually tightened since 2016. many small and medium-sized production capacity in the chemical industry has been eliminated, and the operating rate of the industry has also been affected. the sudden contraction of the supply side of the industry has brought a substantial increase in the prices of many chemical products. Under the background of high-pressure normalization of environmental protection, removing production capacity, grasping environmental protection, and entering the district and entering the park are unavoidable problems; coupled with the supply-side reform, the backward small production capacity with high pollution and high cost will be cleared, and the chemical industry will experience a new round of reshuffling. the overall supply and demand pattern of the industry will be improved, and the chemical industry will enter an upward cycle.
Industrial transfer superimposed demand growth, paving the PCB high-quality track. Under the influence of supply-side reform, stricter environmental protection and rising prices of raw materials, CCL has entered a new cycle of price increases. With the shift of the focus of the global PCB industry to China, the company, as a domestic absolute leader, is expected to seize the opportunity to enhance its market position. On the demand side, 5G communications and new energy vehicles have been written into the 13th five-year Plan, which is expected to enhance the market capacity ceiling of PCB. According to the different characteristics of CCL and PCB industry, the company has a reasonable layout and fully benefits the general trend of the development of PCB industry as a whole.
Risk tips: raw material prices fluctuate sharply; production capacity is lower than expected; downstream demand is lower than expected.
