PCB integrated layout, focusing on high-precision copper foil and copper clad plate. Chaohua Technology was founded in 1991. It first started with PCB, then penetrated upstream through mergers and acquisitions with more technical barriers and industry bargaining power, and can provide customers with “one-stop” product services. The company's 2018 H1 product revenue structure is PCB accounting for 38%, copper foil 31%, and copper-clad plate 26%. Judging from the company's subsequent development priorities, high-precision copper foil and special copper-clad plate will be the main direction of the company's future expansion and performance growth. Deploy high-precision lithium-ion copper foil to accelerate domestic substitution and global leadership. Looking ahead to the driving factors of technology, innovations such as 5G, the Internet of Things, big data, and the rapid development of new energy vehicles are the main driving force for standards and lithium battery copper foil to higher accuracy and quantity. According to CCFA and New Vision Studio, copper foil for PCBs is expected to reach 470,000 tons in 2020, and lithium-ion copper foil is expected to reach 189,000 tons in 2020. However, since the formula, process, and equipment of copper foil are mainly in the hands of foreign countries, currently domestic 12um electrolytic copper foil is also mass-produced only in Suzhou Futian, Anhui Tongguan Copper Foil, Lingbao Huaxin, Huizhou United, Chaohua Technology, etc. This time, Chaohua Technology ordered high-end equipment from Japan to develop the 8000 ton high-precision electronic copper foil project (Phase II) with an annual output of 6-10 um accuracy and long-term planning to 40,000 tons. We believe that in the future, in addition to famous old customers such as traditional Jingwang Electronics, Lixun Precision, and Midea Air Conditioners, etc., BYD, Catl, LG, and Guogao And potential new energy battery customers will It brings a strong impetus to production capacity and new support to performance. Expanding copper-clad plates with special substrates, the integration of industry, education and research is worth looking forward to. The frequency of use of electronic information products under 5G technology has shifted from MHz to the GHz band. High frequency and high speed have placed higher demands on copper clad plates made of special materials. Traditional copper clad plates cannot meet the rapid development of high frequencies due to dielectric constants, loss factors, thermal expansion coefficients, etc., so if 5G commercialization accelerates, it will bring a large demand for high frequency high-speed boards. According to the “2017 Production Value of Various Types of Rigid Copper Clad Plates” report and industry growth forecast, it is expected to reach 25 billion yuan in 2020. The company currently has a production capacity of 12 million sheets, but the global market share in 2017 was only 1.86%. The company, together with South China University of Technology and Harbin University of Technology, has successfully developed “nano-paper-based high-frequency high-speed substrate technology”, and at the same time, the planned construction target of 32 million sheets of copper clad plate production capacity will also bring some room for performance. The company's participation in Cindy Semiconductor, the only communication chip manufacturer in China that has mastered radio frequency G.hn wired communication technology and solutions, and initiated the joint establishment of Bank Meizhou will help the company maintain business diversity and operational stability. Profit forecast: We forecast that the company's 2018/2019 revenue was 17.57/2.110 billion yuan, net profit of 0.61 billion yuan, year-on-year increase of 29%/67%, EPS 0.06/0.11, corresponding to PE 74/43. Overall, the company's focus is that the company's expanded production of high-precision copper foil and high-frequency copper clad plates will benefit from domestic substitution, downstream demand, and its own production capacity absorption, covering the first time, giving it an “increased holding” rating. Risk warning: downstream demand falls short of expectations: customer certifications such as copper-clad plates fall short of expectations; capacity expansion is slowing