The company announced on July 28 that it would invest in a new production base in Thailand. The company has decided to invest 1.4 billion yuan (about US $200 million) to build a new production base of copper clad laminates and bonded sheets in Thailand. The investment funds come from the company's own funds and self-raised funds. The company plans to purchase an area of about 230mu of land in the industrial park located in Beiliu, Thailand, to meet the company's Thailand production base registration and future project construction needs. In the light of recent developments in the industry, our comments are as follows:
Invest in Thailand to accelerate the layout of overseas production capacity and further enhance the global competitiveness of the company's products. The company plans to invest 1.4 billion yuan to build a new copper clad laminate and bonding sheet production base in Thailand. We believe that this project is expected to accelerate the company's overseas strategic layout process, help the company to open up overseas markets and establish overseas supply capacity of its products, better meet the order needs of international customers, and further enhance the company's competitiveness in the global market.
Looking forward to 23H2 CCL price stabilization and is expected to pick up, high-end business will continue to make efforts. On the demand side, according to Prismark forecast, H2 with inventory removal, consumer terminals ushered in a new product cycle, the digital economy continues to promote the rapid development of high-computing infrastructure, the trend of automobile modernization is accelerated, and PCB demand is expected to recover quarterly. Inventory side, the current inventory level of the CCL/PCB industry is in a relatively healthy state, estimated at about 1 month. On the raw material side, as of the end of June, upstream copper foil prices have stabilized, while fiberglass cloth and resin prices have begun to stabilize and rise slightly. On the price side, we believe that with the gradual improvement in downstream demand, product prices stabilize and are expected to enter the upward channel. On the supply side, the overall growth rate of the company is maintained at about 90%, and high-frequency and high-speed, automotive electronics, IC substrate, HDI and other middle and high-end product projects are expected to be gradually released in H2, which is expected to further improve the company's product structure and restore profitability. On the whole, the CCL/PCB industry is at the bottom of the cycle, and the company is expected to usher in a marginal trend in the future.
The long-term logic of the company is clear, and the upgrading of high-end products is expected to open the space for performance growth. The domestic replacement of high-end electronic circuit substrate is one of the key points of the company's future planning. from the analysis of product structure, we think that the company's high-end upgrading continues to be realized, and the long-term potential still exceeds expectations: 1) IC substrate is a key project of the company, and Shengyi is expected to lead the trend of domestic substitution. 2) in the context of the upgrading of the new generation server platform, Shengyi Technology M6 grade materials have made a breakthrough, and higher grade materials have also been developed, and the future will continue to increase with the demand for high-order computing power and the process of domestic replacement; 3) in terms of vehicle business, 77GHz, 4D imaging millimeter wave radar, power management and other directions blossom; 4) key customers AIP substrates and other layout contributions.
These businesses are highly profitable projects that will contribute to the continuous improvement of the company's performance in the future.
Maintain the "highly recommended" investment rating. Considering that the H2 economy is expected to pick up gradually this year, as well as the trend of the company's product upgrading and the improvement of the PCB business, we maintain our forecast of 200.7 PE 233.6 / 27.51 billion in 23-25, with a net profit of 19.0Unix 2.81 million, a corresponding PE of 0.82 and 1.21 yuan, and a pre-corresponding share price of 19.6max 16.2max 13.3 times. We are optimistic about the company's product matrix, management capabilities and long-term business development space, and maintain a "highly recommended" rating.
Risk tips: raw material prices fluctuate, competition intensifies, demand falls short of expectations, and technology upgrading falls short of expectations.