Description of the event
Pengding Holdings released an April 2024 revenue report: The company's consolidated revenue for April 2024 was RMB 2.2 billion, an increase of 52.21% over the same period last year.
Incident comments
Consumer electronics has reached an inflection point, and innovation is driving the growth of the industry. Since 2022, the consumer electronics industry, represented by smartphones and tablets, has continued to weaken, putting pressure on the company's short-term performance growth. Until the fourth quarter of 2023, benefiting from the contrarian growth of folding machines combined with AI phones injecting innovative momentum, the global smartphone market grew 8% year-on-year, ending seven consecutive quarters of decline and entering a moderate recovery phase. Furthermore, as AI applications empower PC and tablet products, AI PC products are expected to grow rapidly, and the entire consumer electronics industry chain is ushering in a new cycle of innovation and development. In the medium to long term, as software upgrades drive the increase in hardware technology requirements and push PCBs in the direction of higher precision, Pengding Holdings, which actively lays out high-end FPCs, HDI, and SLP, is expected to fully benefit.
The AI wave continues to superimpose the development of automotive electronics, opening up the company's second growth pole. Looking ahead to the future market, the huge demand for computing power brought about by AI technology has opened up market space for AI servers and brought about a rapid increase in demand for related PCB products. The company actively lays out FPC and high-end HDI products, and has carried out product and technology research and development in the fields of AI servers and automotive electronics. In the field of automotive electronics, the company took the lead in successfully mass production of radar operation boards, and lidar and radar high-frequency antenna boards began to enter the mass production stage. In the field of AI servers, the company continues to technically improve its thick plate HDI capabilities. In response to future AI server development needs, the main product board level has now been upgraded to 16 to 20L or above. In addition to developing overseas customers, the company is also actively developing domestic server-related customers. Currently, certification programs with mainstream domestic server suppliers are being carried out as scheduled. As the company actively promotes the layout of emerging fields, the wave of AI and the continued development of automotive electronics is expected to open up the company's second growth pole.
Maintain a “buy” rating. In recent years, the company has continuously improved the technical level of products, accumulated strong technical strength in high-end HDI and other products, actively laid out the automotive, server and other fields, and insisted on advanced development to keep up with market trends and trends. The layout direction includes AI mobile phones, AIPC, folding machines, AI servers, automotive electronics, etc., to create a comprehensive one-stop service platform for PCB products. As the company continues to promote the rapid development of the automotive and server business, the company is expected to seize development opportunities and gain new momentum for development. It is estimated that in 2024-2026, the company will achieve net profit of 3.838 billion yuan, 4.553 billion yuan, and 4.937 billion yuan, corresponding to the current PE share price of 16.05 times, 13.53 times, and 12.48 times, respectively, maintaining a “buy” rating.
Risk warning
1. Technological innovation falls short of expectations;
2. Downstream demand growth falls short of expectations.