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Caixin reported on July 9th that under the background of the industry recovery, the copper-clad laminate manufacturer, Shengyi Technology (600183.SH), is expecting better performance in the first half of the year, and its subsidiary, Shengyi Electronics (688183.SH), is expecting H1 net income to increase by over 8 times.

Shengyi Technology announced today that it is expected to achieve a net income attributable to the parent of between 900 million yuan and 950 million yuan in the first half of this year, a year-on-year increase of 62%-71%; non-net income is expected to be between 880 million yuan and 930 million yuan, a year-on-year increase of 70%-80%.

Shengyi Technology stated that during the reporting period, the sales volume of copper-clad laminates of the company increased year-on-year, the unit manufacturing cost decreased, sales structure was optimized, resulting in a year-on-year increase in copper-clad laminate product revenue and gross margin, and an increase in other revenue by enjoying the additional deduction policy of added value tax, which increased profitability.

The significant enhancement of the profitability of its subsidiary, Shengyi Electronics, is also one of the main reasons for Shengyi Technology's changes in performance. Shengyi Technology mentioned that with the increasing demand for high-level, high-precision, high-density and high-reliability multilayer printed circuit boards in the market, the sales volume and operating income of Shengyi Electronics increased compared with the same period of last year. The growth in gross profit led to a significant increase in net income.

According to the financial data, Shengyi Electronics is expected to achieve a net income attributable to the parent of 93.5 million yuan to 110 million yuan in H1, a year-on-year increase of 876.88% to 1049.27%. Its Q1 net income was 26.4487 million yuan. Based on this calculation, it is estimated that the Q2 net income will be between 67.05 million yuan and 83.55 million yuan, a sequential increase of 154%-216%.

From the perspective of the industry environment, several PCB industry insiders had previously told Caixin reporters that the PCB market has shown a mild recovery trend since this year, driven by AI applications and other factors which boosted product demand.

The downstream released a positive signal, and the highly concentrated upstream copper-clad laminates manufacturers were the first to benefit.

Since March, copper-clad laminate companies, including KB Laminates (01888.HK), have successively raised raw material prices, citing "more customer orders and full monthly production capacity". Regarding the utilization rate of production capacity, a person related to Shengyi Technology had disclosed, "The company is currently producing at full capacity" in early April.

Regarding the cyclical changes in the industry, Shengyi Technology said during an institutional research conference in May that as far as the CCL (copper-clad laminate) industry is concerned, 2024 will be a year of differentiation in the competitive landscape. The company will further seize the market by leveraging its advantages in capacity, stable quality, and system management, while promoting the development of overseas markets and Thai factories, and striving to create a balanced development trend in both domestic and foreign markets within a short period of time.

With regards to products, Shengyi Technology has adopted a full-scale product strategy, with 27 series and more than 120 products covering the high-end fields of servers, autos, high-frequency and high-speed, and packaging.