Key points of investment:

The company has been deeply involved in the PCB industry chain for many years. The company was founded in 1985 and has been deeply involved in the PCB industry chain for many years. Its main products include copper clad plates, adhesive sheets, printed circuit boards, etc. After years of development, the company has a rich product matrix, continuous breakthroughs in the fields of high speed, high frequency and packaging substrates, and market competitiveness continues to improve. In 2023, the global copper clad plate market share reached 14% and the global special copper clad plate market share reached 7%. Adhering to the “R&D generation, reserve generation, production generation” strategy, the company promotes continuous innovation and development of advanced technology through continuous investment in R&D. Among them, it has achieved a full range of layouts in the field of high-speed products. The core indicators of related products are already at the global benchmark level, and have obtained certification from world-renowned terminal AI server customers.

The industry is expected to start a new upward cycle. As the core material for manufacturing printed circuit boards, copper-clad panels are mainly composed of materials such as copper foil, glass fiber, and epoxy resin. They perform functions such as conductivity, insulation, and support, and are widely used in various terminal fields such as consumer electronics, computers, communications, and automotive electronics. Facing the rise in prices of major raw materials this year, the overall operating rate of downstream PCB manufacturers is picking up, and against the backdrop of supporting demand for copper-clad plates, several copper-clad plate companies have successively raised product prices.

Considering that H2 is about to enter the peak consumer electronics collection season, if the price of raw materials continues to rise, it is expected that copper-clad plate companies will further raise product prices, and the performance flexibility of related companies is expected to gradually be unleashed.

Cycles and growth resonate, and 24-year results are worth looking forward to. On July 9, the company released the 2024H1 performance forecast. The net profit for the first half of the year is expected to be 0.9-0.95 billion yuan, an increase of 62%-71% year-on-year, and the performance exceeds market expectations. On the one hand, it benefited from improved downstream demand, and the company's sales volume of copper-clad plate products increased. At the same time, product structure optimization, price rationalization, and overall revenue and gross margin increased year-on-year; on the other hand, the improved business performance of the subsidiary Shengyi Electronics also boosted the company's performance. The company raised prices for related products in May, and performance is expected to be released one after another. In terms of growth, the company's products cover high-end fields such as servers, automobiles, high frequency and high speed, and packaging. Among them, it maintains close cooperation with leading domestic and foreign terminals in the AI field. Currently, ultra-low loss materials have passed material certification from many North American and domestic terminal customers.

With the gradual release of related products, there is plenty of momentum for subsequent performance growth.

Investment advice: The company's 2024-2025 EPS is expected to be 0.81 and 0.99 yuan, respectively, and the corresponding PE is 29 and 24 times, respectively.

Risk warning: terminal demand falls short of expectations; product advancement falls short of expectations; industry competition intensifies, etc.