Incidents:
The company released its 2024 semi-annual report. Revenue for the first half of the year was 5.424 billion yuan, up 44.13% year on year; net profit to mother was 1.141 billion yuan, up 131.59% year on year; and non-net profit deducted from mother was 1.111 billion yuan, up 150.22% year on year.
The trend of the AI wave remains unchanged, and the PCB business is clearly recovering
In the first half of 2024, due to continuous improvement in demand, inventory removal results were remarkable, and the PCB industry successfully rebounded, benefiting from strong demand for artificial intelligence and network infrastructure. The semi-annual report revealed that in the first half of the year, the company's corporate communications market board achieved operating income of about 3.828 billion yuan, an increase of about 75.49% over the previous year; the gross margin of the company's corporate communications market board was 41.59%, an increase of about 8.44 percentage points over the previous year. The share of AI servers and HPC-related PCB products in the company's corporate communications market revenue increased from about 21.13% in 2023 to about 31.48%. At the same time, Shengweiche's business conditions improved at an accelerated pace, and losses were drastically reduced compared to the previous year.
Revenue has grown steadily, and new automotive board products have made significant breakthroughs
The semi-annual report revealed that against the backdrop of a sharp rise in raw materials such as copper in the first half of this year, the company's automobile board achieved overall operating income of about 1.145 billion yuan, a slight increase of about 3.94% year on year. However, due to factors such as Shengweicer's auto board business, the gross margin of the automobile board decreased by about 0.8 percentage points year on year. The company actively collaborates with many top international component suppliers and leading domestic new energy vehicle manufacturers to jointly cultivate cutting-edge fields such as SIP (System Level Packaging) and domain controllers, focusing on the development and innovation of HDI (High Density Interconnect) products. By deepening strategic cooperation with industry chain partners, P2pack technology has made significant progress, especially in exploring the application of 800V and above high-voltage architectures in automobiles. In the first half of the year, the company's emerging automotive board product market showed a strong growth trend. Among them, the market share of millimeter-wave radars, autonomous driving assistance systems with integrated HDI technology, intelligent cockpit domain controllers, and circuit board products containing advanced materials and technology such as ceramics, thick copper, and P2Pack continued to rise, accounting for about 33.69% of the company's automotive board revenue from about 25.96% in 2023.
Breakthroughs in high-speed communication technology have accelerated batch shipment and certification of multiple product lines. The company deepens R&D investment in data communication, high-speed network equipment, and data centers. The core focus is on improving multiple key technical dimensions of high-speed products, including but not limited to optimization of signal integrity, power integrity, design and implementation of high-density complex structures, and overall enhancement of product reliability. The semi-annual report revealed that the company has officially launched the technical certification process for next-generation general-purpose server products based on the PCIe 6.0 standard. The main technologies supporting the 224Gbps rate (102.4T switching capacity 1.6T switch) have been completed; OAM/UBB2.0 products have been shipped in batches; GPU products have passed 6-level HDI certification and are ready for mass production; in the network switching product section, 800G switches have been shipped in batches.
Investment advice:
We expect the company's revenue from 2024 to 2026 to be 12.156 billion yuan, 15.803 billion yuan, and 18.964 billion yuan, respectively, and net profit to mother will be 2.437 billion yuan, 3.52 billion yuan, and 4.461 billion yuan respectively. We will give 2024 30 times PE, corresponding to a target price of 38.18 yuan, and maintain a “buy-A” investment rating.
Risk warning:
Downstream demand falls short of expectations; new product development and introduction falls short of expectations; market competition intensifies.