Incident: The company announced that 2024H1 achieved revenue of 2.396 billion yuan, +11.38% year over year, and realized net profit of 0.303 billion yuan to mother, +54.49% year over year.
Product structure optimization+increased utilization rate led to high performance growth: the overall recovery of the industry, sufficient orders, and the release of production capacity led to performance growth. The company achieved revenue of 1.302 billion yuan in 2024Q2, +19.09% month-on-month and +14.65% year-on-year. Combined with product structure optimization and increased operating rate, 2024Q2's gross profit margin in a single quarter was 24.67%, an improvement of 4.19 percentage points over the previous month, and an improvement of 8.33 percentage points over the previous year. 2024Q2 achieved net profit of 0.194 billion yuan, a rapid increase of +78.78% month-on-month and +60.54% year-on-year.
Continue to expand production to meet customer needs: In order to further meet customer needs, the company planned a new circuit board construction project with an annual output of 3 million square meters in 2020. The project is being developed in three phases. The corresponding production capacity of the first phase of the project is 1 million square meters, and the production capacity is steadily climbing. The subsequent company will do a good job of operating the project and controlling costs to speed up the release of production capacity; the corresponding production capacity of the second phase of the project is 1.5 million square meters. The capital was raised by issuing shares to specific targets. The capital was already in place in March 2024, and production is expected to begin within 2024; the corresponding production capacity of the third phase of the project is 0.5 million square meters, which will advance according to customer order requirements.
After the entire project is completed, the production capacity of the company's Heshan headquarters will increase to 7 million square meters.
Lay out the automotive sector, occupy an advantageous position, and promote business expansion. There are many PCB materials for automotive applications, involving processes including high frequency, high voltage, high heat dissipation, etc., which guides the diversification of PCB supplier processes and is conducive to the development of emerging fields such as artificial intelligence/low altitude flight/low orbit communication/humanoid robots. With years of production and technology accumulation in the automotive PCB field, the company has achieved mass production capacity for 28-layer AI server circuit boards/5-stage HDI (including any layer interconnection) /6oz thick copper multi-layer board/multi-layer soft board/multi-layer HDI soft and hard combination board, which has basically covered the process requirements of PCBs required for mainstream AI servers.
Investment proposal: We expect the company to achieve operating income of 5.434/6.274/7.2 billion yuan and net profit to mother of 0.696/0.812/0.94 billion yuan in 2024-2026. The corresponding PE was 17.84/15.31/13.23 times, respectively, maintaining the “gain” rating.
Risk warning: Risks such as downstream demand falling short of expectations, exchange rate risk, and increased industry competition.