Jingwang Electronics: High-end PCB core supplier, digital-communication automotive two-wheel drive

Since its establishment in 1993, the company has been the world's leading national high-tech enterprise for R&D, production and sales of printed circuit boards and high-end electronic materials. The company has 6 production bases in China, Shenzhen, Guangdong, Longchuan, Jiangxi, Jishui, Jiangxi, Xinfeng (under construction), Jinwan, Zhuhai, and Fushan, Zhuhai, with a total of 13 factories and more than 17,000 employees worldwide. As one of the world's largest printed circuit board suppliers, the company has set up 11 offices around the world to provide immediate EAE localization services. In 2023, the company's revenue was 10.757 billion yuan, ranking 10th in the world in the printed circuit board industry and third in China's top 100 domestic PCBs. Jingwang is an enterprise with national intellectual property advantages. It provides customers with the most reliable printed circuit solutions. The company is well-known in the industry and highly recognized by high-quality customers.

Judging from the overall trend of the PCB industry, there are signs of recovery, and server applications are growing the fastest

In the first half of 2024, due to improved inventory and gradual recovery in demand, the PCB industry began to show signs of recovery. Observing the current speed and pace of inventory removal, it is expected that it will continue to improve until the end of the year. Inventories in most application segments will be fully normalized in the second half of 2024. 2024 is a year of recovery. Prismark predicts growth in all segments of the multi-layer PCB market. It is expected to grow from $26.5 billion in 2023 to $32.5 billion in 2028, with a five-year compound annual growth rate of about 5.4%. Among them, the server/data storage sector will grow the strongest. The overall PCB market size for server and data storage applications is expected to increase from 9.781 billion US dollars in 2024 to 14.221 billion US dollars in 2028, 2023- The CAGR compound growth rate in 2028 was 11.6%, which is more than double the average CAGR growth rate of 5.4%. Demand for AI chips is strong. Continued chip selection is driving demand in the PCB sector. According to Omdia data, the rapid growth of GPUs and other accelerators currently used in cloud construction and data center artificial intelligence will eventually slow down, but it will not slow down until the entire industry is changed. Server PCB products need to be selected from generation to generation in sync with server chips. The product life cycle is generally 3-5 years, and the maturity period is generally 2-3 years. As the requirements of various chip platforms of various generations increase in signal transmission rate, data transmission loss, and wiring density, server PCB products also need to be upgraded accordingly. According to Guanghe Technology's prospectus, different server chips, different product architectures, and corresponding PCB layers are different, and the corresponding board thickness and thickness ratio all change accordingly with the chip and generation selection.

The electrification and intelligence of automobiles continue to promote the needs of the PCB industry

The main reason for the growth in automotive PCB production value comes from the increase in the penetration rate of electric vehicles (BEV). The average PCB value per vehicle is about 5 to 6 times that of traditional fuel vehicles. Among them, the one with the highest PCB value in the vehicle is the electronic control system, which accounts for about half of the vehicle's PCB value, and the BMS (battery management system) in electronic control systems currently mainly uses wire harness connections. In the light weight trend of electric vehicles, FPC (flexible printed circuit boards) will be gradually adopted in the future, which will further increase the PCB value content of electronic control systems.

As the level and penetration rate of autonomous driving continue to increase, the average number of electronic products equipped with lenses and radars per vehicle will continue to increase. Currently, automotive PCBs are mainly 4-8 layer boards, while self-driving systems mostly use HDI boards with a higher unit price, which is about 3 times that of 4 to 8 layer boards. The HD price used in LIDARs equipped with L3 or higher self-driving systems can reach tens of dollars, which is also the main source of future increases in vehicle PCB production value.

AI terminals drive a steady rise in consumer electronics demand

In the consumer electronics sector, as the combination of generative AI and smartphones begins to penetrate into flagship devices, the industry chain will actively embrace change. The innovation of generative AI phones will gradually evolve from improvements in computing power and memory on the hardware side to simultaneous improvements on the software side, until opening up the underlying software interconnection. Counterpoint believes that the stock of generative Al phones will grow from just one million in 2023 to 1.23 billion units in 2027.

The PC is an important productivity tool and a computing and interactive platform for content consumption. AIPC is a personal AI assistant tailored for everyone. It not only improves production efficiency, simplifies work processes, but also better grasps user preferences and protects personal privacy data security. IDC predicts that AIPC's assembly ratio for new machines in the Chinese PC market will rise rapidly in the next few years, reaching 85% in 2027, becoming mainstream in the PC market. Investment advice

We expect the company to achieve operating income of 12.549 billion yuan, 14.696 billion yuan, and 16.76 billion yuan in 2024/2025/2026 respectively: net profit to mother was 1.219 billion yuan, 1.526 billion yuan, and 1,823 billion yuan, respectively, up 30.2%, 25.2%, and 19.4% year-on-year respectively. Corresponding to 2024/2025/2026 PE was 19.89/15.89/13.30 times, respectively. The first coverage gives a buy rating. Risk Alerts

AI demand falls short of expectations, company R&D falls short of expectations, PCB industry competition is fierce, and PCB core upstream material costs are high