After being deeply involved in the PCB design business for more than 20 years, the revenue growth rate has slowed down due to the economic environment. The company is a leading one-stop hardware service enterprise based on printed circuit board design services and also provides printed circuit board assembly and manufacturing. Since '19, the company's performance has continued to grow, with revenue CAGR of 24.58% for 19-22; net profit CAGR of 23.97% for 19-22. In 2023, due to capacity expansion, production capacity for superimposed newly completed projects has not yet been released, leading to a decline in the company's profitability, and subsequent improvements will be made as production capacity starts.

The company is positioned as an innovative service provider for PCB R&D, benefiting from the continuous expansion of demand for commercial R&D services.

China has successively introduced a number of policies to promote the continuous and rapid development of the electronics manufacturing industry and its upstream and downstream industries.

As the technical content and complexity of PCBs continue to increase, the difficulty of design, production and assembly processes is also increasing. Downstream companies have tight R&D time and high risk, and commercial R&D services are in high demand. The PCB design market has surpassed 37 billion yuan, and the global EMS market is expected to reach 946.5 billion US dollars in 2026. The company has professional PCB design capabilities and fast response high-quality PCBA manufacturing service capabilities, and maintains a leading edge in the industry.

Differentiated competition provides one-stop service for downstream, and the modular design process brings high gross profit margins. The company's competitive advantage is mainly in the fields of R&D proofing and small to medium batch segmentation. It has a high degree of individualization, strong bargaining power, and relatively high gross margin. The company has built a modular design service process and systematic engineering design specifications. Based on the characteristics of multiple types of businesses, small batches, and short delivery times, the company establishes flexible production line equipment configurations to shorten the delivery period for all aspects, achieve flexible response and efficient services, and form strong profitability. The gross margin exceeds the industry average.

Leading technology has accumulated a large number of customers, and high viscosity has stabilized the leading position. The company has outstanding design capabilities. The highest number of PCB layers is 56, the highest number of single-board pins exceeds 0.15 million points, the highest number of single-board connections is more than 0.11 million, and the highest speed signal reaches 112 Gbps. It has accumulated more than 8,000 customers, and has established long-term cooperative relationships with well-known domestic and foreign companies such as Zheng Meiji, Zoomlion Heavy Industries, Intel, Apple, and NVIDIA.

Profit forecast: The company's net profit for 2024-2026 is expected to be 1.15/1.44/ 0.2 billion yuan, or +16.68%/+24.94%/+38.99% compared to the same period. The corresponding PE is 59x/ 48x/ 34x, respectively, covered for the first time, giving a “buy” rating.

Risk warning: process upgrade risk; risk of gross margin decline; risk of production capacity falling short of expectations; risk of orders falling short of expectations; performance forecasts and valuation judgments falling short of expectations.