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胜宏科技(300476):AIHDI开启公司第二增长曲线

Shenghong Technology (300476): AIHDI opens the company's second growth curve

Huaan ·  Jan 22

Shenghong Technology: High-end PCB core supplier, server PCB opens the company's second growth curve. The company digs deep into growth market segments represented by servers, etc., to cope with weak demand in consumer electronics and other industries since 2023. The company adjusts the customer structure and product structure according to market demand, vigorously expands new energy, new energy vehicles, Al computing power, high-end servers, optical transmission, base station communication, and metaverse products, and further enhances the share and market share of high-end products in the company.

The company attaches importance to market development and R&D investment in emerging fields. The technical layout is centered around the “CPU and GPU” technology route, keeping an eye on the cutting edge of technology development in industries such as artificial intelligence, AI servers, Al computing power cards, Al Phone, AIPC, intelligent driving, new energy vehicles, and next-generation communication technology (PCle 6, Oak stream platforms, 800G/1.6T, etc.). Shenghong Technology invested a total of 0.198 billion yuan in R&D in the first half of 2024, and carried out R&D and research on the next generation transmission PCle 6.0 protocol and chip Oak Stream platform technology for Al computing power and AL server products; single-channel 112G & 224G transmission technology for 800G/1.6T optical transmission on optical modules and switches; next-generation 6G communication technology; L3/L4 level autonomous driving technology, etc., and successfully implemented product applications.

In terms of process capacity improvement and optimization, Shenghong Technology completed the technical capability transformation of products such as Al servers, AI computing power, optical transmission switches, etc., and completed equipment optimization and transformation of high-multi-layer precision HDI 5.0mm and high-multi-layer PCB8.0mm thick plates, and the construction of large aperture blind hole filling capabilities and ultra-thin core board capabilities, laying a solid foundation for the development of next-generation AI servers, computing power, and communication products.

Looking at the overall trend in the PCB industry, there are signs of recovery. Server applications grew 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, with the server/data storage area growing the strongest. The overall PCB market for server and data storage applications is expected to increase from $9.781 billion in 2024 to $14.221 billion in 2028. The CAGR compound growth rate in 2023-2028 is 11.6%, which is more than double the average CAGR growth rate of 5.4%.

Demand for Al chips is strong, and continuous chip iteration is driving demand in the PCB area. According to Omdia data, the rapid growth of GPUs and other accelerators currently used in cloud computing 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 keep up with server chips and intergenerational changes. 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 PCBs have different layers, and the corresponding board thickness and thickness ratio all change accordingly with the different chips and iterations.

Vehicle electrification and intelligence continue to drive PCB industry needs

The main reason for the growth in automotive PCB production value is the increase in the penetration rate of electric vehicles. The average PCB value per vehicle for pure electric vehicles (BEV) 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, and the price of self-driving systems mostly use HDI boards with a higher unit price, which is about 3 times that of 4-8 layer boards. The HDI price used in LIDARs equipped with L3 and above 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 Al and smartphones begins to penetrate into flagship devices, the industry chain will actively embrace change. The innovation of generative Al 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 units 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 11.145 billion yuan, 14.612 billion yuan, and 16.506 billion yuan in 2024/2025/2026 respectively: net profit to mother will be 1.168 billion yuan, 1.551 billion yuan, and 1,860 billion yuan, respectively, up 74.1%, 32.8%, and 19.9% year-on-year, respectively. The corresponding 2024/2025/2026 PE was 43.1/32.5/27.1 times, respectively. The first coverage gives a buy rating.

Risk Alerts

Al 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

The translation is provided by third-party software.


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