PCB industrial chain vertical integration, structure optimization of industrial chain layout has achieved initial results. Chaohua Technology is mainly engaged in high-precision electronic copper foil, copper clad laminate and printed circuit boards (PCB). It has initially formed a vertical integrated layout of the industrial chain around 5G communication equipment, automotive electronics, intelligent terminals, industrial control and medical care.
The company seizes the market opportunities of 5G high-frequency and high-speed, new energy vehicles and other industries, adjusts the industrial structure, optimizes the market layout, and actively expands the domestic market.
New energy electric vehicle + 5G, promote copper foil, copper clad laminate, PCB comprehensive upgrade. With the gradual improvement of electric vehicle permeability, the demand for lithium battery core materials and lithium copper foil at home and abroad will increase greatly; in addition, due to the promotion of 5G, PCB,CCL in the electronic industry chain, and standard copper foil have ushered in a high-end, high-frequency, high-speed trend, promoting the comprehensive development of the copper foil industry.
Driven by demand, the supply pattern of high-end capacity is tight. According to the statistics of power battery demand (GHw) in this paper, and the calculation of the corresponding 6 μ m lithium copper foil demand, it can be concluded that from the point of view of China, about 70,000 tons of 6 μ m lithium copper foil production capacity will be needed in 2021, and the overall demand will reach 243400 tons by 2025. Although the production process will continue to improve in the future, due to the limited number of manufacturers with high-end technology and mass production capacity, the future supply pattern may be continuously tightened due to the process requirements (from 6 μ m to 4.5 μ m).
Continue to expand the production of copper foil and copper clad laminate business to the high end to meet the general trend of future demand. In October 2020, the company plans to invest in the expansion project of copper foil and copper clad laminate business, planning and building a new annual production capacity of 20,000 tons of copper foil (10,000 tons in the first phase) and 6 million pieces of high-end copper clad laminate on the basis of the current production capacity. In order to cope with the upgrading and high growth of global demand for electronic and electric vehicles in the future, the company actively expands its production capacity, conforms to the industry trend, and lays out in advance, which is expected to bring greater growth potential when the production capacity is released in the future.
Profit forecast and investment advice: we believe that with the vertical integration of the company's copper foil, PCB and CCL businesses, as well as the deep accumulation of industrial chain customers and active production expansion, the subsequent 5G penetration will fully benefit from the improvement of the prosperity of the downstream electronics industry, as well as the continuous improvement of the permeability of new energy electric vehicles to ultra-thin lithium copper foil. Therefore, we expect the company to achieve revenue of 1.365, 17.45 and 2.055 billion respectively in 2020, 2020, and 2021, respectively. Corresponding to the net profit of homing, we expect to achieve a net profit of 0.5, 227, 319 million, corresponding to PE of 176.7, 38.7, 27.4x, covering for the first time and giving a "buy" rating.
Risk hint: production expansion is not as expected, and downstream demand is not as expected.