We are optimistic about the acceleration of the introduction of new products, the flexible release of production capacity and the improvement of operating efficiency, as well as the opening up of long-term product upgrading layout in the context of the recovery of the industry and the strengthening of downstream innovations such as automobiles / consumers. For the first time, it was given a "highly recommended-A" rating, with a target price of 81.5 yuan.
The growth rate of performance rebounded and the product layout was balanced. According to KuaiBao's 2020 performance, the company's revenue increased from 1.312 billion yuan to 2.911 billion yuan in 2016-2020, and the net profit of returning home increased from 190 million yuan to 349 million yuan in 2016-2020, and CAGR increased to about 16% of CAGR. The company forecasts a year-on-year increase of + 27.9% and 30.6% in revenue / return net profit in 2020, with a pick-up in performance growth. In terms of business structure, it is estimated that in 2020, the company's revenue from Netcom will account for about 35%, 40% and 40% of the company's revenue, about 15%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20%, 20% and 20%, respectively.
Multi-laminate demand recovery, vehicle / consumer category and other downstream innovation accelerated. Since the beginning of 2020Q2, the demand in various fields downstream of the multilayer board has entered a period of rapid recovery, until the current uptrend continues: 1) the automotive board market has entered the total recovery and product innovation acceleration channel, in which the electric intelligent trend has gradually increased the permeability of HDI/FPC/ soft-hard composite board / high-frequency high-speed board. 2) the epidemic brought online office / education demand and formed user habits, hot sales such as NB/ tablets, and the demand for HDI motherboard has been booming so far; 3) the innovation cycle of each product line of Apple chain has led to the demand boom of soft board / HDI/ carrier board in supply chain; 4) the demand for 5G/ digital communication is expected to improve at the margin of 21Q2. Overall, we believe that companies with capacity flexibility benefit the most in the context of a strong recovery in the multilayer industry cycle.
Elastic release of production capacity + improvement of marginal benefits, long-term layout of high-end products. In the short term, the company's main operating plants will be A1-A3 and A5 by 2020, and the combined output of the four plants is expected to be close to 360,000 square meters per month in 2020. On the other hand, the monthly output of 2021Q1's four factories has risen sharply, and the A6 and A8 plants from Zhaoqing will also contribute output in the second half of the year, and the monthly output level in square meters this year is expected to reach 600,000 square meters per month compared with last year. In addition, the company continues to improve production efficiency through super-large splicing technology and measures to reduce personnel and increase efficiency. Although the price pressure of copper clad laminate is still there, the positive factors such as the rapid growth of income and the improvement of efficiency are still greater than the negative factors of the rise in material costs. In the long run, the company continues to strengthen the layout of ICT/ vehicles / HDI and other high-end markets, and strive to occupy more value and say in the industrial chain.
Investment advice. We are optimistic about the flexible release of production capacity and the improvement of efficiency in the context of the recovery of the industry, as well as the layout of long-term product upgrades. we predict that the company's revenue for 20-22 years will be 29.1 trillion, with a net profit of 3.5pm, 5.1pm and 680,000,000, corresponding to 30.0 PE, 20.6pm, 15.4 times. For the first time, it is given a "highly recommended-A" rating, with a target price of 81.50 yuan, corresponding to 25.5 times PE in 21 years.
Risk tips: industry demand is lower than expected; downstream innovation is lower than expected; industry competition is intensified; executive reduction risk.