Events:
The company released its annual report for 2020 and quarterly report for 2021, with revenue of 2.911 billion yuan in 2020, + 27.89% year-on-year, net profit of 349 million yuan, + 30.55%, cash dividend of 12.5 yuan (including tax) for every 10 shares, revenue of 892 million yuan for 21Q1, + 82.05% over the same period last year, and net profit of 109 million yuan for home, + 330.72% over the same period last year. At the same time, the company forecasts a net profit of 2.4-280 million yuan in the first half, an increase of 102 percent over the same period last year. Comments are as follows:
Comments:
1. The growth rate of performance in 2020 stabilized and rebounded, mainly due to the recovery of demand and the release of production capacity.
20Q4's single-quarter income is 857 million yuan, with year-on-year + 34.29% month-on-month + 2.97% position 20Q4 net profit of 123 million yuan, year-on-year + 100.75% month-on-month + 14.43%. The gross profit margin for the whole year of 2020 is 25.31%, compared with the same period last year. The net profit rate of-1.53 pcts, is 12.00%, and the net profit rate is + 0.25 pct. Among them, 20Q4's single-quarter gross profit margin is 26.83%, year-on-year + 1.67 pcts rings + 0.4 pct; net margin 14.36%, year-on-year + 4.75 pcts, rings + 1.44 pcts. The situation at home and abroad is grim in 2020, and the demand of the industry is low first and then high. Although traditional orders such as automotive electronics are the same as in previous years, consumer orders such as home appliances and mobile phones have made up for the decline in orders in the automotive electronics market. The company has also carried out investment in the "Zhaoqing Oshikang Science and Technology Industrial Park" project, implemented employee stock ownership plans, and further strengthened R & D investment. In terms of profit margin, the company's profit margin improved quarter by quarter with the increase of harvest rate in the second half of the year.
21Q1's quarterly income was 892 million yuan, year-on-year + 82.05%, month-on-month + 4.08%; net profit returned to its mother was 109 million yuan, year-on-year + 330.72%, month-on-month-11.63%. 21Q1 gross profit margin 26.23%, year-on-year + 3.76 pcts,-0.6 pct; net profit 12.19%, year-on-year + 7.04 pcts,-2.17 pcts. In the first quarter, the industry demand remained brisk, and the overall order was not light in the off-season, but the increase in the price of copper clad laminate affected the company's profit margin.
In terms of production and sales, PCB output in 2020 was 4.4197 million square meters, compared with the same period last year, with sales volume of 4.3114 million square meters and + 22.04% compared with the same period last year. Compared with the revenue growth rate, the overall product structure of the company has been upgraded to a certain extent.
2. The impact of the price increase of copper clad laminate is controllable, leading to exceeding market expectations in the second quarter.
The company forecasts a net profit of 2.4-280 million yuan in the first half, an increase of 102 percent over the same period last year. Corresponding to the median return net profit of 151 million yuan in the second quarter, + 62% month-on-month + 39% compared with the same period last year. We expect the end of materials such as copper clad laminate, that is, after double-digit growth in the first quarter, to continue to increase prices in the second quarter, while the company has achieved high growth performance against the trend under greater cost pressure, mainly due to: 1) further release of capacity elasticity. By 2020, the total output of the company's four factories is close to 360,000 square meters per month. In the first half of 2021, the monthly output of the company's four factories rose sharply, and the monthly revenue continued to reach an all-time high. 2) the high income increase and efficiency improvement reduced the pressure of material price increase. The company continues to improve production efficiency through oversized jigsaw 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 revenue and the improvement of efficiency are still greater than the negative factors of the rise in material costs. 3) the company has accumulated for many years in the ICT/ vehicle / miniLED and other fields, and it also has the ability to transmit prices downward to a certain extent.
3. 2021 is expected, and the layout of miniLED and other long-term lines is also being carried out step by step.
On the demand side, the demand in various areas downstream of the multilayer board has entered a rapid recovery period since 2020Q2, until the current uptrend is still continuing: 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. In terms of production capacity, we estimate that the company's monthly output is 400-500,000 square meters per month, and the A6 and A8 factories from Zhaoqing will also contribute output in the second half of this year. The monthly output level in the second half of this year is expected to increase significantly to 600,000 square meters compared with last year (30 million square meters per month). Although the climbing of production capacity brings depreciation pressure, it is also conducive to the consolidation of the customer relationship of a large number of existing orders and the accelerated iteration of products.
In the long run, the company will gradually expand its layout in areas such as miniLED. The global MiniLED expansion trend is launched this year, among which Samsung is expected to launch several series of 8K/4K in 2021. The, miniLED PCB of PCB products can be divided into two types: backlight and direct display, in which the direct display adopts 2-3 order (or more) HDI scheme, which is difficult to process. at present, the total market demand is small but growing rapidly because of the high cost. The backlight scheme uses 2-4 layer through-hole plate design, technical barriers and requirements are higher than ordinary multilayer plates, mainly because of its higher flatness requirements, electroplating etching and other processes, white ink difficulty and other links are different. We initially estimate that this year's industry backlight scheme PCB demand will be millions of square meters and the market space will be billions of RMB. And in the next few years, with the backlight + direct display TV program gradually replacing LCD TV, as well as the penetration of miniLED program in pad and other links, miniLED PCB/HDI demand is expected to become one of the fastest growing varieties in the plate. At the corporate level, Oshkang is currently mainly undertaking Samsung miniLED orders, with a monthly output of more than 50,000 square meters, and customer follow-up demand is greater than this, and other companies are expected to undertake more orders after the release of Zhaoqing production capacity. Considering that the industry is in a new technology cycle, Samsung miniLED order supply pattern is better, and the subsequent upgrade trend from backlight to direct display, with the release of the company's subsequent HDI capacity, the business is expected to become one of the long-term growth points. In addition, the company invested 1.27 yuan in R & D in 2020, an increase of 42.12% over the same period last year, focusing on the development of high-end HDI, high-end automobile boards and servers, and high-frequency communications, and is expected to provide increments gradually in the future.
4. Investment suggestions.
Combined with the company's higher-than-expected growth trend in the first half of the year, taking into account the higher visibility of the demand for multilaminates this year, the company's greater capacity flexibility, as well as depreciation pressure on new capacity, material price increases and other factors. We raise our profit forecast to estimate that the revenue for 2021-2023 is 70.95 million, the return net profit is 5.52 million, the corresponding EPS is 3.48 million, and the corresponding share price PE is 20.4, 15.512.7 times. Maintain the "highly recommended-A", the target price is 81.50 yuan, and the PE corresponding to the forecast performance in 2021 is 23 times.
Risk tips: industry demand is lower than expected; downstream innovation is lower than expected; industry competition is intensified; executive reduction risk.