Looking ahead to 2024, along with the recovery trend of the global semiconductor cycle and the innovative launch of terminals represented by Apple XR and AI PCs, the PCB industry's dual logic of “cycle+growth” is expected to continue to resonate.
The Zhitong Finance App learned that BOC Securities released a research report saying that the PCB industry is a basic industry for the manufacture of electronic information products and is greatly affected by cyclical macroeconomic fluctuations. In 2023, the global political and economic landscape is complex and changing, and the PCB industry will also be affected accordingly. Looking ahead to 2024, along with the recovery trend of the global semiconductor cycle and the innovative launch of terminals represented by Apple XR and AI PCs, the PCB industry's dual logic of “cycle+growth” is expected to continue to resonate. It is recommended to focus on targets: (1) AI computing power: Shanghai Electric Power Co., Ltd. (002463.SZ), Shenghong Technology (300476.SZ), etc.; (2) AI terminal side: Pengding Holdings (002938.SZ), Jingwang Electronics (603228.SH), Dongshan Precision (002384.SZ); (3) Price increase for copper-clad panels: Shengyi Technology Jiantao Laminated Board (01888), Nanya Yicai (688519.SH), Huazheng Xincai (603186.SH), etc.
BOC Securities's main views are as follows:
Overview of the PCB sector's 2023 report and 2024 quarterly report
In 2023, the PCB sector's revenue and profit were both under pressure, but the quarter-on-quarter trend has been restored, and there was no shortage of outstanding performance in 24Q1. On the revenue side, the PCB sector achieved revenue of 19.973 billion yuan for the full year of 2023, or -4.11% year-on-year. Looking at the profit side, the PCB sector achieved net profit of 12.016 billion yuan for the full year of 2023. Compared with the year-on-year decline of -29.94% on the revenue side, the decline on the profit side was even more obvious. The PCB industry was affected by multiple factors in the first half of 2023, such as the macroeconomic downturn and downstream customers constantly losing inventory. The industry's prosperity improved in the second half of the year, so the revenue side showed a quarter-on-quarter improvement trend. Entering 2024, the PCB sector achieved overall revenue of 48.978 billion yuan in 24Q1, -15.22% month-on-month/+14.69% year-on-year. Achieved net profit of 3.237 billion yuan, +28.33% month-on-month, showing an improving trend in the economy.
PCB may continue to recover in 2024. Servers+cars are downstream with high growth rates
According to Prismark estimates, the global PCB output value in 2023 was about 69.517 billion US dollars, down about 14.96% year on year, while the PCB output area only fell by about 4.7% year on year. Compared with the output area, the sharp drop in PCB output value highlights serious price erosion. However, in the medium to long term, strong demand for artificial intelligence, high-speed networks, and automotive systems will continue to support the growth of high-end HDI, high-speed high-rise, and package substrate segments, and bring a new growth cycle to the PCB industry. The global PCB industry will continue to show a growing trend in the future. Future PCB growth may be concentrated in the server/data transmission and automotive industries. According to Prismark's forecast, the compound annual growth rate of global PCB output in 2027 will be about 2%, while the server/data transmission sector's growth rate is as high as 6.5%, far higher than the average. The growth rate of the automotive sector is 4.8%, second only to server/data transmission.
Fundamental tracking: all raw materials rise, demand recovery or drive smooth transmission of CCL prices
The upstream of the PCB industry chain is raw materials. Direct materials account for about 55% of the cost, of which copper-clad plate materials account for more than 30%, copper foil accounts for about 9%, steel balls about 6%, and gold-salt ink, etc. account for about 3%. Changes in upstream copper clad plate prices have a great impact on midstream PCB manufacturers. Copper-clad panels are the main base material for PCB conductivity, insulation, and support. The prices of the three main raw materials, copper foil, resin, and glass fiber cloth, are rising. As expectations for future demand in the industrial chain begin to improve, various downstream fields are actively preparing stocks. At the same time, the global overall macroeconomic improvement and repair has established a trend where copper prices continue to rise. The radiation effect of copper prices will also further drive the relatively concentrated copper clad plate sector to the downstream. At the same time, the full recovery of AI-driven PCB demand has also provided a breeding ground for price increases.
Risk factors: AI technology breakthroughs fall short of expectations; downstream demand recovery falls short of expectations; penetration rate of innovative terminal applications falls short of expectations; raw material price increases higher than expected or cost transmission falls short of expectations.