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According to Caixin on July 16th, bullish on the demand for electronic chemicals, Guangdong Guanghua Sci-Tech (002741.SZ) will join hands with MK Company in South Korea to expand its overseas map and invest in setting up joint ventures involved in high-end electronic chemicals in PCBs, panels, ICs and other fields.

Guangdong Guanghua Sci-Tech announced tonight that the company plans to jointly set up joint ventures in Guangzhou and South Korea with MK CHEM AND TECH (referred to as "MK Company"), with registered capital of 0.7 million US dollars, to jointly research, develop, produce and sell high-end electronic chemicals in fields such as PCBs, panels and ICs. Guangdong Guanghua Sci-Tech and MK Company hold 51% and 49% of the shares of the two companies respectively.

It is currently monopolized by foreign brands in the domestic high-end electronic chemical market, especially in the fields of PCB, panels and ICs. MK Company in South Korea is an internationally leading company in R&D and manufacturing of IC and PCB electronic chemicals, taking up a majority share of the South Korean market and is the main chemical supplier of South Korean world-class electronic enterprises.

Guangdong Guanghua Sci-Tech stated that this external investment is beneficial for the company to further expand its overseas markets, deepen its cooperation with international customers, deeply participate in the globalization competition of the electronic chemical industry, and improve the company's international market share and international reputation. It also helps the company introduce overseas product and technological resources.

However, the company also pointed out risks in the announcement. This external investment is Guangdong Guanghua Sci-Tech's first investment in South Korea. With the development of the joint venture's business, risks such as changes in macro policies, market demand, intensified competition, poor management, and exchange rate fluctuations may arise in the future, which may lead to uncertain investment returns for the joint venture, and affect the company's strategic development plan.

Electronic chemicals are important supporting materials in the electronic industry. Its future market prospects are bullish. It is reported that because electronic component manufacturing belongs to continuous and large-scale production, the quality of special chemical products will not only affect the entire production process, but also directly affect the yield, electrical performance and reliability of electronic products. Guangdong Guanghua Sci-Tech mentioned in the announcement that with the rapid development of AI, intelligent driving, 6G communication, low-altitude flight and other application fields, electronic chemicals will usher in another round of high-speed growth.

Market analysis believes that PCB is an important component of electronic manufacturing, which is a key material for supporting server operation. Benefiting from the recovery of the consumer electronics industry, the increasing demand for AI high computing power, and the accelerating trend of automotive electronics, downstream demand for electronic chemicals is growing rapidly.

In fact, companies in the industry have already benefited. From the performance point of view, PCB chemicals contributed about 50% of Guangdong Guanghua Sci-Tech's revenue last year. According to the latest disclosed performance forecast for the first half of 2024, Guangdong Guanghua Sci-Tech expects to achieve a net profit of 8.5 million yuan to 11.5 million yuan attributable to shareholders in H1, turning losses into profits year on year, with a loss of 216 million yuan in the same period last year. The company mentioned in the reasons for the performance changes that "the prosperity of the electronic chemicals industry has improved."

Sanfu New Materials (688359.SH) said today on the interactive platform that the electronic chemical business is the largest source of revenue for the company's chemical business, and the company's electronic chemical business is expected to grow in the first half of this year compared to the same period last year. Meanwhile, Tiancheng Technology (688603.SH), which mainly produces electronic chemicals for electronic circuits, revealed in June that the company's sales volume in the second quarter of 2024 showed good growth.