Take root in PCB business and enter the stage of all-round development

The company was founded in 2005, the main product is PCB hard board, the products are mainly double-panel and multilayer board, the application field of the product is expanding continuously, involving computer, consumer electronics, communication equipment, automotive electronics, industrial control equipment and medical electronics and other fields. The company's long-term performance has grown steadily, with operating income CAGR reaching 25% and net profit CAGR reaching 27% in 2013-2020. The operating income of the company in 2020 is 2.911 billion yuan, and the net profit of yoy+28%, is 349 million yuan. Yoy+31%, is showing a trend of rapid growth. The company expects 21Q1 to make a profit of 103 million yuan, and yoy+308%-348%. The company has focused on its main business for a long time, and the PCB hard board has always been the main source of revenue, accounting for 96% of the revenue in 2020. At the same time, the company continues to promote the upgrading of product structure, and the proportion of four-layer and above boards is increasing year by year, contributing 81% of revenue in 2019, compared with 68% in 2016.

Continuous capacity expansion brings performance flexibility, medium-and long-term attention to high-end product structure companies are mainly in Huizhou, Guangdong, Hunan Yiyang A1/A2/A3 plant, according to the company's website, the total production capacity of the four factories is 580000 square meters / month. The company expands its existing production capacity by implementing the "large typesetting" production mode, while promoting the "Zhaoqing Oshikang Science and Technology Industrial Park" project to continuously expand production capacity and release performance flexibility. The "Zhaoqing Oshikang Science and Technology Industrial Park" project mainly produces high-end automotive electronic circuits, any layer interconnection HDI, high-end communication 5G network, high-end semiconductor IC/BGA chip packaging carrier board, big data processing memory electronic circuits and other high-level, high-speed, high-frequency products. In addition, the company's independent research and development of multi-layer high-end HDI project has been able to mass produce more than 6-order ultra-high wiring density HDI board, and the company listed fund-raising and construction of high-precision board project is in good progress, HDI production capacity continues to expand, and is expected to benefit from high-end products in the medium and long term.

The multilayer plywood in the post-epidemic era has entered the recovery cycle, and the company is expected to benefit from the economic recovery in the post-epidemic era. At the same time, 5G, automobile electrification, intelligence and consumption upgrading will drive the prosperity of communications / automobile / consumption and other fields to improve, and the PCB industry, especially the multilayer version, will enter the upstream cycle. According to the downstream point of view, the company's products are: consumer / automotive electronics / communication network / NB servers / industrial control products / other products, respectively, with a proportion of 26%, 14%, 35%, 18%, 6%, 1%, and the company is expected to benefit from this upstream cycle of multilayer boards. The company covers automotive HUD and entertainment system PCB products, listed to invest in the construction of automotive board projects continue to expand automotive PCB board production capacity, the company will directly benefit from the growth of automotive electronics demand.

Investment suggestion: according to the pace of the company's production capacity release, the company's 21-22 revenue is expected to be 45.21 / 6.761 billion yuan, and the net profit of yoy+55.33%/49.54%, is 528,829 million yuan. Yoy+51.12%/57.06%, comprehensively considers the company's performance growth, valuation center and comparable company valuation, giving the company a 20-25xPE valuation corresponding to the 2021 target price of 66.4-83 yuan per share, covering for the first time. Give "buy" rating risk hints: customer introduction is less than expected, epidemic continues to worsen demand is lower than expected, and capacity construction is not as expected.