Shennan Circuit (002916): Net profit pre-increased by 65% -85%. The leading tiers are steadily stacked, and the logic of high multi-layer + carrier board length is clear.

The company issued an announcement on the evening of January 10, and it is estimated that the net profit attributable to shareholders of listed companies in 201911.


9 trillion, a year-on-year growth of 65% -85%.

The strong communication cycle has begun, and performance growth has entered a new phase.

The company’s net profit attributable to the mother in 2016-2019 exceeded the growth rate of 69% / 63% / 55% / 75% (median range), in which the capacity was restored after 16 years of factory relocation, the performance increased, and the expansion of 4G in 17-18 yearsConstruction is driving demand, overlapping Longgang and Wuxi capacity releases, technological transformation and cooperation with customers in communications equipment vendors, packaging substrates and other distribution enhancements and product swaps, but overall 16-18 years of downstream demand is in the 4G replacement period.

Beginning in the second half of 2018, due to the expansion of 4G capacity expansion requirements at home and abroad, the introduction of high gross margin orders in the early stage of 5G in mainland China, in conjunction with automation, and potential improvement in yield improvement measures, the company’s single-quarter value-added rate in the 2018Q3-2019Q3 was 121% / 105% / 59% / 74% and 105%, the performance growth rate has entered a new stage, and high growth is expected to continue under the strong communication cycle; Q4 chain decline is due to Wuxi climbing factors and year-end expenses.

According to the median forecast, the single-quarter profit in Q4 of 19 was about 3.

500 million US dollars, + 60% year-on-year, -10%, Q4 revenue slightly increased month-on-month, profit decreased month-on-year. Because Wuxi carrier board project is still in the climbing phase, it gradually increased month-on-month, and the company’s overall year-end management costs (performance bonus, etc.), R & D expenses are accrued, and the company has no abnormal values in exchange and non-recurring aspects every year.

We expect the company to reduce duplication by introducing rapid climbs to existing non-storage orders to the Wuxi carrier board factory. According to the measured items and reaching 40-50%, it can achieve reverse losses, and we expect to see it in the second half of 20Come back in a single month.

In terms of expenses, the company increased employee incentives, customer development and R & D expansion this year, effectively realizing the team’s potential tapping, leading the market in research and development progress, production line update, and sales response; Q1 production line is fully loaded, delivery time is reduced, NantongThe second phase will be accelerated.

From November to December 19, the bidding scale of the two major internal communications customers was close to 9 billion, with a growth of more than 30% in several years. The bidding performance of Shennan was strong.40% will continue to ensure that the company’s high-end revenue growth trend continues.

Regarding the market’s concerns about the gross profit margin, although the company’s wireless side products have reduced prices, scale effects, automation, material localization and other measures must have some impact, and the company’s development in the datacom market (19 years of high server revenue, Customer high-end certification also made a breakthrough) will bring 佛山桑拿网 optimization of product structure.

On December 30, the company announced the issuance of RMB 15.

2 billion convertible bonds (origin shareholders’ placement ratio 32.

48%), which is used to replace the initial expenditure funds for the second-phase expansion project of Nantong (and continue to spend a total of 10.

600 million) and supplementary working capital (4.

500 million), the current production line is still fully loaded, the Spring Festival holiday will be shorter than last year (last year, about 10 days of vacation due to technical reform), we expect Nantong Phase II will be launched before April, compared to the expected Q2The improvement is ahead of time, and this part of the expansion of production is targeted at the higher level of data communication market demand, which will help to improve the company’s existing gross profit level; the industry boom cycle of the expansion of packaging boards is expected to gradually begin to replace imports.

In terms of ABF carrier boards, the demand side benefited from chip upgrades such as HPC / AI / 5G, pulling goods, and the early-stage capacity reshuffle of the supply side was cleared. The industry boom trend starting from 18-19 is expected to continue; BT carrier boardsThe 5G smart terminal AIP module will gradually increase in volume, iPhone5G and other are expected to be introduced. The content of the AIP module BT substrate material is nearly 6 times that of the normal smartphone SOC, and even the iPhone millimeter wave version accounts for 10-15%.Pull action will also occur.

The prosperity of the downstream application areas of the two major carrier boards drives the overall prosperity of the carrier board industry.

The production capacity of the packaging substrate of the Longgang headquarters in Shennan is about 300,000 square meters per year. The products include MEMS, RF, etc. At present, the demand for TWS headsets and other products is constantly increasing, and the production capacity is in a state of funding replacement.

The Wuxi carrier board project is mainly targeted at the storage side. Leading customers around the world can gradually achieve mass production. Later, more top customers in Japan and South Korea will be gradually introduced.

In the medium and long term, after the project climbs, the gross profit margin is estimated to be no more than 28-29% of the existing carrier board business, which will have a positive effect on the overall gross profit margin of the company.

At present, the company’s finished packaging substrates can already cover application areas such as Nand-flash, Dram, FCCSP, and EMMC. In the future, it will gradually increase domestic demand for docking with Yangtze River storage, Hefei Changxin, etc., and increase the company’s revenue area; product upgrades and expansion of capacity expansion, Growth momentum is still abundant.

The product price and business barriers of the multi-layer through-hole track are increased with the increase of size and precision. Overseas customers usually have even more advanced technology and higher requirements.

The company’s 19-year server and switch order revenues have grown rapidly and customers are fully deployed. Q3’s advanced certification at the US switch leader has also made progress. It is expected that commercial cooperation will begin in 20-21 years.

There can be more than 30 layers of advanced order products, with higher technical barriers (its advanced suppliers include a few of the US TTM, Hudian, etc.) and product gross profit margins (high-order order gross margins are not less than 5G). At present, theseProduct revenue only accounts for less than 10% of the company’s overall. The introduction of these high-end customers is conducive to the company’s upcoming release of Nantong’s second-stage high-end production capacity (average number of floors above 16 existing plant areas).

Nantong’s second-stage positioning of high-level orders is one of the keys to the company’s ability to maintain product competitiveness and avoid price competition.

Server demand is expected to welcome the boom again. At the same time, 5G networks and large data center upgrades and expansions will continue to promote related equipment upgrades (such as optical networks from 25G to 100G, 400G, the company is the absolute leader in optical module PCBs), bringing high-end PCBs.Market expansion and higher competition barriers provide long-term growth momentum for the company’s business.

Investment Advice.

We predict that the PCB business will gradually increase in volume driven by 5G demand. In the medium and long term, product upgrades and automation will increase efficiency. The package substrate business will gradually enter the expansion period of storage products, and the two major businesses will continue to drive the growth of electronic assembly business.

It is estimated that the revenue for 2019-2021 will be 108.15%, 20.3 billion, and the net profit of the mother will be 12.



5 billion, corresponding to EPS 3.



95 yuan, corresponding to the current sustainable PE of 43.


2x, maintain “Highly Recommended-A” rating, target price of 180 yuan.

Risk warning: 5G progress is less than expected, industry competition is intensified, and macroeconomic risks.