Shennan Circuit (002916): Net Profit Exceeds Market Expectations, Communication PCB Demand Maintains Fiery
Investment Highlights Event: The company released the forecast of the first three quarters of 2019 on October 10, 2019. It is expected that the first three quarters will achieve net profit attributable to shareholders of listed companies.
700 million, 65% -85% a year; Q3 is expected to achieve net profit attributable to mothers in a single quarter3.
1-4 trillion, 60% -109% in the first half of the year (19Q2 / Q1 return to mother growth rate of 74% / 60% respectively).
Base station communication equipment PCB demand capacity double growth, driving rapid growth in the third quarter.
The construction volume of 5G base stations is constantly increasing, and domestic telecommunications customers have full PCB orders. The company can benefit from the gradual landing of the 5G base station construction process, which will enter the peak period of cargo pulling in the second half of the year.
The first phase of Nantong’s production capacity climbed beyond market expectations, and the single-month increment was further improved through calculations. It also supplemented the company’s automated production efficiency and efficient production capacity conversion, which is expected to contribute to the company’s overall profit margin in Q3.
Customers in the data communications field (servers and switches) were further introduced, driving the company’s backplane and high-frequency high-speed boards to grow.
The service storage technology was further upgraded, and the company gradually increased the product level and average 南京夜生活网 price, helping Nantong’s second-stage high-end production capacity to digest.
The second phase of Nantong’s product positioning is 5G communications and general-purpose high-frequency PCBs. The average number of layers is 16 and the barriers are high. It continues to develop high-end product lines. According to the plan, it will be connected to trial production at the end of this year or early next year, which meets customer demand time.
Investment suggestion: Nantong Phase I and Phase II projects are progressing smoothly, and future growth space is breakthrough.
We expect the company to achieve net profit attributable to mothers in 2019/202012.
4 ppm, currently corresponding to PE 37 / 25X, maintain “Buy” rating.
Risk warning: the company’s third quarter revenue is less than expected, and the expansion of production is less than expected