(Report Producer/Author: Zhongtai Securities, Wang Fang)
First, electrification + intelligence, new opportunities for PCB development
(1) PCBs are widely used in the automotive field, and the demand for the industry continues to increase
Automotive PCBs are widely used in traditional cars. PCB is a bridge that carries electronic components and connects circuits, and is widely used in communications, consumer electronics, computers, automotive electronics, industrial control, military/aerospace, medical equipment and other fields. PCB is mainly used in automotive electronics power control system, safety control system, body electronic system, entertainment communication four major systems, mainly including lamp assembly, LCD instruments, air conditioners, body sensors and other electronic and electrical components.
Overall demand in the automotive industry has stabilized. According to Canalys data, global passenger car sales in 2020 will be 66.75 million units, down 14% year-on-year, passenger car sales will gradually rise from 2021, and by 2030, global passenger car sales are expected to increase to 72.83 million; China is the world's largest automobile market, accounting for more than 30% of passenger car sales in 2020, and by 2030, China's passenger car sales are expected to be 25.35 million units, accounting for about 35%.
The continuous improvement of automotive electronic content has led to an increase in the price of automotive PCBs. Automotive electronics account for about 28% of the value of traditional high-end cars, and in new energy vehicles, it can reach 47%-65%. The proportion of global automotive electronics costs in the whole vehicle has increased year by year, and has shown an increasing trend. According to data from China Industry Information Network, automotive electronics accounted for 34% of vehicle costs from less than 20% in 2000 to 34% in 2020, and is expected to reach 50% in 2030. AS a bridge to carry automotive electronic components and connect circuits, PCBs have been further enhanced with the continuous improvement of automotive electronic content, and the demand and value of in-vehicle PCBs have also been further enhanced.
The growth rate of global automotive PCB demand is higher than that of the overall PCB demand. According to Prismark data, automotive PCB demand will increase from $6.5 billion in 2020 to $9.5 billion in 2025, with a CAGR of 7.6%, higher than the overall PCB growth rate of 1.8pct, and the proportion of automotive PCB is expected to increase from 10% in 2020 to 11% in 2025.
(2) Electrification + intelligence, new opportunities for PCB development
1. The increase in electrified PCB mainly comes from the electronic control system and FPC instead of the traditional battery wiring harness
From 2021 to 2022, China and the world have ushered in the inflection point of 10% penetration rate of new energy vehicles, and the development of vehicle electrification has accelerated. Terminal penetration rate of more than 10% into a period of rapid development. According to the China Automobile Association, the total sales of mainland vehicles will reach 26.1 million in 2021, of which the sales of new energy vehicles will reach 3.4 million, +149% year-on-year, and the penetration rate of new energy vehicles will increase rapidly from 5% in 2020 to 13%, and 2021 will become the first year of China's electric vehicles. EVTank and Deloitte predict that global vehicle sales will slightly increase from 83.43 million to 87.6 million in 2021-2022, and new energy vehicle sales will increase from 6.08 million to 8.61 million units, +42% year-on-year, and penetration will increase from 7% to 10%. Therefore, the world will usher in the switching window for the rapid development of electric vehicles in 2022.
The electronic control system is mainly composed of motor control unit (BMS), battery management system (MCU), vehicle controller (VCU), the total amount of PCB used in the electronic control system is between 5-8 square meters, and the value is about 2000 yuan.
1) BMS: detection collection and preliminary calculation of real-time battery status parameters, according to the comparison relationship between the detection value and the allowable value to control the on-off of the power supply circuit; and the collected key data is reported to the VCU, and receives the instructions of the controller, coordinated with other systems on the vehicle, so as to effectively ensure the safety, durability and power of the battery pack. BMS has relatively high requirements for PCB boards, and more multilayer boards with better stability bring about a large PCB increment. The BMS master circuit PCB usage is approximately 0.15 square meters, and the single management unit PCB usage is approximately 3-5 square meters.
2) MCU: The core power electronic unit unique to new energy vehicles, by receiving the VCU's vehicle driving control instructions, controls the motor to output the specified torque and speed, and drives the vehicle to drive. The DC power of the power battery is converted into the required high-voltage alternating current, and the motor itself is driven to output mechanical energy; at the same time, the MCU has the function of fault diagnosis protection and storage of the motor system. The amount of PCB used for the MCU control circuit is approximately 0.15 square meters.
3) VCU: responsible for the normal driving of the car, braking energy feedback, vehicle drive system and power battery energy management, network management, fault diagnosis and processing, vehicle status monitoring, etc., so as to ensure that the vehicle in a better dynamic, high economy and reliability of the state of normal and stable work, VCU in the electronic control system played a mainstay role. The AMOUNT OF PCB used in the VCU is approximately 0.03 square meters. The pcB dosage of the new energy vehicle electronic control system is between 5-8 square meters, which is much higher than that of the traditional high-end car.
FPC replaces the traditional wiring harness in the power battery, increasing the value of pcB bicycles by about 600 yuan.
The collection line is an important part of the BMS system of new energy vehicles, and its role is to monitor the battery status in real time, accurately and reliably, such as voltage, temperature, current, etc.; connect data acquisition and transmission; protect the power battery cell, abnormal short circuit automatic disconnection, overcurrent protection function and other functions.
Previously, new energy vehicles mostly use the traditional copper wiring harness scheme as the collection line of the power battery, the traditional copper wiring harness due to the connection of the battery pack when each wiring harness to reach an electrode, when the power battery current signal is a lot, it needs a lot of wiring harness cooperation, the space is squeezed large, and the Pack assembly link relies on manually fixing the port on the battery pack, and the degree of automation is low. FPC has the advantages of height integration, ultra-thin thickness, ultra-softness, etc., and has outstanding advantages in terms of safety, lightweight, and regular layout. With the excellent performance of FPCs and the rapid cost reduction brought about by large-scale production, the process of replacing traditional wiring harnesses with FPCs has accelerated significantly.
At present, NINGDE times and BYD have applied FPC in batches in the pack link, and Tesla, Guoxuan Hi-Tech, AVIC Lithium Battery, Tafil, Sunwoda and other enterprises have also begun to apply FPC. The price of a single FPC is about 60 yuan, the mainstream models are mainly 7-12 modules, and we expect the value of the battery FPC bicycle to be about 600 yuan.
Taping further enhances FPC profitability. In general, most of the hard boards sold by PCB manufacturers to the downstream are empty boards. When selling FPCs, they will hit pieces on FPCs, and hitting pieces has become a trend for car FPCs. Therefore, in addition to the profit generated by the sale of FPC itself, it will also generate a certain profit due to the beating of parts, which further enhances the profitability of FPC.
2. The intelligent PCB increment mainly comes from ADAS and intelligent cockpit
ADAS: From the perspective of penetration rate, 2022 will be a window period for L2 to L3 to leapfrog, driving the rise of the entire intelligent car industry chain. At present, the vehicle penetration rate of L2 level has entered a rapid development stage of 20-50%, and the automatic driving function of L2 level will gradually become the standard of high-end models. According to the "Automotive Driving Automation Classification" standard, the automatic driving system from L3 onwards will be responsible for monitoring the driving environment for the driver and become a truly intelligent car. On December 10, 2021, the Mercedes-Benz L3 level autonomous driving system was approved by the German Federal Traffic Management Agency, taking the lead in sounding the charge of automobile intelligence. We expect that L3-level intelligent vehicles will achieve a small range of landing in 2022 to further promote the development of automotive intelligence, 2022 will become the first year of global autonomous driving, the business layout and industrial investment for automotive intelligence will also accelerate the advancement, and smart cars will lead a new round of industrial development.
ADAS significantly increases the amount of PCB used in vehicles. ADAS uses on-board sensors to collect environmental data inside and outside the vehicle at the first time, and performs static and dynamic object recognition, detection and tracking technology processing, effectively improving driving safety and comfort. The development of ADAS is the trend of the times, and the business layout and industrial investment in automotive ADAS will also accelerate, and smart cars will lead a new wave of industrial development. The PCB increment comes primarily from the sensors, controllers, security systems, and so on required by ADAS.
At present, L2-level ADAS has become rapidly gaining popularity. Among them, domestic car Ideal, Xiaopeng, Weilai, etc. have successively launched L2-level ADAS function models. At the same time, with the continuous landing of autonomous driving technologies and products of major car companies and technology companies, the mainland ADAS market is expected to further develop. According to the data of Huajing Industry Research Institute, the ADAS market size of the mainland is expected to exceed 84.46 billion yuan in 2020, and by 2023, the mainland ADAS market size is expected to reach 132.15 billion yuan, and the CAGR will reach 27.5%. In terms of ADAS system penetration, at present, the ADAS system penetration rate in mainland China is not high, and the market growth space is broad. (Source: Future Think Tank)
ADAS mainly in the sensing end and the use of various functional control units need to use PCB, sensing end is mainly lidar, millimeter wave radar, cameras, ultrasonic radar and other sensors, functional control units including assisted driving and automatic driving control unit, active distance control cruise system, blind spot detection, active parking assistance system, drowsiness detection and so on.
Millimeter-wave radar has a high PCB value due to the use of high-frequency plates. PCB accounted for about 16% of the cost of millimeter-wave radar, the price of a single millimeter-wave radar is about 300-500 yuan, the current mainstream models equipped with millimeter-wave radar number of about 3-5, it is expected that the millimeter wave radar part will bring PCB increase of 250 yuan, and will increase with the increase in millimeter wave radar usage.
Lidar is expected to have an average annual compound growth rate of 90% in the market size from 2021 to 2030, and the PCB space is vast. Lidar is currently the most accurate sensor, with an accuracy of 10 times that of millimeter-wave radar, which can accurately obtain external environmental information and 3D modeling, and has an irreplaceable advantage in high-level autonomous driving with strict requirements for information accuracy. However, due to the high cost, the current lidar in the L1 / L2 class model is optional, with the L2 to L3, L4 transition, the advantages of lidar began to highlight, L3 / L4 / L5 respectively need 1/2/4 lidar; coupled with the cost of lidar continues to decline, lidar is expected to become the standard of L3 class models, Yole expects that the penetration rate of lidar in 2032 will reach 11%. Lidar mainly uses HDI boards, each lidar needs to use 4 pcs PCB board, the expected value of the bicycle is about 60-80 yuan. It is expected that the demand for PCBs will be further driven by the increase in the use of lidar in the future.
The development of smart cockpits is also driving the growth in demand for automotive PCBs. The intelligent cockpit DCU integrates the visual perception system, language interaction system, streaming media rearview mirror and vehicle networking module into a complete set of solutions, and with the promotion of intelligence, the car display will bring more and more convenient functions and experiences to the driver and occupants. As more and more new technologies for HUD and human-computer interaction are integrated into the smart cockpit, the driving experience will be better.
According to IHS data, it is estimated that the global smart cockpit market space will exceed 40 billion US dollars in 2021, and the market size will reach 68.1 billion US dollars in 2030; The Chinese smart cockpit market size will exceed 160 billion yuan in 2030, and China's share of the global market will increase to 37%. The smart cockpit requires pcb board wiring density to be higher, the line width line spacing is narrower, and the process and design requirements for PCBs are improved, which is expected to further drive the demand for HDI boards.
Looking ahead, thanks to electrification + intelligence, we expect automotive PCB demand to reach 123.3 billion yuan in 2025 and CAGR of 24% in 2020-25.
PCB increment brought about by electrification and intelligence: The value of ordinary vehicle PCBs is about 400 yuan. According to the foregoing, the increase in PCB electrification is mainly derived from the increase of the electronic control system, which is about 2000 yuan, and the increase brought by FPC instead of the traditional wiring harness in the power battery is about 600 yuan, and the electrification increase is expected to increase by 3% per year. The PCB increment brought by intelligence is mainly derived from the increase brought by intelligent driving and intelligent cockpit, which is expected to bring about 400 yuan, and with the iteration of intelligent technology, the PCB increment brought by intelligence will increase by 5% per year.
Second, electric intelligence brings a new pattern of automotive PCB
(1) Industry barriers to upgrade: technical barriers and customer barriers
1, technical barriers: the product is more high-end
At present, although the automotive PCB is still dominated by multilayer boards, its overall share has dropped from 51% in 2018 to 45% in 2020, while the total proportion of high-end HDI, RF boards, and flexible/rigid-flexible combined versions has risen from 24.3% in 2018 to 33.5% in 2020. New energy vehicles millimeter wave radar and other products need to apply a large number of high-frequency PCB, and power batteries, cameras and other products need to use a large number of FPC, lidar, intelligent cockpit, ECU, ADAS system due to the more refined wiring, the demand for HDI board is strong, it is expected that the future with the new energy vehicle penetration rate continues to increase, high-end PCB products will continue to increase, which will further drive the value of PCB increase, but also put forward higher requirements for PCB manufacturers' technical capabilities.
2. Customer barriers: PCB manufacturers have higher requirements and higher certification barriers
High reliability results in a high barrier to entry for automotive PCBs. Automobiles have higher requirements for reliability, so they also have extremely high requirements for the stability and reliability of the automotive PCB, the automotive PCB needs to be more adaptable to the extreme working environment than the ordinary PCB board, and the PCB life requirements are much higher than other consumer electronics PCBs, so the high requirements have created a high threshold for the automotive PCB, in general, if you want to become a supplier of automotive PCBs, the certification cycle takes 2-3 years, and after determining the supplier, in order to maintain the stability of quality, the manufacturer will not easily replace the supplier.
The PCBs of new energy vehicles are mostly safety parts, which have higher requirements for suppliers and have obvious first-mover advantages. The electronic control system and auxiliary driving system of the new energy vehicle are more related to driving safety, and the stability and safety requirements of the vehicle PCB are higher, so more tests will be carried out for the safety of new suppliers, the certification time will be longer, the barriers to entry will be higher, and the customer barriers are significantly higher than those in the traditional automotive field.
(2) Competitive landscape: large customers bring large orders, and domestic manufacturers benefit
1, large customers large orders, customer advantages highlighted
New energy vehicle PCB manufacturers are more closely linked to the downstream, and it is easier to obtain large orders after entering. 1) PCB board as a customized product, with the improvement of automotive electronic integration, the need for early participation in the manufacturer's design process, which will promote PCB suppliers and vehicle manufacturers closer contact. 2) Traditional cars due to the small amount of PCB, and PCB use is scattered, and the value is small, even if it enters the large customers, it is difficult to form an obvious scale effect; the new energy vehicle PCB value is about 6 times that of the traditional car, and there are such as the electronic control system PCB value of the extremely large components, which means that the binding of large customers can get larger orders, once the PCB order of the core components will bring a huge amount of value, it will be easier to form a scale effect.
2. The PCB supply chain continues to shift to the mainland, and domestic manufacturers benefit deeply
Most of the automotive PCB market share is concentrated in Japan and the United States, and it is expected to further shift to the mainland, and manufacturers with first-mover advantages will fully benefit. 1) According to the data of Zosco Automobile Research Institute, the global automotive PCBs in 2020 are mainly japanese, American and Taiwan enterprises, and cr 10 mainland enterprises only have Jingwang Electronics. The overall output value of PCB in mainland China has accounted for more than 50%, and the share of domestic vehicle PCB is much lower than the overall PCB share. 2) The new energy vehicle market has been expanding in the Chinese market in recent years, and the main demand for PCBs required for electrification also comes from the Chinese market. Mainland manufacturers can respond quickly and strong service capabilities to better adapt to downstream customer needs, it is expected that the vehicle PCB production capacity is expected to be further transferred to the mainland, with first-mover advantages will fully benefit.
Tesla localization is expected to further open the internal PCB market. Tesla after the establishment of factories in China cost dropped significantly, with the continuous release of production capacity, Tesla products frequently reduced prices, such as Model 3 after multiple price cuts have dropped to 250,000 yuan, a drop of nearly 110,000 yuan, the price reduction brought about by the increase in sales is obvious. It is expected that with the improvement of Tesla's localization rate and the continuous release of production capacity in The Shanghai factory, it will further benefit domestic Tesla PCB suppliers.
With the rise of local vehicle brands, sales volume and market competitiveness are increasing day by day. Under the background of vigorous support of national policies and accelerated construction of industrial chains such as infrastructure, domestic brand car companies such as BYD, Weilai, Xiaopeng, Ideal, Nezha, Zero Run, and Weima have emerged. At the same time, domestic consumers have a high degree of acceptance of electric vehicles, and the huge domestic automobile consumption market has created an excellent living soil for independent vehicle brand manufacturers, and promoted the sales volume and market competitiveness of independent vehicle brands to increase day by day. In 2021, the sales volume of domestic traditional car companies BYD/Wuling reached 59/460,000 units, ranking second/third in the world, with a market share of 9.1%/7.0% respectively; Xiaopeng, a new car-making force, sold about 99,000 units, ranking 19th in the world, with a market share of about 1.5%.
The supply chain of the electric vehicle era is reshuffled and reshaped, and the domestic replacement of electronic components for vehicles is helped. There is a certain degree of closed loop in the car supply chain, the certification barriers are high, and it is often difficult for new players to enter. Referring to the development process of the automobile industry chain in the United States, Japan and Europe in history, it is precisely because the United States, Japan, and Europe car companies, Tier1, and local supply chain manufacturers have cooperated closely and carried out in-depth cooperation and run-in in the early stage of product development, so that the auto parts manufacturers in the United States, Japan and Europe can quickly develop products that meet the needs of automakers, and form the core competitiveness of Hengqiang in the long-term development of the automobile industry.
At present, a number of domestic manufacturers such as Shiyun Circuit and Shanghai Electric Power Have entered the supply chain of mainstream new energy vehicle companies such as Tesla, BYD, and Weilai, in recent years, with the rise of the domestic industrial chain, the entire PCB industry is also transferring to the Chinese mainland, and related companies are also actively laying out business in this field to seize the opportunity for industry growth. In the current wave of automotive electric intelligent development, the traditional supply chain system will be broken and reshaped, while China is at the center of the development of automotive electric intelligence, and local supply chain manufacturers will rise with the trend.
Third, track the prosperity of PCB enterprises: raw material prices and supply and demand
Prosperity indicator 1: Changes in raw material prices.
Raw materials account for up to 60% of PCB costs, which is the main factor affecting PCB gross margin. The cost structure of PCB is mainly based on raw materials, mainly including copper clad laminates, copper foils, phosphorus and copper balls, etc., and the material cost accounts for up to 60% of the PCB cost. Copper clad laminates account for the largest proportion of materials, accounting for 30% of the total cost of PCBs. Since the price of PCBs is mostly agreed upon in advance with downstream manufacturers, and the frequency and space for price adjustment are not large, we believe that raw material prices are the main factors affecting the gross profit margin of PCBs.
IT is difficult for PCB manufacturers to transmit upstream price increase pressure to the downstream, and the price transmission of automotive PCB manufacturers is smoother than that of other fields. Global PCB manufacturers CR10 accounted for only 36%, while copper clad lamps CR10 accounted for 75%, PCB market concentration is low, compared to PCB manufacturers, copper clad laminate manufacturers can more than the raw material price pressure downward transmission; and PCB manufacturers downstream for the terminal large customers, PCB manufacturers bargaining power is weak. However, due to the high barriers to entry, long certification cycle, and high technical thresholds for safety requirements, PCB manufacturers have closer ties with downstream car companies, the market competition pattern is better, the bargaining power of PCB manufacturers is improved, and the price transmission will be smoother than that of PCBs in other fields.
The price of raw materials for copper clad laminates stabilized. In the first half of 2021, the price of RAW materials upstream of PCBs continued to rise, and the profitability of PCB enterprises was under pressure. Since October 2021, due to the weak demand in the consumer field, the pressure on the price reduction of copper clad laminates has increased, and the prices of raw materials such as copper foil and epoxy resin, the main raw materials of copper cladding, have tended to be stable.
The gross profit margin of CB manufacturers is negatively correlated with copper prices. PCB raw materials mainly include copper clad laminates, copper foils, phosphorus and copper balls, and their gross profit margins are most affected by copper prices. We will be The world's circuit, Dongshan Precision, Shanghai Electric Shares, Jingwang Electronics, Shenghong Technology companies quarterly gross profit margin as the industry average gross profit rate, can be issued, the industry average gross profit margin and copper price trend shows a significant negative correlation, can be observed by observing the copper price trend to judge the PCB industry profit margin situation.
Track PCB Business Climate Indicator 2: Supply and Demand.
We believe that the supply and demand situation of PCB manufacturers can observe the order situation, capacity utilization rate and delivery time of PCB manufacturers. 1) The order situation in hand reflects the demand prosperity: the downstream customer prosperity has increased, and customers have placed more orders from PCB manufacturers, resulting in an increase in the number of orders in hand for PCB manufacturers. 2) Capacity utilization rate and delivery period reflect the supply boom: capacity utilization rate reflects the current production status of PCB manufacturers, which can fully explain whether the current PCB manufacturers' production capacity is fully utilized and whether the capacity layout matches market demand, the higher the capacity utilization rate, the higher the supply prosperity of PCB manufacturers; the delivery period reflects the relationship between the order volume of PCB manufacturers and their own production capacity level, the long delivery period, indicating that the current PCB manufacturers' current order volume exceeds its own production capacity level, and the longer the delivery period, the more it indicates the current PCB In short supply.
Fourth, key PCB manufacturers
(1) World Transport Circuit: The proportion of on-board PCB is high, and Tesla is the largest automobile terminal customer
Founded in 1985, the company's products involve four categories: high-multilayer hard boards, high-precision interconnect HDI, FPCs, hard-flex boards (including HDI) and metal substrates. The company's main downstream applications are automotive electronics, high-end consumer electronics, computers and related equipment, industrial control, communications and medical equipment and other fields, according to N.T. Information data, the 2019 global automotive PCB supplier rankings, the company ranked 17th, an increase of 3 places over 2018. In 2019 and 2020, the company passed the certification of Hyundai Mobis and Denso, two of the world's top ten auto parts suppliers, respectively, and achieved batch supply, with a clear first-mover advantage.
Revenue continued to grow and product structure continued to upgrade. 1) The company's revenue increased from 1.2 billion yuan in 2014 to 2.5 billion yuan in 2020, with a revenue CAGR of 12.6%; attributable net profit increased from 140 million yuan in 2014 to 330 million yuan in 2020, and the net profit attributable to the mother CAGR was 13.3%. In the first three quarters of 2021, the company's revenue was 2.61 billion, an increase of 43.8% year-on-year, and the company's 2021 Q3 revenue was 1.1 billion yuan, an increase of 60%. 2) From the perspective of product structure, the company's main business is multi-layer board, 2020 multi-layer board revenue accounted for 66%, multi-layer board gross profit margin is much higher than double-layer board, single-layer board, it is expected that with the automotive, communications industry demand for multi-layer board and investment projects brought about by the release of multi-layer board production capacity, the company's multi-layer board proportion and gross profit margin will be further improved, to help the company's overall gross profit margin increase.
Tesla is the company's largest automobile terminal customer, and it has made a good start for the follow-up entry into the new energy vehicle market. 1) The company began to develop Tesla as its end customer in 2012, which lasted two years to become its qualified PCB supplier through Tesla's audit, began to supply small quantities in 2015, and began to supply in batches in 2017, sales have increased steadily, and Tesla has become the company's largest automotive terminal customer. 2) The company successfully obtained the Certification of Xiaopeng Automobile in 2021 and realized batch supply, and has also made a breakthrough in the domestic new energy vehicle sector, as more and more traditional automobile manufacturers devote themselves to new energy vehicles, the company is expected to gain a first-mover advantage.
The new high-end production capacity has laid a solid foundation for the company's performance growth. 1) The company's pre-listing production capacity is about 2.5 million square meters, and the IPO investment project can increase the production capacity of 2 million square meters of HDI and multi-layer board, which will be put into production in 2018 and 2020 respectively, and the first phase of the project will be fully produced in June 2020, and the second phase of the project will be fully produced in May 2021, further increasing the company's high-end PCB output and laying a solid foundation for the company's performance growth; 2) In order to further seize the opportunities brought by the new 5G infrastructure, the company issued convertible bonds in 2020 to further increase production capacity. The total capacity of the project is 3 million square meters, and it is expected to be gradually put into production in 2022.
(2) Dongshan Precision: The world's leading PCB company, Tesla FPC supplier
Founded in 1998, Dongshan Precision is one of the world's top three FPC manufacturers and the world's top four PCB manufacturers. Products are widely used in mobile phones, computers, wearable devices, servers, communications, automotive electronics and other products, the main customers are international first-class customers. At present, the company has formed three major business sectors of electronic circuits, optoelectronic displays and precision manufacturing, and the business layout of the five major business units of MFLEX, MULTEK, LED, touch display and precision manufacturing, and gradually builds an integrated industrial chain competitive advantage through continuous internal resource integration.
The company's revenue continues to grow and its profitability continues to increase. From 2016 to 2020, Dongshan Precision's revenue and attributable net profit both grew rapidly, with revenue growing from 8.4 billion yuan in 2016 to 28.1 billion yuan in 2020, CAGR 35.1%, and net profit attributable to the mother increased from 140 million yuan in 2016 to 1.53 billion yuan in 2020, CAGR 80.5%. The company's revenue and net profit growth rate is relatively high, highlighting the company's management and development strategy advantages. The company's gross profit margin is relatively stable and has less volatility. The company's profitability continues to increase, and the company's net profit margin is still 5.5% despite a decline in gross margin in the first three quarters of 2021.
The new production capacity will be increased to help the company's subsequent performance growth. 1) In order to adapt to the demand for PCBs generated by the rapid development of the 5G communication industry, high-end servers, and automotive electronics, the company will increase in 2020, respectively, in Suzhou Xinwei to implement an annual output of 400,000 square meters of fine circuit flexible circuit boards and supporting assembly expansion projects, in Zhuhai Chaoyi to implement Multek PCB production line technology transformation project, in Zhuhai Deli Technology to implement Multek 5G high-frequency high-density printed circuit board technology transformation project, effectively increase the company's high-end production capacity. Lay a solid foundation for the company to further expand its business in the communications and automotive fields in the future. 2) In order to further adapt to the rapid development of the new energy vehicle market, the company will change the investment project "Yancheng Dongshan Communication Technology Co., Ltd. wireless module production and construction project" to "Yancheng Wearnes Electronics Co., Ltd. new energy flexible circuit board and its assembly project", further increase the FPC production capacity in the field of new energy vehicles, and deepen the layout of the field of new energy vehicles.
Attach importance to the field of new energy vehicles, and the future performance can be expected. 1) The company's precision manufacturing business from the new energy vehicle business sales to achieve a substantial increase, the main products include new energy vehicles heat sink parts and precision structural parts, the main cooperation customers include North American new energy vehicle leading enterprises. 2) The company will be the new energy vehicle business as a new business to expand in the future, a full range of development of new products and services used in the field of intelligent new energy vehicles and other fields, including lightweight parts, battery pack cooling system, charging piles and battery module structural parts and other product companies, the company has now become a Tesla FPC supplier, and with a number of new energy vehicle manufacturers to establish cooperation. It is expected that in the future, the company's automotive field will continue to increase volume, and future performance can be expected.
(3) Hudian shares: the proportion of automotive steel has increased year by year
Founded in 1992, Hudian Co., Ltd. is mainly engaged in the research and development, design and production of printed circuit boards. The company's main products are 14-38 layers of enterprise communication market board, high-end automotive board, and office and industrial equipment board, semiconductor chip test board as a strong supplement, can be widely used in communication equipment, automotive, industrial equipment, medical equipment, microwave radio frequency, semiconductor chip testing and other fields. (Source: Future Think Tank)
The company's net profit growth rate is relatively high, and its profitability continues to increase. From 2016 to 2020, the growth rate of Revenue and Attributable Net Profit of Hudian Co., Ltd. was relatively high, with revenue increasing from 3.8 billion yuan in 2016 to 7.46 billion yuan in 2020, CAGR of 18.5%, and net profit attributable to the mother increased from 0.8 billion yuan in 2016 to 1.26 billion yuan in 2020, CAGR 100%. The company's net profit growth rate is significantly higher than the revenue growth rate, mainly due to the continuous improvement of the company's gross profit margin, from 15.7% in 2016 to 30.4% in 2020, and the company's profitability has continued to increase.
The proportion of automotive steel has increased year by year, and the company has increased its R&D layout in the automotive field. The proportion of automotive steel increased from 17.8% in 2020 to 25.4% in H1 in 2021, an increase of significantly. Huli Micro-electric successfully developed BSG control board, ADAS main control board, vehicle energy board, buried ceramic car lamp board, embedded copper block board and other new products, and began to gradually introduce mass production; Huangshi Second Plant automotive plate line production and customer certification has also been smoothly promoted; in the future, the company will strengthen in high-end automotive HDI product development and capacity expansion, automotive high-frequency high-speed material application research, high-reliability product research and development and production efficiency improvement and other aspects of invest more resources, so that the company maintains and expands its competitive advantage.
(4) Jingwang Electronics: leading domestic FPC supplier of power lithium batteries
Jingwang Electronics was established in 1993, the company's product types cover rigid circuit boards, flexible circuit boards and technical substrates, etc., and horizontally developed high-density interconnection, high-speed multi-layer, high-frequency, high heat dissipation, multi-layer flexible board and soft-hard combination and other products, products are widely used in communication equipment, intelligent terminals, computer and network equipment, consumer electronics, automotive electronics, industrial control, medical equipment and other fields.
The company's revenue and net profit increased steadily. From 2016 to 2020, the growth rate of Jingwang Electronics' revenue and attributable net profit was stable, with revenue increasing from 3.3 billion yuan in 2016 to 7.06 billion yuan in 2020, CAGR 21.1%, and net profit attributable to the mother from 540 million yuan in 2016 to 820 million yuan in 2020, CAGR 14.4%. The decline in the company's gross profit margin in the first three quarters of 2021 is mainly due to the increase in raw material prices, and it is expected that the company's profitability will be repaired as raw material prices stabilize.
Production capacity continues to upgrade, follow-up performance growth momentum is sufficient. Zhuhai Seaview Wanggao multi-storey project, high-end HDI project, Zhuhai Longchuan Jingwang FPC Second Factory, etc. continued to expand production, while the convertible bond project financing of 1.78 billion yuan to develop HLC, HDI (including SLP) project to help the company upgrade products, more adapt to the future demand for high-end PCB products, follow-up performance growth momentum.
Vigorously lay out the automotive field. According to data from Zosy Auto Research Institute, Jingwang Electronics is the only mainland enterprise in the global automotive PCB market to enter the top ten in 2020. In 2018, the company built a production capacity for first-class automotive customers in Jiangxi, which has been recognized by international first-class customers; the company is a leading domestic FPC supplier of power lithium batteries, and in 2020, it won the Excellent Quality Award issued by Leading Cars. The company is currently in millimeter wave radar, lidar have been supplied in large quantities, and in the electronic control system, new energy battery packs, vehicle electronic products have a layout, with the future of new energy vehicles booming, the company's performance can be expected.
(5) Shenghong Technology: Tesla and Desay SV suppliers
Founded in 2006, Shenghong Technology mainly produces double-sided panels, multi-layer boards, HDI boards, etc., and has a wide range of downstream applications, mainly including computers, 5G communications, servers, consumer electronics, automotive electronics, new energy, industrial control security, medical instruments and other fields, ranking first in the world in the market share of high-density multi-layer VGA (graphics card) PCBs and small-pitch LED PCBs.
The company's revenue and net profit grew steadily, and the performance in the first three quarters of 2021 was eye-catching. From 2016 to 2020, shenghong technology revenue and attributable net profit growth rate is stable, revenue from 1.8 billion yuan in 2016 to 5.6 billion yuan in 2020, CAGR 32.5%, net profit attributable to the mother increased from 230 million yuan in 2016 to 520 million yuan in 2020, CAGR 22.3%. The company's revenue in the first three quarters of 2021 further increased to 5.4 billion yuan, an increase of 42.3% year-on-year, and the net profit attributable to the mother increased to 620 million yuan, an increase of 46.7% year-on-year.
It is scheduled to increase the PCB production capacity of new energy vehicles. In 2017, the company announced a fixed investment of 1.1 billion yuan to deploy new energy vehicles and circuit board projects for the Internet of Things, improve the company's automotive steel production capacity, and deploy new energy vehicles in the field. At present, the company has become a supplier of Tesla and Desay SV, and is expected to grow rapidly in the future with the release of downstream new energy vehicles.
(6) Sihui Fushi: layout lidar, vehicle PCB continued to break through
Founded in 2009, The company has a wide range of PCB product types, in addition to double-sided panels and multi-layer boards, the product types cover HDI boards, thick copper plates, metal substrates, rigid-flex bonding plates, high-frequency high-speed boards, etc. The company focuses on the manufacture of small batch boards of printed circuit boards, with "small batch, high quality, high reliability, short delivery time, rapid response" as the market positioning, the products are widely used in industrial control, automotive electronics, transportation, communication equipment, medical equipment and other fields.
The company's revenue and net profit growth rate is relatively fast, and it will increase again in the first three quarters of 2021. From 2016 to 2020, Sihui Fushi's revenue increased from 210 million yuan in 2016 to 650 million yuan in 2020, CAGR of 32.6%; the net profit attributable to the mother after deduction increased from 0.3 billion yuan in 2016 to 110 million yuan in 2020, CAGR of 35.7% (the non-recurring profit and loss generated by the company's implementation of equity incentives in 2017 had an impact of 0.42 billion yuan on the company's net profit, which had a greater impact on the profit of the current period, so it is more reasonable than the net profit attributable to the parent after deduction). In the first three quarters of 2021, the company's revenue further increased to 750 million yuan, an increase of 59.3% year-on-year, and the net profit attributable to the mother increased to 130 million yuan, an increase of 57.8% year-on-year.
Layout of lidar, vehicle PCB continues to break through. In the field of automotive electronics, the company's products are mainly used in steering motors, telematics (T-box) and other important automotive safety components, as well as automotive lighting systems, antennas, car locks, etc., the main customers include CMK, SIIX, UMC, Gadari, Jiyan Xinyang and other industry well-known EMS enterprises. The company's fundraising and investment projects focus on the layout of the automotive field, and are currently expanding to important safety components such as body control safety systems and power engine control systems, and the company's steering control systems have been mass-produced. And the company's lidar products applied to new energy vehicles have also passed customer identification and access to small batch mass production orders.
5. Investment analysis
Automotive PCBs have surged with the trend of automotive electric intelligence. Information technology from the perspective of penetration rate Change drives the electric intelligence of automobiles to enter the growth inflection point, and the prototype of automobiles as a new human-computer interaction platform has begun to appear. On the one hand, the electrification of automobiles has entered the accelerated development stage across the inflection point of 10% penetration; on the other hand, intelligence has ushered in the wind outlet driven by the L2 to L3/L4 leap. PCB as an important component of automotive electrification and intelligence, with the surge in the trend of automotive electric intelligence, the future market space is vast.
Companies with high PCB content benefit the most. The PCB increment brought by electric intelligence mainly benefits two types of PCB suppliers: 1) new energy vehicle customers are the main body of shipments: At present, the main body of shipment growth is new energy vehicle customers, and IF PCB manufacturers can break into the supply of new energy vehicles, they will deeply benefit from the industry dividend to achieve a volume and price increase. And the head of new energy vehicle manufacturers to form a demonstration effect, some new entrants in order to ensure quality, speed up the introduction of speed, may be inclined to import the head of new energy vehicle manufacturers suppliers. 2) The growth potential of existing traditional automobile customers is huge: electric intelligence is an irreversible trend in the automotive industry, and traditional automobile manufacturers will transform in this direction, and traditional automobile manufacturers will transform into the production of new energy vehicles Out of trust in suppliers, they may give priority to PCB suppliers in traditional cars and continue to become PCB suppliers after their transformation.
(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）
Featured report source: [Future Think Tank].