Shennan Circuit (002916): 5G order accelerates release of new capacity and full utilization of Q3 results is expected to exceed expectations

Shennan Circuit (002916): 5G order accelerates release of new capacity and full utilization of Q3 results is expected to exceed expectations

Event: On the evening of October 10, the company released the forecast of the first three quarters of 2019.

80?
8.

75 ppm, a 65% increase in one year?
85%; of which Q3 achieved net profit attributable to mother 3 in a single quarter.

09?

4.

40,000 yuan, a year-on-year increase of 61%?
110%.

The performance forecast exceeded expectations.

5G orders continued to increase, Nantong’s first phase added production capacity, and the performance continued to exceed expectations: the company’s Q1 and Q2 achieved net profit attributable to the mother, respectively1.

87 and 2.

840,000 yuan, an annual increase of 60% and 74% (the second quarter increased by 52%).

It is expected that Q3 will achieve net profit attributable to mothers3.

09?4.

40,000 yuan, a 61% increase in ten years?
110%, an increase of 8% from the previous month?
42%.

The company’s performance has continued to achieve substantial growth under a high base. In essence, it is the volume of 5G orders. 南宁桑拿 As a leading PCB supplier, the company has full orders and high production capacity. At the same time, the first phase of the IPO fundraising of Nantong base (mainly communication and automotive board)The slope is smooth and contributes to supplementing production capacity.

In addition, the company maintains stable production management. According to the operating data of the first half of the year, the gross profit margin in Q2 reached 24.

0%, an increase of 0 from the previous month.

5 pct, the gross profit margin has steadily increased, and the trend has continued.

The second phase of Nantong’s production expansion is smooth, and the SMT and IC carrier board business has grown steadily: The PCB market space in the 5G era has doubled compared to 4G, and the existing capacity is tight.

The company is a leader in 都市夜网 the industry. In the first half of 2019, it issued convertible bonds to invest in the second phase of Nantong (5G and Datacom PCB), which has already been put into construction. After the completion of the construction, it will contribute to the increase of production capacity and promote sustained high growth.

In addition to PCB, SMT and IC carrier boards are the company’s other two major businesses.

In the first half of 2019, operating income5 was achieved.

700 million and 5.

10,000 yuan, a year-on-year growth of 43% and 30%, respectively, and the income share was 12% and 10%.

The SMT business benefited from the PCB drive and is expected to maintain a stable growth rate for a long time. The IC carrier board business benefited from the Wuxi project’s commissioning, and the production capacity climbed smoothly, and the volume continued to increase in the second half.

5G commercial accelerators, high-frequency PCBs continue to benefit as core assets: In June this year, the Ministry of Industry and Information Technology officially issued a 5G license, and operators accelerated the construction of base stations. In the context of the current tariff package, the number of 5G subscribers has exceeded 10 million.

Mobile phone companies have also released high-performance 5G terminals. Participants in the industry chain, such as Huawei, have also vigorously launched new terminals and applications such as VR. Therefore, 5G has improved overall, and the performance of upstream core device suppliers has accelerated.

As a 5G core asset, high-frequency PCB has a good industry structure and a large market space. The company’s leading company has a significant premium and growth is expected.

Investment advice: We expect the company in 2019?
The operating income in 2021 will be 102.

1.7 billion (+34.

4%), 136.

810,000 yuan (+33.
9%) and 179.

4.9 billion (+31.

2%), the net profit attributable to the mother is 11 respectively.

4.6 billion (+64.

4%), 15.

1.3 billion (+32.

0%) and 18.

8.2 billion (+24.
4%), the corresponding EPS is 3.

38 yuan, 4.

46 yuan, 5.

54 yuan, corresponding to PE is 44 times, 34 times, 27 times.

The 5G high-frequency PCB industry has a good structure and a large market space. The company’s leading company has a significant premium. It maintains a “Buy-A” investment rating and a six-month target price of 160.

56 yuan.

Risk Warning: The impact of Sino-US trade frictions on changes in market growth.