Since the 21st century, the global PCB industry center of gravity has gradually shifted from Europe and America to Asia, forming a new pattern centered on Asia (especially mainland China) and supplemented by other regions.As the proportion of China's PCB output value in the world keeps increasing, PCB in mainland China will enter the stage of sustained and stable growth. In 2017, China's output value was $29.9 billion, increasing by 5.2% year-on-year, much higher than the global growth rate of 2.8%.Along with the transfer of global PCB industry, China is expected to copy the development experience of Taiwan enterprises, and a number of tens of billions of enterprise groups have emerged, and gradually won the leading position of the PCB industry.
On the demand side, consumer electronics, 5G and automotive electronics are the main driving forces for the development of China's PCB industry.Growth in the consumer electronics market has slowed in recent years, but the shift of market share to Chinese manufacturers has created opportunities for upstream PCB manufacturers.In terms of automobile, it is expected that in the future, automobile electronics will have a large growth, which will become the PCB growth driver of consumer electronics.The 5G era will bring the construction of base stations and transmission networks in the communication industry, which is expected to be several times better than 4G.At the same time in the IC board, chip localization will have a large number of downstream packaging materials supporting the needs for downstream manufacturers to provide opportunities.
On the supply side, we expect the industry to concentrate on leading manufacturers, mainly due to rising prices of raw materials, stricter environmental requirements, and technological upgrading.In the process of market share concentration, small and micro manufacturers will be gradually eliminated because they cannot survive in the environment of rising costs and competition.In the long run, this will make the PCB industry return to rationality, which is conducive to the healthy development of the industrial chain.
As a leading enterprise of PCB in China, shennan electric circuit has its competitive advantages, including one-stop platform layout and technological advantages in the field of IC onboard board. Meanwhile, shennan keeps carrying out research and development investment for future technological upgrading and has certain advantages in management and incentive mechanism.
Shennan circuit took the lead in PCB, electronic assembly, IC board layout and achieved results.The platform model can make shennan give full play to the synergistic effect and improve the operating efficiency.In terms of technology, shennan is the only IC board company capable of mass production and profitability in China, with leading technological strength.Shennan has always maintained the strategic positioning of technology-driven profit, and the proportion of research and development investment is in the forefront of the industry, and the technology upgrading is oriented to the future.From the perspective of management and motivation, in the past two years, under the guidance of chairman radium, shennan has been carrying out modern management methods with continuous improvement of efficiency and gradual reduction of expense ratio.At the same time, the deep binding of the senior management team by the salary level higher than the industry average is beneficial to the development of the company.
Investment advice and rating:
At present, China's PCB industry is in a historical opportunity period, and the global market share is gradually shifting to China.On the demand side, the advent of 5G era, consumer electronics and automobile electronics will bring new growth point to the PCB industry.Supply side, environmental protection, raw material price rise and technical upgrade will accelerate the industry reshuffle.In the future, production capacity will continue to shift to China, leading manufacturers such as shennan will benefit.
Shennan electric co., as a leading PCB company in China, has the advantages of technology and management. Relying on high-quality products and successful sales strategies, shennan electric co., ltd. has achieved rapid growth for many years.After going public in 2017, the company has more abundant capital, and the business of various products has improved steadily.At present, the company has a sound development momentum. It is expected that the operating revenue of nantong and wuxi will increase by 22.04 billion yuan after the factory is put into operation, and the performance will accelerate.Therefore, shennan electric circuit is expected to become a PCB enterprise of ten billion scale, which is worthy of attention.
We expect a net profit of 0.60 billion, 850 million and 1.23 billion in 2018-2020, which is now valued at 31 times, and the industry average is around 25 times. Considering strategic integration and leading edge of technology, the reasonable valuation of 2018-2019 is between 30x-35x and about 28 billion in 2019.