Shennan Circuit (002916): Q3 net profit exceeded 106% of revenue and gross margin improved beyond expectations

    Shennan Circuit (002916): Q3 net profit exceeded 106% of revenue and gross margin improved beyond expectations

    Investment Highlights: The company achieved operating income of 76 in the first three quarters.

    58 ppm, an increase of 杭州桑拿网 43 in ten years.

    5%, to achieve net profit attributable to mother 8.

    6.7 billion, an increase of 83 in ten years.

    4%, close to the upper limit of performance forecast, in line with market optimistic expectations.

    The prosperity of the downstream communications sector continued to rise, the company’s revenue increased rapidly for the fifth consecutive quarter, and the gross profit margin increased further than expected.

    Company Q3 achieved revenue of 28.

    670,000 yuan, an increase of 36 in ten years.

    69%, net profit attributable to mothers3.

    9.6 billion, a 105-year increase of 105.

    81%.

    The growth was mainly driven by the demand in the communications and server sectors, and the company’s orders were full. The first phase of Nantong went into operation in 2018H2, driving the 2018Q3-2019Q3 revenue to increase by 41% / 54% / 46% / 49% / 37%.High growth trend.

    Q3 gross profit margin 28.

    77%, a record high in a single quarter.

    Q3 gross profit margin increased by 4 from the previous month.

    8 points, an increase of 6 per year.

    With 8 points, profitability has improved significantly.

    Mainly due to the optimization of product structure, 5G PCB, and high-density multi-layer boards continue to increase.

    At the same time, the company’s capacity utilization rate is higher, the first phase of datacom’s ramp-up in production capacity and the company’s smart factory automation transformation have all contributed positively to the gross profit margin.

    Net operating cash flow of the company in the first three quarters of 8.

    4.4 billion, similar to the net profit in the same period.

    R & D expenditure in the first three quarters 3.

    77 ppm, an increase of 50 in ten years.

    66%, the proportion of research and development continued to increase to 5.

    12%.

    Orderly expansion of production capacity.

    The company ‘s Nantong Shutong Phase I plant continued to ramp up production capacity.

    At the same time, the second phase of Nantong Datacom’s factory has been put into construction.

    In April 2019, the company launched a convertible bond plan with a plan to raise no more than 15.

    2 billion funds for the construction of the second phase of the datacom plant project.

    At present, the project has started construction with its own funds.

    The high-end products of Datacom Phase II positioning server are mainly targeted at high-speed and high-density multi-layer PCBs, and the overall ASP and profitability will be further promoted after production.

    Packaging substrate customers have been introduced one after another, and the production capacity has been slowly climbing smoothly.

    The company maintains its advantages in MEMS packaging substrates, and has gradually introduced major storage customers. The new production line of the Wuxi plant will be launched in June. It is expected that it will take about 2 years to climb the slope. The short-term performance contribution is limited and the potential for long-term growth.

    Core customers have high recognition and are expected to become the top five global leaders.

    In the field of communications, Shennan Circuit has formed a long-term and stable strategic cooperative relationship with global leading communication equipment manufacturers such as Huawei, Nokia, and ZTE; in the server field, it has established good relationships with high-quality customers such as Huawei, Dell, HP, Lenovo, Seagate, etc.Partnership.

    According to Prismark data, the company ranked 14th in the world’s PCB manufacturers in 2018. Benefiting from high-end communications and semiconductor packaging substrate business, Shennan is expected to become the top five global leaders in the future.

    Upgrade earnings forecast and maintain BUY rating.As Q3 gross margin improved more than expected, the net profit attributable to mothers for 2019/2020/2021 will be increased from 10.

    07/13.

    27/17.

    5 billion to 12.

    41/15.

    77/20.

    600 million.

    According to Prismark, the company ranked 14th in the world’s PCB manufacturers in 2018; benefiting from high-end communications and semiconductor packaging substrate business, Shennan is expected to become the top five global leaders and maintain a buy rating.

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