研究报告全文：BUYMNMaintain22Sep2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateShennanCircuit002916CHSoft1H23numberssuggestnoimmediateHOLDMaintainturnaroundTheworldwidePCBmarketexperiencedasignificantdeclineof20YoYTargetPriceRMB7200in1H23mainlyduetofallingdemandforelectronicsproductsunderglobalPreviousTPRMB9660UpDownside97macroeconomicpressureThisisinlinewithourpreviouspredictionthatweCurrentPriceRMB6566expecttheglobalPCBmarketwillpersistentlyencountermacroeconomicchallengesduetoweakenedconsumerdemandandtheongoingdestockingChinaTechnologycycleamongdownstreamindustrieslinkShennanCircuit002916CHaLilyYANGPhDpurePCBmanufacturerisnotimmunetothemarketweaknessMaintain85239163716lilyyangcmbicomhkHOLDwithloweredTPofRMB72PCBsegmentnearly23oftotalrevenueremainsweakwithmarginKevinZHANG85237618727erosioninadecliningmarketSegmentrevenuedroppedby124YoYkevinzhangcmbicomhkand116QoQtoRMB39bnin1H23Thegrossmargindeclinedby149pptsto259comparedto1H22WeakeningdemandindomesticandStockDataMktCapRMBmn336770overseastelecommarketsanddelayinupgradeforEaglestreamplatformAvg3mthstoRMBmn2160draggedthesegmentsalesThecontributionoftheCompanysAIserver52wHighLowRMB98866214TotalIssuedSharesmn5129relatedPCBproductswasnotmeaningfulsuggestingShennanisnotyetaSourceFactSetkeybeneficiaryfromthecurrentAIboomAutoPCBwastheonlyspotlightShareholdingStructurewith40YoYgrowthinordersduetoalowbaseAVICInternationalHoldingsLtd640Substratesegmentwasdealtaheavyblowwithasignificant399YoYHKSCC31SourceHKExdropinrevenueasdownstreammanufacturerscontinueddestockingAlthoughtheCompanyactivelyventuredintonewprojectsandcultivatedSharePerformanceAbsoluteRelativenewcustomerrelationshipsASPerosionwasparticularlyseverefor1-mth-80-53packagesubstrateGPMwas188in1H23vs303and231in3-mth-174-916-mth-241-1761H222H22affectedbymarketdowncycleandrisingcostsofnewfactoriesSourceFactSetTheCompanyreporteda135YoYdeclineinrevenuetoRMB60bnand12-mthPricePerformanceasubstantial3702YoYdropinnetprofittoRMB474mnin1H23GPMwasloweredto229vs265and246in1H222H22TheCompanys1H23resultswerebelowourestimateswhichwerealreadylowerthanconsensusWecutFY2324ErevenueandNPby1414and2924aswethinkthebusinesswillcontinuetobeaffectedbyindustrydowncycleandanear-termturnaroundmaynotbeimminentMaintainHOLDwithSourceFactSetloweredTPofRMB72basedon25xrollover2024EPEWekeepthesamePEmultipleof25xwhichisover1SDbelow5-yearhistoricalavgasthemarketiswaitingforaclearsignofdemandrecoveryEarningsSummaryYE31DecFY21AFY22AFY23EFY24EFY25ERevenueRMBmn1394313992126931467217490YoYgrowth2020493156192Grossmargin237255231240253NetprofitRMBmn14811640109814802088YoYgrowth35107330348410EPSReportedRMB302322213288406PEx336283308228162ROE18615888111142SourceCompanydataBloombergCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk22Sep2023Figure1CMBIGMestimatesvsconsensusCMBIestimatesConsensusDiffRMBmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue126931467217490148161712119497-14-14-10GrossProfit293035214419354642344905-17-17-10OperatingProfit110315542190165720812457-33-25-11Netprofit109814802088154019402267-29-24-8EPSRMB213288406319385445-33-25-9GrossMargin231240253239247252-08ppt-07ppt01pptOperatingMargin87106125112122126-25ppt-16ppt-01pptNetMargin87101119104113116-17ppt-12ppt03pptSourceCompanydataCMBIGMestimatesFigure2EarningsrevisionNewOldDiffRMBmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue1269314672174901510817475NA-16-16NAGrossProfit29303521441939444587NA-26-23NAOperatingProfit11031554219018792195NA-41-29NANetprofit10981480208817232014NA-36-26NAEPSRMB213288406352412NA-39-30NAGrossMargin231240253261262NA-3ppt-23pptNAOperatingMargin87106125124126NA-37ppt-2pptNANetMargin87101119114115NA-28ppt-14pptNASourceCompanydataCMBIGMestimatesFigure3Companyssoft1H23resultssuggestnoFigure4Companysrevenuebreakdownbyimmediateturnaround1Q22-2Q23segmentsRMBbnRmbBn5030201726826225416154023814142302282513Thousands123020820154100FY21FY22FY23EFY24EFY25E00101Q222Q223Q224Q221Q232Q23PCBSubstrateOtherSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE222Sep2023Figure5RevenueforecastbreakdownRMBmnFY20EFY21EFY22E1H232H23EFY23EFY24EFY25EPCB831187378825388242448125935210844YoY765110-124-34-791511607263636464646462Substrate154424152520821971179222523265YoY32756344-399-158-2892574501317181415141519PCBA116019401744850931178219752177YoY-42672-101203-102211081031014121414141312Other58585190448051399410931203YoY384454623117310010010056688877Total11600139431399260346660126931467217490YoY10220204-111-37-93156192SourceCompanydataCMBIGMestimatesFigure612MforwardPEbandFigure712MforwardPEchart70RMB602505020040150301002010500003-2309-1812-1803-1906-1909-1912-1903-2006-2009-2012-2003-2106-2109-2112-2103-2206-2209-2212-2206-2309-231218121909180319061909190320062009201220032106210921122103220622092212220323062309231-yrForwardPEMeanClosingPx126x228xMean1SDMean-1SD331x434x537xSourceCompanydataCMBIGMestimatesSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE322Sep2023FinancialSummaryINCOMESTATEMENT2020A2021A2022A2023E2024E2025EYE31DecRMBmnRevenue116001394313992126931467217490Costofgoodssold8530106371042297631115213070Grossprofit307133063571293035214419Operatingexpenses117414061691160517742059Sellingexpense231319340373394492Adminexpense480543673571646752RDexpense645782820790884992Others182238142129149177Operatingprofit162516171723110315542190Otherincome844668Otherexpense27117467Pre-taxprofit160616091720110515532191Incometax17512880773102Aftertaxprofit143114811640109814812088Minorityinterest100000Netprofit143014811640109814802088Grossdividends465499513343463653BALANCESHEET2020A2021A2022A2023E2024E2025EYE31DecRMBmnCurrentassets594172708578768285279922Cashequivalents50462019126759091462Restrictedcash201111Accountreceivables279938953805354138774394Inventories220625272341247427203009Prepayment61649283340FinancialassetsatFVTPL1650271700700700Othercurrentassets258213199262286314Non-currentassets8067952212149132711432815231PPE64857789913899371062511303Right-of-useassets04437302418Deferredincometax7291208272297326InvestmentinJVsassos666667Intangibles322407557537518500Goodwill000000FinancialassetsatFVTPL11812165656565Othernon-currentassets106410642138242527933012Currentliabilities493259486708583663896857Short-termborrowings2323500420668758Accountpayables377244384632452447885088Taxpayable2278318694104Othercurrentliabilities4675831491365367370Contractliabilities97709398100127Accruedexpenses342428462342373411Non-currentliabilities106617251384189120642224Long-termborrowings105913681175172018772018Bondpayables000000Deferredincome67209171187206Othernon-currentliabilities03500000Totalliabilities599876728092772784549080Sharecapital489489513511511511Capitalsurplus000000Retainedearnings313541505291586869958605Otherreserves378338446410641664276442Totalshareholdersequity7407848412214127961393315558Minorityinterest333444Totalequityandliabilities134081615920309205272239024643PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE422Sep2023CASHFLOW2020A2021A2022A2023E2024E2025EYE31DecRMBmnOperatingProfitbeforetaxation143114811640109814812088Depreciationamortization6448631079120313531508Taxpaid11885102911Changeinworkingcapital55834495209217318Others2823612811802070Netcashfromoperations180023423180217025883197InvestingCapitalexpenditure248626583378248023632351Acquisitionofsubsidiariesinvestments6264141919Netproceedsfromdisposalofshort-term185818185146000investmentsOthers201316425388011Netcashfrominvesting263524813614289323452332FinancingDividendpaid453541565580414542Netborrowings87536242169405231Proceedsfromshareissues002530300Others934342112727Netcashfromfinancing37540168954136338NetchangeincashCashatthebeginningoftheyear14415046201912675909Exchangedifference31730303030Others90512212631267204524Cashattheendoftheyear50462019126759091462GROWTH2020A2021A2022A2023E2024E2025EYE31DecRevenue1022020493156192Grossprofit1007680179202255Operatingprofit1470566360408409Netprofit16035107330348410PROFITABILITY2020A2021A2022A2023E2024E2025EYE31DecGrossprofitmargin265237255231240253Operatingmargin14011612387106125ReturnonequityROE22718615888111142GEARINGLIQUIDITYACTIVITIES2020A2021A2022A2023E2024E2025EYE31DecNetdebttoequityx070805060505Currentratiox121213131314VALUATION2020A2021A2022A2023E2024E2025EYE31DecPE469336283308228162PEdiluted472337284308228162Divyield070911101419SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE522Sep2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBIGMwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE6