生益科技(600183)
Shengyi Tech’s 2Q22 revenue/NP to shareholders declined 13.5% YoY/47.9% YoY to RMB4,607mn/RMB453mn. 2Q results miss was due to 1) weak demand from consumer markets, 2) ASP pressure due to peers’ aggressive price war and 3) significant energy cost increase. GPM decreased slightly to 23.2% in 2Q from 23.6% in 1Q. Looking forward, we expect PCB to outperform CCL business, driven by capacity ramp up for auto market and easing margin pressure. We cut our forecasts for 2022/23E and slightly tweaked TP to RMB19.2. Maintain HOLD.
CCL business under pressure. CCL/prepreg sales declined 18.3%/4.4% YoY/QoQ in 2Q (vs. 4.0%/-4.8% in 1Q). GPM decreased to 22.7% in 1H22 from 25.7%/29.3% in 2H21/1H21. 2Q may be the weakest quarter for CCL, due to deteriorating demand and price war. However, 2H22 could still be challenging as market demand is still on its way of slow recovery, especially for consumers. ASP should have reached the bottom given little room to cut price further.
PCB business to continue outperform. PCB sales grew 14.2%/9.1% YoY/QoQ in 2Q (vs. 7.2%/-12.2% in 1Q). GPM decreased to 21.2% in 1H22 from 16.5%/18.8% in 2H21/1H21. The majority of PCB sales were from the telecom market, which remain stable. We believe the growth was mainly from the auto market. Auto PCB has experienced fast growth in 2021, with revenue contribution increasing from 1% to 8%, thanks to production ramp up. Prismark forecasts PCB market to grow 4.2% YoY in 2022, moderate growth after significant growth of 24.1% YoY in 2021. We think Shengyi will outperform peers, driven by strong demand from auto market, increasing capacity and easing margin pressure.
Maintain HOLD, TP adjusted to RMB19.2. We cut Shengyi’s FY22-23Erevenue by 9%-10% considering CCL demand recovery could be slow. We derive our TP using the same 16.6x target P/E multiple,~ avg. 1-yr forward P/E. TP was adjusted to RMB19.2 on valuation rollover to 2023E P/E.Potential downside risks include: 1) worse-than-expected global economy that curbs consumer spending, 2) continuous ASP pressure and 3) increasing manufacturing costs, i.e. energy costs.
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