Shennan Circuit (002916) 2019 Third Quarterly Report Review: Profitability Continues to Improve in Third Quarter Results Exceeds Expectations

Shennan Circuit (002916) 2019 Third Quarterly Report Review: Profitability Continues to Improve in Third Quarter Results Exceeds Expectations

Event: The company released the third quarter report for 2019, and the company achieved revenue of approximately 76 in the first three quarters.

58 ppm, an increase of 43 in ten years.

50%, net profit of return to mother is about 8.

67 ppm, an 83-year increase.


Comments: Profitability continued to improve, third-quarter performance exceeded expectations. The company’s net profit attributable to mothers increased by 83 in the first three quarters of 2019.

30%, which is the upper limit of the 65% -85% range predicted by the Air Force, exceeding expectations.

From the third quarter alone, Q3 achieved revenue of 28.

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

69%, net profit attributable to mothers3.

9.6 billion, an increase of 105 in ten years.


From the perspective of revenue, Q3’s orders for communications equipment from 5G are relatively full, and orders from servers continue to be introduced, leading to a substantial increase in Q3 revenue.

At the same time, the small size of 5G and server products has higher profit margins, and the professionalization of the company’s internal production line layout has increased, driving the company’s Q3 gross profit margin to 28.

77%, an increase of 4 深圳spa会所 from the previous quarter.

76pct, an increase of 6 per year.


The company’s expense ratio in the first three quarters remained basically stable.

The sales expense ratio for the first three quarters was approximately 2.

02%, 0 per year.

09pct, a slight decrease; the total management and R & D expense ratio is about 9.

24%, 0 per year.

32pct, mainly because R & D expenses are growing faster than revenue growth; financial expense ratio is about 0.

64%, flat for one year.

Benefiting from the wave of 5G data communications, profitability is expected to continue to improve. 5G communication boards have the characteristics of high layers, small line widths and spacings, and high wiring density. They have higher technical difficulties and higher barriers.

The company is deeply engaged in the field of communication boards, with communication revenue accounting for more than 60%, and its technical strength is very outstanding. It has established close cooperation relationships with top equipment manufacturers such as Huawei, ZTE, and Ericsson.

With the start of large-scale construction in 5G adjustment in 2019, the demand for communication boards will also increase by an offset.

5G requires massive MIMO array antennas. The channel expansion increases, and the PCB carrying the antenna array expands in terms of area and number of layers. In addition, 5G communication boards require high-frequency materials, manufacturing losses increase, and product value and profitability will improve.
In terms of data communication, the company’s first phase of Nantong specifically targeted digital products. The current actual production capacity exceeded about 40% of the designed capacity, and customer introduction went smoothly. The second phase of Nantong positioned the higher-end data communication board. The current capacity construction is smooth.Further improvement of product structure.

Actively expand the production of IC carrier boards, leading domestic IC carrier board imports to replace Inspur IC carrier boards to provide functions such as support, heat dissipation and protection for the chip, while providing power and mechanical connections between the chip and PCB.Technical characteristics such as accuracy are the areas with the highest technical shortcomings in PCB subdivision products.

The company is a leading company in the field of domestic packaging substrates. Benefiting from the strong support of national policies and the huge domestic market demand, the domestic semiconductor industry has entered a fast track of development, and domestic demand for packaging substrates as a key material for the semiconductor packaging industry chain is strong.

The company leads the world in the field of silicon microphone MEMS package substrates, with a global market share of more than 30%.

The company newly added 600,000 square meters of storage packaging substrate capacity in Wuxi, which is currently progressing smoothly, and has already achieved on-line trial production in mid-2019, which will become a blank for domestic-funded enterprises in the field of storage packaging substrates.

Profit forecast, estimation and rating As the main supplier of communication boards for major internal communication equipment manufacturers, the company delivered 5G related product research and development two years in advance, leading the technological strength, spanning the full production of Nantong Phase I and the upcoming phase of Nantong Phase II.Construction, which is expected to deeply benefit from the 5G development in the future.

In fact, the company’s Wuxi IC carrier board project is progressing smoothly and has been connected to trial production in mid-2019, contributing to the company’s previous two years of performance increase.

As the gross profit margin was higher than expected, and the increase in gross profit margin was due to the high volume of high-end products driven by 5G and servers, which has a long-term nature, we raised the company’s net profit attributable to its mothers from 2019 to 2021 to 12, respectively.

7.3 billion / 17.
01 billion / 22.
10,000 yuan (previous value was 10 respectively.

1.7 billion / 13.

2.4 billion / 16.

4.8 billion), maintain “Buy” rating.

Risk warning: 5G construction scale is less than expected; capacity and yield climb are less than expected; rising raw material prices erode the company’s profitability.