【行业研究报告】生益科技-Expect modest sequential growth in 2H23

22Sep2023
CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdate
ShengyiTech(600183CH)
Expectmodestsequentialgrowthin2H23
CCLandPCBindustriesfacedongoingchallengesthataddedpressureon
ShengyiTech’sperformance.TheCompany’s1H23revenue/NPto
shareholdersdeclinedby15.9%/40.7%YoYtoRMB7,880mn/RMB555mn.
GPMfellto19.3%in1H23vs.23.4%/20.5%in1H22/2H22.Lookingforward,we
expectmodestsequentialgrowthin2H23,asthemgmt.mentionedrecent
operationsofCCLproductswererunningonfullcapacity.However,wethink
investorsshouldwaitforaclearersignaloffullrecoveryofthedownstream
demand,whichwouldsupportrevenuegrowthandmarginrecovery.Maintain
HOLD,withadjustedTPofRMB16.1,basedon20xrollover2024EP/E.
IndustrydowncycleweighsontheCompany’sperformance.The
worldwidePCBmarketexperiencedasignificantdeclineof20%YoYin
worldwidePCBmarketexperiencedasignificantdeclineof20%YoYin
1H23.ThefallingdemandhurtmoreontheASPside(CCL/PCB:est.high-
teens/low-teensinpricechange)assalesvolumewasrelativelyresilient.
Eventhoughtheinventorylevelofsomedownstreamclientsisrelatively
low,theywerereluctanttopurchasematerials.Wesawtheindustryis
consolidatingthroughourchannelchecks,whichhassuppressedthe
willingnesstopullupinventory.
ShengyiTechisbetter-positionedthanitspeerswithoperationsonfull
capacity;however,themarketiswaitingforaclearersignalofdemand
return.PerPrismark,theCompanyrankedsecondgloballyintermsofCCL
saleswith12%marketsharegloballyandwithabroadendmarket
coverage.Themgmt.alsomentionedoperationofCCLbusinessisalready
atfullcapacity.Therearespotlightsonauto,mainlyEV,andservermarket.
However,abroadermarketdemandisstillweak.Meanwhile,copperprice
hasincreasedrecentlyandtheCompanywasunabletopassdownthe
incrementalcostunderthecurrentcircumstances,whichwouldfurtherhurt
theCompany’sGPMinthenearterm.
WecutFY23/24ErevenueandNPforecastsby6%/8%and26%/21%,as
theCompany’s1H23resultswerelowerthanourexpectationsandtheGPM
compressionindowncycleislonger-than-expected.Wethinknear-term
pressurewouldpersist,butShengyiTechshouldhavemodestsequential
growthin2H23fromalowbase.MaintainHOLD,withTPadjustedto
RMB16.1,basedonthesame20xrollover2024EP/E,asthemarketis
waitingforaclearsignofdemandrecoveryandup-cycle.