【行业研究报告】深南电路-Soft 1H23 numbers suggest no immediate turnaround

TheworldwidePCBmarketexperiencedasignificantdeclineof20%YoY
in1H23,mainlyduetofallingdemandforelectronicsproductsunderglobal
macroeconomicpressure.Thisisinlinewithourpreviouspredictionthat“we
expecttheglobalPCBmarketwillpersistentlyencountermacroeconomic
challengesduetoweakenedconsumerdemandandtheongoingdestocking
cycleamongdownstreamindustries.”(link)ShennanCircuit(002916CH),a
purePCBmanufacturer,isnotimmunetothemarketweakness.Maintain
HOLD,withloweredTPofRMB72.
PCBsegment(nearly2/3oftotalrevenue)remainsweak,withmargin
erosioninadecliningmarket.Segmentrevenuedroppedby12.4%YoY
erosioninadecliningmarket.Segmentrevenuedroppedby12.4%YoY
and11.6%QoQtoRMB3.9bnin1H23.Thegrossmargindeclinedby
1.49pptsto25.9%comparedto1H22.Weakeningdemandindomesticand
overseastelecommarketsanddelayinupgradeforEaglestreamplatform
draggedthesegmentsales.ThecontributionoftheCompany’sAIserver
relatedPCBproductswasnotmeaningful,suggestingShennanisnotyeta
keybeneficiaryfromthecurrentAIboom.AutoPCBwastheonlyspotlight,
with40%YoYgrowthinordersduetoalowbase.
Substratesegmentwasdealtaheavyblowwithasignificant39.9%YoY
dropinrevenue,asdownstreammanufacturerscontinueddestocking.
AlthoughtheCompanyactivelyventuredintonewprojectsandcultivated
newcustomerrelationships,ASPerosionwasparticularlyseverefor
packagesubstrate.GPMwas18.8%in1H23vs.30.3%and23.1%in
1H22/2H22,affectedbymarketdowncycleandrisingcostsofnewfactories.
TheCompanyreporteda13.5%YoYdeclineinrevenuetoRMB6.0bnand
asubstantial37.02%YoYdropinnetprofittoRMB474mnin1H23.GPM
wasloweredto22.9%vs.26.5%and24.6%in1H22/2H22.TheCompany’s
1H23resultswerebelowourestimates,whichwerealreadylowerthan
consensus.WecutFY23/24ErevenueandNPby14%/14%and29%/24%,
aswethinkthebusinesswillcontinuetobeaffectedbyindustrydowncycle
andanear-termturnaroundmaynotbeimminent.MaintainHOLD,with
loweredTPofRMB72,basedon25xrollover2024EP/E.Wekeepthe
sameP/Emultipleof25x,whichisover1SDbelow5-yearhistoricalavg.,as
themarketiswaitingforaclearsignofdemandrecovery.