High industry concentration, the pattern of A-share CCL industry may change
The main business of SHNY Electronic Material Technology Group is the design, development, production and sales of composite materials such as copper clad laminates and adhesive sheets and their products. Copper clad laminates are the core materials for making printed circuit boards. Printed circuit boards are carriers for the electrical connection of electronic components. Copper clad laminates and printed circuit boards are indispensable and important parts in modern electronic information products. They are widely used in consumer Terminal areas such as electronics, computers, communications, automotive electronics, aerospace and industrial control.
The CCL industry is a technology-intensive and capital-intensive high-barrier industry, with high industry concentration globally. The top 20 manufacturers have a total market share of about 90%, mainly dominated by companies in Japan, the United States and Taiwan, China. The domestic manufacturers have a total market share of less than 20%, and they are internationally leading in terms of technology level and production scale. There is a certain gap between enterprises, and there is a possibility that the existing market share will be further compressed.
Although the compression of the market by foreign-funded and Taiwan-funded enterprises has formed a major bottleneck in the development of the CCL industry, Chinese manufacturers still have relatively large room for growth. On the one hand, international trade friction has accelerated the localization of key materials in the industry and promoted the upgrading of high-end materials. Domestic manufacturers are expected to accelerate the implementation of import substitution by virtue of their cost-effective advantages in the field of high-frequency/high-speed copper clad laminates. On the other hand, the national level is currently pushing for new 5G infrastructure. As an important raw material for upstream PCBs for base stations and data centers, copper clad laminates are expected to usher in a significant increase in demand in 2020. Prismark forecast data shows that the global PCB output value in 2020 will be There will be a 3.3% increase.
At present, the A-share listed companies in China's copper-clad laminate industry are basically in a "triple-legged" trend, with DGSY Technology, JAGJ, and HZXC leading the industry pattern. The competition pattern is as follows:
SHNY's ultra-thin process can achieve 30 microns, the reliability can be applied to high multilayer boards, the process technology is at the domestic advanced level. It has basically achieved lead-free and halogen-free products. The halogen-free copper clad laminates rank among the top ten in the world and the second in China. The global market share of halogen-free copper clad laminates is 2.2%. It can be seen that after the successful IPO of SHNY, it will change the industry structure of A-share CCL to a certain extent.
Strong profitability in the industry, downstream market demand slowed down
In terms of operation, the overall performance of SHNY's operating income is relatively stable. After a substantial increase in 2018, there was a slight decline in 2019. The main reason is that the new capacity of the headquarters was put into operation in the second half of 2017. Subsequently, the growth rate of the CCL industry in 2018 Since the beginning of the year, it has slowed down, and the industry has entered a period of adjustment and development, which has made the overall operating income stable. At the same time, the revenue and gross profit ratio of environmentally friendly products represented by lead-free and halogen-free products and adhesive sheets supporting multilayer PCB requirements of downstream PCB customers continued to increase, optimizing SHNY's product structure.
Halogen-free copper clad laminate technology ranks second in China, raising funds for breakthrough capacity bottleneck
In terms of R&D, the CCL industry has high demand for R&D and capital. SHNY's current core technology is reflected in the basic realization of lead-free and halogen-free products, and the halogen-free copper clad laminate ranks in the top ten in the world and second in China. In addition, during the reporting period of SHNY, the R&D investment and the proportion of R&D both increased steadily, and the compound growth rate of R&D investment was 15.76%.
In terms of fund-raising, the total amount of investment to be raised by SHNY New Materials this time is 920 million yuan. Except for R&D center renovation and upgrade projects, it will be used for high-frequency high-speed electronic circuit bases with an annual output of 15 million square meters for 5G communications and other fields. Construction project. The project intends to use raised funds of 801 million yuan, accounting for 87.07% of the total funds. After the project is completed, it will form a total annual production capacity of 15 million square meters of high-frequency high-speed copper clad laminates and 24 million meters of adhesive sheets.
The capacity utilization rate of SHNY's existing copper clad laminates and adhesive sheets is relatively saturated, and it can no longer meet the rapidly growing demands of downstream PCB application markets such as 5G communications, automotive electronics and the Internet of Things. After the project is completed, the overall production capacity of copper clad laminate will be increased by about 80%, which can solve the capacity bottleneck currently faced by SHNY and enhance its market position. With regard to the risks of fundraising projects, in addition to the depreciation and amortization pressures caused by new fixed assets, due to the rapid development of downstream industries and rapid technological iterations, changes in the market environment and policy environment during project construction may have an impact on expected returns.