1. There are indeed too many PCB printed circuit board stocks, totaling 32.
Although the industry has begun to experience high prosperity, many companies still see a decline in net profits. This is because those not engaged in AI PCB are still facing intense competition, with gross margins only in the teens. After deducting expenses such as the three fees, the net profit margin is minimal.
Therefore, for those with low gross margins, to achieve a significant increase in net profits, they must have the potential to improve gross margins. This could involve entering the AI field, releasing production capacity to create economies of scale, or adjusting product structures, such as shifting from 2-layer and 4-layer boards to higher-layer boards, significantly increasing the value per square meter. For example, the price of ordinary layer boards is only 800-1000 yuan/square meter, while Shenghong Technology charges 15 yuan/square meter for orthogonal backplanes, and Weilgao charges 20,000-40,000 yuan/square meter for secondary power boards, with net profit margins reaching 40-50%.
1) Companies about to release production capacity: The leading indicator is a significant year-on-year increase in fixed assets, while the year-on-year decrease in construction projects is generally large. The main companies include Tianjin Printron, Xunjiexing, Si Hui Fu Shi, and Guanghe Technology. However, they also share a characteristic: their second-quarter performance is poor, with low net profit margins, leading to average stock price performance. Therefore, it is necessary to study whether their net profits can significantly improve in the next quarter or the quarter after.
2) Ultra-high gross margins and net profit margins: Undoubtedly, Shenghong ranks first, followed by Huadian Co., Ltd., Guanghe Technology, and Shengyi Electronics. Guanghe Technology is about to release significant production capacity, so it deserves more attention.
3) The proportion of construction projects to fixed assets (generally, the larger this value, the greater the potential for future production capacity release): Companies often boast about how many new companies they can create, and this indicator can be referenced. The leading companies include Bomin Electronics at 84.2%, Qiangda Circuit at 58%, Huadian Co., Ltd. at 44.5%, Zhongfu Circuit at 39%, Mingyang Circuit at 37.8%, Benchuan Intelligent at 29%, and Pengding Holdings at 23.4%. When their construction projects begin to decrease and convert to fixed assets, production capacity is about to be released. It is important to note that depreciation will also begin, so how the company achieves a balance between increasing revenue and profit is crucial. Generally, when this happens, the market is likely to recognize it.
2. PCB Equipment: There are very few stocks, only 4, which are relatively scarce, and the market is willing to give them a high valuation, with stock prices rising sharply.
Dazhu CNC has seen a significant increase in fixed assets, while construction projects have sharply decreased, aligning with the first point mentioned above, indicating that production capacity is about to be released.
On the other hand, Chip Microelectronics has seen a surge in construction projects, with the proportion of construction projects to fixed assets reaching 86% (generally, the larger this value, the greater the potential for future production capacity release), indicating significant future production capacity potential. According to tracking, the company’s second-phase project is set to commence production in September, at which point the financial report should show a sharp decrease in construction projects and a significant increase in fixed assets.
3. PCB Copper Clad Laminates: There are not many stocks, only 5, but one company dominates the market.Shengyi Technology holds an absolute advantage, similar to how Ningde Times dominates its sector, while competitors struggle with gross margins.
The elasticity of individual stocks comes from the surge in downstream printed circuit demand, leading to price increase expectations.
4. PCB Photoresists and PCB Electronic Inks: Guangxin Technology is known for PCB photoresists, while Oriental Materials specializes in PCB electronic inks. However, PCBs are not their primary business.
5. PCB Copper Plating Process and PCB Embedded Heat Dissipation: Jiangnan New Materials has seen strong stock performance, possibly due to its high elasticity, with a market-to-sales ratio of only 1.3 times, and gross and net profit margins of 3.77% and 2.03%, respectively, both extremely low. If prices can increase, for example by 5%, the net profit margin could more than double.
