1. Project Overview
The company plans to purchase land in the Jinchi Industrial Park in Pathum Thani, Thailand, and build its own factory. By acquiring advanced production equipment, the company aims to establish a printed circuit board (PCB) production base to enhance its overall production capacity and improve its overseas capacity layout, thereby filling the gap in the company’s overseas production capacity to meet the growing order demands from overseas customers.
The implementation of this project is an important measure for the company to align with the overseas capacity layout of downstream customers. Once the project is operational, the company will establish a synchronized layout of domestic and overseas production capacity, laying a foundation for expanding into overseas markets and accelerating the company’s “globalization” process. Upon reaching full production, the project will achieve an annual production capacity of 1.2 million square meters of single-sided and multi-layer boards, further optimizing the company’s overall production capacity, capacity layout, and product line structure.
(1) Optimize the company’s PCB capacity layout to meet the procurement needs of overseas customers
Currently, the company’s PCB production base is mainly concentrated in Changzhou, Jiangsu, with a small portion of products outsourced to domestic manufacturers. Orders from overseas markets are supplied entirely by domestic production bases, and there is still a gap in the layout of overseas production bases. Moreover, Thailand, as an emerging market economy, has undertaken capacity transfers from various domestic industries in recent years due to its comparative advantages in land, labor costs, and tax incentives. Related enterprises in the industry have also established factories in Thailand, including major customers such as LG, Hisense, Haier, Midea, Lite-On, Delta, and EATON, all of which have production bases in Southeast Asia.
Currently, Thailand has a mature upstream and downstream industrial support system in the electronic information manufacturing field, especially in automotive electronics and communication terminals, forming a relatively complete industrial chain with stable demand and significant growth potential for PCB products. Therefore, responding to customer industry transfers and the demand of Thailand’s electronics industry, constructing a diversified capacity layout has become an urgent task for the company.
This project plans to establish a PCB production base in Pathum Thani, Thailand, with an annual capacity of 1.2 million square meters. This will not only serve local and ASEAN customers nearby, reducing tariffs and logistics costs, but also effectively respond to supply chain risks brought by global market uncertainties, enhancing risk resistance and global competitiveness, and building a more flexible and robust global capacity layout.
(2) Provide a capacity foundation for further achieving balanced development of domestic and overseas business markets
In recent years, as the company actively explores new overseas markets and the procurement volume from existing overseas customers increases, the proportion of PCB products exported by the company has been rising year by year, reaching 30.58% by 2024. However, all of the company’s production bases are located domestically. Therefore, in the face of the continuous increase in the scale and proportion of the company’s overseas market business, it is necessary to build overseas production bases to meet the growth needs of the export market business.
The new capacity from this project will be entirely dedicated to the overseas market, helping the company further achieve balanced development of domestic and overseas business markets. This project is expected to become a new profit growth point and strategic support point in the future, assisting the company in establishing a “dual-base” structure of domestic and overseas operations, enhancing overall risk resistance and sustainable development levels, and improving the company’s core competitiveness in the global PCB industry.
(3) Enhance the company’s overseas supply capacity and service quality to improve customer loyalty
PCBs, as core components of electronic products, have their delivery time, quality, and cost directly affecting the supply chain efficiency of OEMs. Currently, global electronic OEMs are setting up factories in Southeast Asia, especially in the fields of smartphones, automotive electronics, and industrial control, where international brand customers have higher demands for regional supply. Driven by this, domestic PCB manufacturers are planning to establish production bases in Thailand and other Southeast Asian countries to provide “localized” services to enhance customer loyalty.
Therefore, through the implementation of this project, the company will help fill the gap in overseas production capacity, achieving a “synchronized” layout of PCB capacity with downstream customer capacity and “proximity” supply, enhancing the company’s overseas supply capacity and service quality, meeting customers’ comprehensive requirements for flexible delivery, low-cost logistics, and high-quality standards, thereby improving customer satisfaction and order stickiness, and further expanding new customers and orders while stabilizing the existing market.
In some high-end customer bidding processes, suppliers with regional production capacity have a competitive advantage. By establishing factories overseas, the company can build a more complete global service network, strengthen strategic cooperation with leading customers, further stabilize order sources, and increase market share and profitability.
3. Feasibility of Project Construction
(1) The expansion of overseas production capacity by major downstream customers provides a platform for the implementation of this project
In recent years, downstream customers of the company have accelerated the “globalization” layout of their production bases in search of lower-cost production factors. Major customers of the company, including LG, Hisense, Haier, Midea, Lite-On, Delta, and EATON, have successively established new production bases in Asia, Europe, and America. Thailand, as an emerging market economy, has undertaken a large number of PCB downstream application industry transfers due to its comparative advantages in land resources, labor costs, and tax incentives.
Major customers such as Hisense, Midea, Haier, Delta, and LG have already established production bases in Thailand, and the new overseas production capacity of these customers has correspondingly increased the demand for PCB procurement.
The location of this “Thailand Production Base Construction Project” aligns with the industrial transfer paths of downstream customers, enabling a “synchronized” layout with the new production capacity of downstream customers, thus providing convenient “localized” supply chain services. It is evident that the expansion of overseas production capacity by the company’s major downstream customers provides a platform for the implementation of this project.
(2) A large number of quality customer resources provide a customer base for the digestion of new capacity
The company has been deeply engaged in the PCB manufacturing field for many years, gaining recognition from downstream customers due to its production capacity, product and service quality, technological innovation, and rapid response capabilities, accumulating a large number of stable domestic and overseas customer resources.
Currently, the company’s major customers include LG, Hisense, Haier, Midea, Lite-On, Delta, and EATON, as well as well-known companies such as Whirlpool, BSH, EMERSON, Melecs, NPE S.r.l, Diehl, Katek, and MIL-Solar. In addition, the company is continuously increasing efforts to explore new application field customers and overseas market customers while maintaining existing customers.
In terms of application fields, while deeply tapping into the potential of traditional markets, the company is also expanding into new tracks. The company is rapidly penetrating into new application scenarios such as new energy vehicles, AI computing centers, satellite internet, industrial control, and medical equipment, continuously improving its customer structure and expanding its coverage. It is evident that the large number of quality and stable customer resources accumulated by the company will help the new capacity of this project to be smoothly digested in the market.
(3) The company has accumulated rich experience in the construction of PCB production bases
The production process of PCB products is complex, with many procedures, and downstream application fields have high requirements for the precision, density, delivery capability, and service quality of PCBs. Therefore, downstream customers place great importance on the production capacity of PCB manufacturing enterprises. The company has accumulated 20 years of experience in the PCB manufacturing field, and as the business scale has grown, the scale of the company’s production bases has also been continuously expanding, accumulating rich experience in the construction and operation of production bases.
In recent years, the company has completed the construction of a “120,000 square meter high-precision multi-layer board and high-density interconnect laminated board production project” in Changzhou, Jiangsu, which officially commenced production at the end of 2022 and was recognized as a “2023 Jiangsu Province Intelligent Manufacturing Demonstration Factory” by the Jiangsu Provincial Department of Industry and Information Technology. This project will establish an overseas PCB production base in Pathum Thani, Thailand, and the rich experience accumulated by the company in the construction of PCB production bases will ensure the smooth implementation and operation of this project.
(4) High industry visibility and good corporate image are beneficial for overseas market expansion
Since its establishment, the company has been engaged in the research and development and manufacturing of PCB products, establishing a high industry visibility and good corporate image, and has been repeatedly recognized by customers as an “excellent supplier” or “strategic supplier,” which provides a significant customer loyalty advantage. According to the “23rd (2023) China Electronic Circuit Industry Ranking” published by the China Printed Circuit Association (CPCA), the company ranks 33rd among domestic enterprises.
In addition, as a qualified PCB supplier for many large domestic and foreign enterprises such as LG, Hisense, Haier, Midea, Lite-On, Delta, EATON, Diehl, HANGJIA, and Bitron, customer recognition further enhances the company’s industry visibility and corporate image. It is evident that the high industry visibility and good corporate image established by the company during its development are beneficial for overseas market expansion.
4. Project Investment Estimate
The total investment for this project is 596.0421 million yuan, with construction engineering costs of 157.5107 million yuan, site decoration costs of 19.1083 million yuan, hardware equipment investment of 384.2769 million yuan, software tool investment of 2.5 million yuan, other engineering construction costs of 29.8292 million yuan, and a contingency fund of 2.8170 million yuan.
5. Project Implementation Entity
This project will be implemented by the company’s wholly-owned subsidiary established in Thailand, AOHONG ELECTRONICS (THAILAND) CO., LTD.
6. Project Construction Period
The planned construction implementation period for this project is 24 months.
7. Project Economic Benefit Analysis
Once this project reaches full production, it can achieve an average annual operating income of 663.2 million yuan, with a pre-tax internal rate of return of 13.77%, and a pre-tax static payback period (including a construction period of 2 years) of 7.39 years, indicating good expected benefits for the project.
8. Project Related Filing and Approval Status
On June 21, 2023, the company obtained the “Overseas Investment Certificate” issued by the Jiangsu Provincial Department of Commerce (Overseas Investment Certificate No. N3200202300643); on July 31, 2023, it obtained the renewed “Overseas Investment Certificate” (Overseas Investment Certificate No. N3200202300809);
On June 28, 2023, the company obtained the “Overseas Investment Project Filing Notification” issued by the Changzhou Development and Reform Commission (Changfa Gai Wai Zi Bei 2023[46] No.); on July 28, 2023, it received the “Notice of Approval for Changzhou Haihong Electronics Co., Ltd. to Establish a New PCB Production Base Project in Thailand” (Changfa Gai Wai Zi Bei 2023[53] No.); on July 15, 2023, AOHONG in Thailand signed a “Land Purchase and Sale Contract” with BORTHONG INDUSTRIES TECHNOLOGY COMPANY LIMITED for the purchase of land for the construction of this project.
On April 4, 2024, AOHONG in Thailand obtained the “Land Use and Operation License,” with a permanent ownership period and the land designated for industrial use.
This report is an excerpt of the public portion. Customized reports for government project approval filings, state-owned assets supervision, bank loans, industrial fund financing, and internal board investment decisions can be consulted with Sihan Industrial Research Institute.
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