Investment Rating - The report does not explicitly state an investment rating for the company Core Insights - The global PCB market is showing signs of recovery in 2024, driven by demand from AI technology, XR, and consumer electronics, with a projected market value of $2.55 trillion [1] - The company, Guanghe Technology, is the leading domestic PCB supplier for servers in China but has a low global market share of only 4.25% as of 2020 [4] - The company's revenue from AI server products accounts for approximately 25% of its server revenue, indicating a growing segment within its product offerings [15] Summary by Sections Market Overview - The global PCB market is expected to grow by 5% in 2024, with a notable increase in demand for multilayer boards, HDI, and packaging substrates [1][2] - The server and data storage PCB market is projected to reach approximately $8.2 billion in 2023 [3] Company Performance - Guanghe Technology's revenue increased from 1.03 billion yuan in 2018 to 2.68 billion yuan in 2023, reflecting a compound annual growth rate (CAGR) of 21% [14] - The company reported a 36.7% year-on-year revenue growth in the first three quarters of 2024 [14] Product and Customer Base - The company primarily focuses on high-layer printed circuit boards, with around 70% of its revenue coming from server PCB products [13] - Major clients include Dell, Inspur, Foxconn, and Quanta Computer, with the top five customers accounting for about 70% of sales [13] Financial Metrics - The gross margin for the company reached 33.3% in the first three quarters of 2024, with a net margin of 18.4% [17] - The company’s net profit attributable to shareholders was 440 million yuan in 2023, with a 51.3% year-on-year increase in the first three quarters of 2024 [18] Operational Challenges - The company faces limited bargaining power with both upstream suppliers and downstream customers due to high customer concentration and reliance on a few key suppliers [22][24] - Despite improvements in gross margin, the company struggles to pass on rising material costs to customers [25]

Investment Rating - The report maintains an "Accumulate-A" rating for the company [1][2] Core Views - The company's performance is driven by increased market orders and optimized sales structure, leading to rapid growth in revenue and profit [1] - For the first three quarters of 2024, the company achieved a revenue of 2.681 billion yuan, a year-on-year increase of 36.69%, and a net profit attributable to shareholders of 492 million yuan, a year-on-year increase of 69.92% [1] - The company is expected to continue its growth trajectory with projected revenues of 3.611 billion yuan, 5.047 billion yuan, and 5.903 billion yuan for 2024, 2025, and 2026 respectively, reflecting year-on-year growth rates of 34.8%, 39.8%, and 17.0% [2] Financial Performance Summary - For the first three quarters of 2024, the company reported a basic earnings per share (EPS) of 1.20 yuan, a year-on-year increase of 57.89% [1] - The gross profit margin for the first three quarters of 2024 remained stable, while the net profit margin improved significantly to 18.37%, an increase of 3.59 percentage points compared to the same period last year [1] - The company’s research and development expenses grew rapidly, reaching 131 million yuan in the first three quarters of 2024, a year-on-year increase of 51.65% [1] Future Projections - The company is projected to achieve net profits of 677 million yuan, 854 million yuan, and 1.042 billion yuan for 2024, 2025, and 2026 respectively, with corresponding year-on-year growth rates of 63.3%, 26.1%, and 22.1% [2] - The projected EPS for the next three years is expected to be 1.60 yuan, 2.02 yuan, and 2.47 yuan, with price-to-earnings (P/E) ratios of 28.4X, 22.6X, and 18.5X respectively based on the closing price of 45.60 yuan on October 30 [2]

Investment Rating - The report assigns a "Buy-A" rating to the company, indicating a positive outlook for its stock performance [5] Core Views - The company is the leading domestic server PCB supplier in China, with server products accounting for nearly 70% of its revenue [3] - The company's revenue and net profit grew by 45.50% and 102.42% YoY in H1 2024, respectively, driven by the rapid development of AI and other technologies [3] - The company's gross margin and net margin improved to 34.34% and 18.73% in H1 2024, reflecting enhanced profitability [3] - The company's Thailand factory is expected to start production by the end of 2024, with an estimated annual sales of 2 billion yuan upon full capacity [5] Company Overview - The company specializes in the R&D, production, and sales of server PCBs, ranking first among domestic PCB companies in China [14] - The company's products are widely used in data centers, cloud computing, industrial internet, AI, 5G communications, automotive electronics, and other fields [14] - The company has established long-term partnerships with well-known domestic and international clients, including Dell, Inspur, and Foxconn [14] Industry Trends - The server/data storage and automotive sectors are expected to be the fastest-growing areas in the PCB industry, with CAGRs of 6.5% and 4.8% from 2022 to 2027, respectively [44] - The global AI server and AI server PCB markets are projected to grow from $4 billion and $1 billion in 2024 to $19.4 billion and $4.85 billion in 2030, respectively, with a CAGR of 30.10% [47] - The company is well-positioned to benefit from the AI-driven growth in server PCB demand, given its strong market position and technological capabilities [47] Competitive Advantages - The company has a deep understanding of server PCB design complexity and performance stability, enabling it to meet high-performance and high-reliability requirements [55] - The company has a comprehensive, flexible, and efficient R&D system, allowing it to provide customized products and rapid response services to clients [56] - The company has a strong cost control management system, ensuring its competitiveness in the highly competitive PCB industry [60] Financial Projections - The company's revenue is expected to grow from 3.611 billion yuan in 2024 to 5.903 billion yuan in 2026, with a CAGR of 17.0% [5] - The company's net profit is projected to increase from 677 million yuan in 2024 to 1.042 billion yuan in 2026, with a CAGR of 22.1% [5] - The company's EPS is forecasted to rise from 1.60 yuan in 2024 to 2.47 yuan in 2026, with a P/E ratio of 21.5X, 17.0X, and 14.0X, respectively [5]