Sytech(600183) Zhao Yin Guo Ji·2024-08-29 02:00Investment Rating - The report maintains a "BUY" rating for Shengyi Tech with a target price of RMB26.41, implying a potential upside of approximately 49.2% from the current price of RMB17.70 [5][3]. Core Insights - Shengyi Tech reported solid earnings for 1H24, with revenue increasing by 22.2% year-on-year (YoY) to RMB9.6 billion, driven by strong demand in AI servers and automotive orders [3][4]. - The gross profit margin (GPM) improved to 21.6%, benefiting from better utilization and a favorable product mix [3]. - Net profit surged by 68.0% YoY to RMB932 million, accounting for 47% of the full-year forecast [3][4]. - The report highlights that both the CCL and PCB segments experienced double-digit growth and margin expansion [3]. Financial Performance Summary - Revenue for FY24E is projected at RMB20.85 billion, reflecting a 25.7% YoY growth, with net profit expected to reach RMB2.17 billion, an 86.7% increase YoY [4][12]. - Gross margin is anticipated to improve to 21.8% in FY24E and further to 23.9% by FY26E [4][15]. - The report indicates that the PCB revenue from the server market accounted for 38% of segment sales in 1H24, marking a 20% increase from 1H23 [3]. Segment Performance - CCL and Prepreg sales rose by 20.7% YoY, with GPM improving by 2.0 percentage points [3]. - PCB revenue increased by 23.5% YoY, with GPM improving by 1.6 percentage points [3]. - The report notes ongoing challenges in the telecom segment due to soft investments [3]. Market Conditions - The report discusses the impact of copper prices on Shengyi's CCL business, noting that prices peaked above US$10,000 per ton before retreating to US$9,300 per ton [3]. - It is expected that if copper prices stabilize, Shengyi's CCL average selling price (ASP) will likely increase, contributing to overall GPM improvements [3].