SCC(SZ:002916) Zhao Yin Guo Ji·2024-08-29 08:23Investment Rating - The report maintains a "Hold" rating for the company with a target price of RMB 106.4, unchanged from previous assessments [2][3][6]. Core Insights - The company reported strong performance in the first half of 2024, with revenue increasing by 38% year-on-year to RMB 8.3 billion, and net profit rising by 108% to RMB 0.987 billion, driven by improved gross margins and cost optimization [2][3]. - The growth was attributed to robust demand in artificial intelligence, upgrades in Eagle Stream, stable automotive orders, inventory replenishment in consumer electronics, and expanded profit margins [2][3]. - However, a slowdown in consumer electronics demand is anticipated in the second half of 2024, with revenue and net profit for the first half expected to account for 52% and 56% of the full-year forecasts, respectively [2][3]. Revenue Summary - The company achieved a revenue of RMB 16.051 billion for FY24E, with a year-on-year growth of 19% [13]. - The gross profit is projected to be RMB 4.091 billion, with a gross margin of 25.5% [13]. - Net profit for FY24E is estimated at RMB 1.762 billion, reflecting a year-on-year increase of 26% [13]. Segment Performance - The PCB segment, which accounts for 58% of sales, grew by 25% year-on-year, while the substrate segment saw a remarkable 94% increase [2]. - The PCBA business also performed well, with a 42% year-on-year growth, benefiting from increased PCB sales [2]. Financial Projections - The report projects a revenue of RMB 18.216 billion for FY25E and RMB 20.813 billion for FY26E, indicating continued growth [13]. - The net profit is expected to rise to RMB 2.174 billion in FY25E and RMB 2.791 billion in FY26E [13]. Valuation Metrics - The current stock price corresponds to a forward P/E ratio of approximately 30 times for FY24, which is considered reasonable compared to the historical average of 32.5 times [2][3]. - The report highlights that the estimated gross margin for the second half of 2024 will return to around 25%, influenced by weakening demand and rising raw material costs [3].