Kinwong(603228) Ping An Securities·2024-09-25 04:03Investment Rating - The report gives a "Buy" rating for the company, indicating a positive outlook for investment [2][7]. Core Views - The company is a global leader in automotive PCB supply, with a comprehensive product range and rich customer resources. It ranks tenth globally in the PCB industry and third among domestic companies in China. It has become one of the top three automotive PCB suppliers worldwide [5][14]. - The company has achieved steady revenue growth and continuous improvement in profit margins, with a focus on expanding into emerging markets such as automotive and AI [5][21]. - The company is well-positioned to benefit from the accelerating penetration of new energy vehicles and the rapid development of AI technology, which are driving demand for automotive electronics and high-end products [5][6]. Summary by Sections Company Overview - The company, established in 1993 and listed in 2017, is one of the few manufacturers covering rigid, flexible, and metal-based circuit boards. Its products are widely used in various sectors, including servers, communications, consumer electronics, automotive, and industrial medical [14][17]. - The company has a stable shareholding structure, with major shareholders holding a combined 76.33% of shares. The largest shareholder is Shenzhen Jinghong Yongtai Investment Holding Co., Ltd., with a 34.32% stake [19]. Financial Performance - In 2023, the company achieved revenue of 107.6 billion yuan, a 2.3% increase from 2022, while net profit decreased by 12.2% to 9.4 billion yuan due to intensified competition and weak downstream demand. However, in the first half of 2024, revenue reached 58.7 billion yuan, up 18.3% year-on-year, and net profit increased by 62.6% to 6.6 billion yuan [21][22]. - The company's gross margin and net margin for 2023 were 23.17% and 8.47%, respectively. In the first half of 2024, gross margin increased to 24% and net margin to 11.11% [21][23]. Market Opportunities - The PCB market is expected to grow significantly, driven by emerging industries. The global PCB market is projected to reach $72.97 billion in 2024, with a compound annual growth rate (CAGR) of 5% from 2024 to 2028 [26][27]. - The automotive electronics sector is experiencing rapid growth, with the proportion of electronic costs in vehicles expected to rise significantly by 2030. The demand for automotive PCBs is anticipated to increase as new energy vehicles gain market share [32][33]. Product Development and Innovation - The company has been focusing on high-end product development and has made significant breakthroughs in various business segments, including automotive electronics and AI servers. It has established a strong technological innovation capability and continues to expand its product offerings [5][6][7]. - The company has increased its R&D investment, with R&D expenses reaching 6.01 billion yuan in 2023, a 10.03% increase from 2022. The company aims to maintain its leading position in R&D technology [25].