SCC(SZ:002916)2024-03-21 16:00Investment Rating - The report gives a "Buy" rating for the company, indicating a positive outlook for its future performance [1]. Core Views - The company is a leading domestic PCB manufacturer, benefiting from a recovery in demand and an increase in domestic production rates. Its unique "3-In-One" business model encompasses printed circuit boards (PCBs), packaging substrates, and electronic assembly, focusing on electronic interconnection [1][4]. - The company has shown robust revenue and net profit growth over the years, with a compound annual growth rate (CAGR) of 15.54% in revenue and 20.88% in net profit from 2017 to 2023, outperforming the global PCB average growth rate [6][8]. - The report highlights the company's strong position in the AI-driven server PCB market, which is expected to see accelerated upgrades due to the increasing demand for high-performance computing [12][21]. Summary by Sections 1. Focus on Electronic Interconnection and Steady Growth - The company aims to become a world-class integrated provider of electronic circuit technology and solutions, with a strong emphasis on its PCB business while also developing its packaging substrate and electronic assembly operations [4]. 2. AI-Driven Server PCB Upgrades - The global PCB market is expected to recover, with the server PCB segment leading in growth. The company is well-positioned to benefit from this trend, particularly in the context of AI advancements [12][21]. - The report anticipates a compound annual growth rate of 7.6% for server/data storage PCBs from 2022 to 2027, driven by the need for higher data transmission rates and performance [12][16]. 3. Domestic Leader in Packaging Substrates - The company is recognized as a domestic leader in packaging substrates, benefiting from the semiconductor cycle recovery and increasing domestic production rates. The report notes that the global semiconductor sales are expected to grow significantly, which will positively impact the company's operations [21][22]. - The report emphasizes the high technical barriers in packaging substrate technology, where the company is expected to gain substantial market share as domestic production increases [21][24]. 4. Financial Forecast and Valuation Analysis - The company is projected to achieve revenues of 19.46 billion yuan in 2026, with a year-on-year growth of 13.52%. The net profit is expected to reach 2.34 billion yuan, reflecting a growth rate of 21.32% [2][6]. - The report provides a detailed financial outlook, including projected earnings per share (EPS) of 4.56 yuan by 2026, with corresponding price-to-earnings (PE) ratios decreasing from 29 times in 2024 to 20 times in 2026 [2][6]. 5. Market Position and Competitive Advantage - The company ranks among the top in various financial metrics within the PCB industry, holding the 4th position in total assets and net profit among listed companies in the sector [8]. - The company has a strong R&D capability, with significant investments leading to a robust portfolio of proprietary technologies, positioning it favorably against competitors [20].