FANGBANG CO.,LTD(688020)2024-05-30 01:00Investment Rating - Maintain OUTPERFORM rating with a target price of Rmb57.00 [4] - Current price is Rmb32.89 as of May 29, 2024 [4] Core Investment Thesis - AI is expected to bring incremental market space for the company, particularly in the field of copper cable shielding materials [12] - The company is a core participant in the copper cable shielding materials sector, with potential growth driven by AI server demand [12][52] - The 2025 PE ratio has been raised to 30x (previously 25x) due to expected growth in cable composite copper foil revenue [12] Financial Performance - Revenue is forecasted to grow from Rmb345mn in 2023E to Rmb872mn in 2025E, representing a 115% increase [4][27] - Net profit is expected to turn positive in 2024E at Rmb4mn and surge to Rmb153mn in 2025E, a 3758% increase [4][27] - Gross margin is projected to improve from 28.2% in 2023E to 34.9% in 2025E [4][27] Market and Industry Analysis - AI-driven demand for electromagnetic shielding film is expected to increase due to higher performance requirements in AI mobile phones/PCs [29][57] - The company is likely to benefit from North American customers' folding products, which will drive demand for FPC/electromagnetic shielding film [29][57] - The market space for AI server cable copper foil shielding materials is projected to reach Rmb420mn by 2025, with high growth potential [52][60] Valuation and Forecast - The 2025 net profit forecast has been revised up by 6% to Rmb153mn, driven by the ramp-up of cable composite copper foil [12] - The company's valuation is supported by its position in the high-speed copper cable market, which is expected to grow rapidly with the adoption of AI technologies [52][60] ESG Considerations - The company uses virgin or recycled materials in its production processes, focusing on environmental sustainability [13] - It adheres to supply chain labor and health and safety standards, emphasizing social responsibility [13] - Governance practices include shareholder rights and board diversity [13]