Core Viewpoint - The company, Shenzhen South Circuit Technology Co., Ltd. (深南电路), reported strong performance in its PCB and packaging substrate businesses due to increased demand from computing power upgrades and the automotive electronics market [1] Group 1: Business Performance - The overall capacity utilization rate of the PCB business remained relatively high in the first half of the year [1] - The packaging substrate business saw a significant month-on-month increase in capacity utilization due to a recovery in the storage market [1] - The company's comprehensive capacity utilization is still at a relatively high level [1] Group 2: Project Developments - The first phase of the Guangzhou packaging substrate project is set to connect in the fourth quarter of 2023, with continuous improvements in product line capabilities [1] - The company is steadily ramping up production capacity and has secured bulk orders for BT and some FC-BGA products, although it is still in the capacity ramp-up phase [1] - The losses at Guangzhou Guangxin are expected to narrow on a quarter-on-quarter basis by the first half of 2025 [1] Group 3: Investment and Production - The total investment in the Thailand factory amounts to 1.274 billion RMB (approximately 127.4 million USD), and it has commenced trial production [1]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company turned a profit in Q1 2025 with a net profit attributable to shareholders of 0.09 billion yuan, marking a significant recovery from a loss of 1.98 billion yuan in 2024 [3] - Revenue for Q1 2025 reached 15.80 billion yuan, a year-on-year increase of 13.77% and a quarter-on-quarter increase of 7.76%, achieving the highest quarterly revenue since its listing [3] - The report anticipates a slight downward adjustment in profit expectations for 2025 due to market demand recovery, while profit expectations for 2026 and 2027 have been raised [3] Financial Performance Summary - In 2024, the company reported revenue of 58.17 billion yuan, a year-on-year increase of 8.53%, but incurred a net loss of 1.98 billion yuan, a decline of 193.88% year-on-year [3] - The projected net profits for 2025, 2026, and 2027 are 2.03 billion yuan, 4.39 billion yuan, and 5.83 billion yuan respectively, with corresponding EPS of 0.12, 0.26, and 0.35 yuan [3][6] - The company's revenue from PCB business in 2024 was 43.00 billion yuan, with a gross margin of 26.96%, while the packaging substrate business generated revenue of 11.16 billion yuan, reflecting a year-on-year growth of 35.87% [4][5] Business Segment Insights - The PCB business is undergoing structural adjustments to improve profitability, with a focus on optimizing production processes and expanding overseas markets [4] - The packaging substrate business is in a critical phase for order release and customer expansion, particularly for ABF boards, with plans to complete overseas product certifications in 2025 [5]

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [2] Core Views - The company is experiencing short-term pressure on production ramp-up, but AI-driven growth is expected to build long-term momentum [5] - The company achieved a revenue of 17.907 billion yuan in 2024, a year-on-year increase of 32.39%, and a net profit of 1.878 billion yuan, up 34.29% year-on-year [5] - The data center sector has seen significant order growth, becoming the second downstream market to reach a scale of 2 billion yuan in PCB business after the communication sector [5] - The company is focusing on deepening core technology and accelerating the introduction of high-end products [5] - Revenue projections for 2025-2027 are 21.159 billion yuan, 23.518 billion yuan, and 25.635 billion yuan, with corresponding net profits of 2.557 billion yuan, 3.041 billion yuan, and 3.549 billion yuan [5] Financial Performance Summary - Revenue for 2023 is projected at 13.526 billion yuan, with a revenue growth rate of -3.33% [4] - The company expects a net profit of 1.398 billion yuan in 2023, with a net profit growth rate of -14.81% [4] - Earnings per share (EPS) is projected to be 2.73 yuan for 2023, with a price-to-earnings (PE) ratio of 26.00 [4] - The return on equity (ROE) is expected to be 10.60% in 2023 [4] - The company anticipates a gross margin of 23.4% for 2023 [7] Market Performance - The company's stock has shown a market performance of -11% over the last 12 months compared to the CSI 300 index [3]