PCB companies slowed down after a surge in orders in the second quarter, see the rhythm of downstream replenishment in the second half of the year

Printed circuit board (PCB)-related listed companies reported a lot of good news. A reporter from the Financial Association learned from the securities department of some leading companies that the second quarter orders were full and the capacity utilization rate was at a high level. There was even an explosion of orders from March to May. .
Shennan Circuits, Dongshan Precision, etc. have issued interim earnings pre-profit announcements. In addition, Pengding Holdings, Shengyi Technology, and Shanghai Electric Co., Ltd. have increased their net profit by more than 30% in the first quarter. It is worth noting that the performance expectations for the first half of the year have moved to the left, while the stock price trend of the sector has started to move a bit to the right since July.
The reporter learned from a researcher in the electronics industry of a securities firm that due to the large pre-replenishment of inventory and the need to digest, the communication PCB industry chain’s order pull progress from June to July may slow down; the resumption of work and product consumption of overseas automobile, mobile phone and other factories are still affected by the epidemic. Compared with the second quarter, the order recovery may be smaller in the quarter, and the progress of the digestion of new capacity of related products remains to be seen.
Strong orders in the second quarter
The printed circuit board (PCB) is a bridge between electronic components and circuits, and is widely used in communications, consumption and other fields. Since June, some leading listed companies have frequently issued announcements on pre-increasing results for the first half of the year.
Dongshan Precision’s previous semi-annual performance forecast revision announcement shows that the year-on-year growth range in the first half of this year is expected to be revised from the top 10-30% to 25-40%, and non-net profit will increase by 60-80% year-on-year. Shennan Circuit is expected to increase 45%-55% year-on-year in the first half of the year on July 11.
The staff of the Dongshan Precision Securities Department told the Cailian News that the performance revision was due to sufficient orders for related products and better-than-expected operations. As for whether it will be driven by order demand in the third quarter, it depends on the cooperation with customers and is not certain. Regarding the view of the later industry, she only said that “the company itself remains stable.”
As a leading company in the PCB industry, the staff of the Shennan Circuit Securities Department told a reporter from the Financial Association that, on the one hand, with the rapid recovery of production in March, the orders are relatively full, so the overall performance has increased. Orders in the second quarter are still full, and capacity utilization rates are at a high level; in addition, the company has been improving internal operations, including relatively good improvements in production efficiency, and comprehensive factors have promoted the company’s performance growth.
He also said that the company’s business involves 5G base stations, but it does not make the PCB on the mobile phone, so Apple may not be a good judge. The base station will be ordered about a month in advance, and it is still in relatively tight production. This piece will have a certain impact on the increase in gross profit margin, but it may not be as big as everyone thinks.
The staff of Oshikang Securities Department also revealed that since the second quarter, with the increase in demand, the company’s orders from large customers have grown smoothly, and performance is expected to improve.
The strong orders from PCB manufacturers have also driven shipments from upstream equipment factories. One of Han’s Laser’s main businesses is the sale of PCBs and automation equipment. The staff of the company’s securities department said on the phone that PCB companies need to use our equipment, which belongs to their upstream. The current (PCB) sector is relatively good, and it is estimated that the situation will be better this year. On July 14, Han’s Laser’s net profit in the first half of the year increased by 60%-70%. One of the reasons is that PCB business orders and shipments have increased significantly compared with the same period last year.
Yan Fan, a researcher at China Merchants Securities, believes that the demand for stocking in the downstream industry chain of communications and consumer PCBs was strong in the second quarter, especially in April and May, which laid the foundation for the performance of related companies in the first half of the year.
See the replenishment rhythm in the second half of the year
In the first half of the year, the landscape of the PCB industry was unique, and the second half of the year has already started. Combining the views of some PCB companies and brokerage researchers, there are still some uncertain factors in the order growth situation in the just-opened third quarter.
The staff of the Securities Department of Shennan Circuit said that it is not good to make a judgment and forecast for the second half of the year because the market is still changing. At present, the orders in hand are still good, but they may not be comparable to those from March to May. At that time, the output in February was affected, so during the period, it was in a state of bursting orders. The production capacity was full, and orders may not be able to be received. The state of the connection. Starting in June, the previously delayed production capacity was slowly digested and then returned to normal levels.
This view is more consistent with the regular data disclosed by another PCB listed company. I contacted the staff of Pengding Holdings via a public phone call. The phone told the Cailian News reporter, “The situation in the first half of the year is concerned about the semi-annual report and it is not convenient to disclose. We publish monthly reports every month. Because the indirect controlling shareholder of the company is Taiwan A listed company in, they will have this requirement and will make an announcement in order to maintain the fairness of information disclosure.”
Check the consolidated operating income of Pengding Holdings in the second quarter of April, May, and June, which increased by 42.33%, 10.31% and 11.56% respectively. This leading company with a market value of hundreds of billions, the first quarter performance growth was 66.33%, but did not see the announcement of a substantial increase in interim performance.
Yan Fan believes that the demand for Apple and the communications sector is booming in the second quarter and is optimistic about the leading companies on the boom track. Looking at the third quarter, Apple Chain’s current July order volume is relatively stable. Due to the possible delay in the stocking of new iPhones, Apple Chain’s revenue performance from July to August is still uncertain, but after entering the iPhone5G new machine stocking stage, The PCB supply share of the Apple chain tends to concentrate on dominant companies. In addition, due to the large pre-replenishment of inventory needs to be digested, the communication PCB industry chain’s order pull progress from June to July slowed down, but considering the support of the total bidding amount in the second half of the year and the operator’s potential additional capital expenditure plan, the demand for replenishment in subsequent months Can still be expected.
He also mentioned that at the supply-side level, many PCB manufacturers have plans to expand their production capacity. It is expected to start in 2021. The increase in supply-side capacity may also affect the current economic situation.
A reporter from the Financial Associated Press learned from a local PCB industry executive that the industry is an asset-heavy industry, and the investment in a high-end production line is often more than 100 million. Since the beginning of this year, despite the impact of the epidemic, the PCB industry has listed companies in Sihui Fushi, Aohong Electronics, Concord Electronics, Kexiang Electronics, Zhongfu Circuit, Benchuan Intelligent, etc., Han’s CNC, Tongguan Copper, etc. Foil also disclosed its spin-off and listing plan in June.
In recent years, competition in the PCB industry has become increasingly fierce. With the intensified competition of downstream terminal products, the corresponding PCB industry also has a trend of price decline. With the increase in production in the entire industry, the leading manufacturers have close relationships with downstream customers, full orders, and leading technological advantages. How to quickly grab market share and digest the greatly expanded production capacity may become more urgent for second- and third-tier PCB manufacturers in the second half of the year.

Post time: Aug-03-2020