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Chaohua Technology (002288): Double upgrade of production capacity and structure enters 5G era

Chaohua Technology (002288): Double upgrade of production capacity and structure enters 5G era
Company dynamics The company released its 2019 Interim Report on July 25, which disclosed the company’s operating income for the period7.10ppm, an annual increase of -0.17%, the net profit deducted from non-return to mother 0.$ 3.8 billion, an increase of 21 per year.39%.  Comment on the matter. Upgrade of production capacity and structure. The company entered the 5G era. The company was established in 1991 and went public in 2009. Its main business includes copper foil, copper clad laminates and electronic circuit boards.The report summarizes that the company’s copper foil, copper clad laminate and electronic circuit board business revenue accounted for 39%.7%, 29.5% and 27.3%.The company’s strategy 杭州桑拿 gradually focuses on the upstream of the PCB, and grasps the market potential of 5G and new energy.From the perspective of copper foil business, the company’s existing capacity of 12,000 tons of copper foil, the second half of this year will increase production capacity of 8,000 tons, and rely on 4,000 tons of lithium battery copper foil into the lithium battery business.The company and Shanghai Jiaotong University jointly set up a joint research center for electronic materials, focusing on 5-10GHz copper foil and substrate material key process technologies, etc., to provide strong technical support for the subsequent addition of 20,000 tons of high-precision copper foil production capacity.From the perspective of the copper clad laminate production line, the company and Meizhou jointly plan to build an electronic information industry 青岛夜网 base, which includes an additional 20 million high-frequency high-speed copper clad laminate production projects.In addition, the company is optimistic about domestic alternatives to FPC, and through the non-public fundraising projects in 2019, it will deploy 1.2 million square meters of FPC projects, injecting strong momentum into the company’s mid- and long-term development.  Non-recurring profit and loss will affect the short-term performance of the future profitability improvement. From the perspective of profitability, the company’s gross profit margin and net profit margin during the period were 21 respectively.47% and 4.48%, an increase of 4 each year.9 points and -0.63pct; Return on equity (diluted) 2.03%, 0 per year.32pct.The company’s copper foil, copper clad laminate and PCB gross margins were 26.64%, 11.80% and 9.50%. In the first half of the year, the proportion of copper foil and copper clad laminate products increased to 69.15%, an increase of 11 a year.5pct, the product structure improved to improve the company’s gross profit level; the company’s net interest rate fell mainly due to non-recurring profit and loss -576.97 million yuan, compared with 504 in the same period last year.880,000 yuan.The current sales expense ratio, management expense ratio, financial expense ratio and R & D expense ratio are 2 respectively.57%, 4.35%, 4.26% and 4.80%, the total expense ratio during the period is 15.98%, a slight increase of 0 a year.55 points.The company’s inventory turnover days are 200.71, 154 last year.59; accounts receivable turnover days 97.26, same period last year 138.27.From the perspective of the company’s capital structure and debt repayment ability, the company’s asset-liability ratio is 44.24%, basically the same as last year; the company’s current ratio and quick ratio were 1.16 and 0.63. It has decreased every year.The company’s current three major business lines of copper foil, copper clad laminates and PCBs are all in the stage of capacity expansion, product upgrades, new capacity climbs and capital expenditures will have a certain impact on the company’s existing profitability, and the company’s long-term strategic performanceCashing is worth watching.  Profit forecast and estimation We expect the company to achieve operating income in 2019-2021.8.1 billion yuan, 23.5.4 billion, 39.$ 5.5 billion, with annual growth of 20 each.63%, 40.05% and 68.00%; net profit attributable to shareholders of the parent company is 0.7 billion yuan, 1.4.1 billion and 2.USD 4.7 billion, with annual growth of 103.92%, 100.07% and 75.32%; EPS are 0.08 yuan, 0.15 yuan and 0.26 yuan, corresponding to PE is 67.11, 33.54 and 19.13.The first coverage gives an “overweight” rating.