Investment points:
1, iPhone12 is officially released, and pre-sales are very optimistic;
2, the global PCB leader, Apple's business accounts for nearly 80%;
3, R&D investment and product supporting advantages are significant;
4, dual-wheel drive is expected to reach a new level of growth;
5, target price 66.6 yuan, with an increase of more than 20%.
Related targets: Pengding Holdings (002938)
1. iPhone 12 is officially released, and the pre-sale is very optimistic
Recently, iPhone 12 was officially released. A total of 4 new iPhones were released this time, among which iPhone 12 and iPhone 12 Pro started pre-sale last Friday (October 16) and were officially shipped on October 23. Judging from the current pre-sale data, the situation is very optimistic. As of last Saturday night, the delivery time of most of the 12Pro models in major countries was 2-3 weeks, and the orders were very full; all the regular iPhone 12 in China and Europe need to be postponed. Currently, only some ordinary iPhone 12 in the United States and Japan can be picked up on October 23. From the tracked situation, the pre-sale situation is much better than last year, and the pre-sale of iPhone is very guiding and reference for actual needs. Considering that in the future mid-to-high-end phone market, iPhone will have overwhelming advantages. At the same time, there are many highlights of iPhone innovation this time, and we are optimistic about the sales momentum of new iPhone phones.
Industrial Securities believes that Pengding Holdings and others will benefit from the hot sales of iPhones.
2. The global PCB leader, Apple's business accounts for nearly 80% of
Pengding Holdings has grown together with its core customers, promoting the operating income of its parent company Zhending Technology to rank first in the world. According to NTI statistics, from 2014 to 2016, the parent company Zhending Group ranked second among global PCB manufacturers, and after 2017, downstream customers' FPC solutions were upgraded. Pengding Holdings' high revenue growth helped Zhending Group to gain the first place in the global PCB operating income scale.
According to CICC, Apple's business accounts for nearly 80% of Pengding's revenue, making it one of the companies with the highest proportion of Apple's industry chain, among which iPhone accounts for more than half. We are optimistic that iPhone12 will become the most popular iPhone in 6 years, and the iPhone cycle from 4Q20 to 2021 is worth looking forward to.
3. The advantages of R&D investment and product supporting
FPC products have high process barriers, and the company has opened up the gap with its competitors through continuous investment in R&D. FPC products involve more than 100 processes, resulting in low yield and high process barriers. The company cooperates with customers to actively develop new products, and its R&D expenses account for the highest proportion of operating income. From a time perspective, the absolute amount of R&D expenses of company has increased significantly from 690 million yuan in 2015 to 1.35 billion yuan in 2019, with an annual compound growth rate of 18.4%. Compared with competitors, Pengding Holdings' R&D expenses accounted for 5.1% of its operating income in 2019, slightly lower than 5.5% of Taijun, but the absolute amount is 4 times that of Taijun, and the R&D expense ratio is much higher than 2.0%/1.5% of Fujikura and Sumitomo.
In addition, Pengding Holdings has more advantages in localizing the industrial chain than its competitors. Since the FPC order business mainly comes from Apple, most of the downstream assembly links are in the mainland, mainland factories will have more supporting advantages.
4. The dual-wheel drive is expected to reach a new level of growth
Company's SLP product solution is expected to move towards the diversified Android camp. Kaiyuan Securities expects that the Android SLP market will expand to US$2.74 billion in 2022. is one of the few SLP suppliers in the world and is expected to share growth. In addition, the company's HDI products are expected to penetrate into the tablet and notebook terminals of core customers with Mini-LED backlight, entering the 10 billion market. In the long run, the company's industrial chain division of labor has been extended, and with the help of SLP business to extend upstream to the IC carrier board and chip packaging and testing fields. The downstream relies on the SMT capabilities of existing soft boards to enter the module business, and its growth is expected.
5. The target price is 66.6 yuan, with an increase of more than 20%
Kaiyuan Securities expects that the company's net profit attributable to shareholders will reach 30/3.46/3.74 billion yuan respectively from 2020 to 2022, corresponding to earnings per share of 1.3/1.5/1.62 yuan. The current stock price corresponds to a price-to-earnings ratio of 39.8/34.6/31.9 times. CICC maintains outperforming the industry rating and target price of 66.6 yuan.
Potential risks: exchange rate fluctuation risk, core customer sales are lower than expected, and competition is intensified.
Disclaimer: The above content does not recommend stocks and does not constitute investment advice. You can bear the risks of operating based on this. Be cautious when entering the market with risks.
