Author | Gelonghui Chen Xiao
Data support | Pythagorean Big Data
On the evening of October 29, Shengyi Technology (600183.SH), a leading leader in the domestic high-frequency copper clad plate industry, released its first three quarterly results.
The company's revenue in the first three quarters was 9.47 billion yuan, a year-on-year increase of 5.53%, and its operating profit was 1.3 billion yuan, a year-on-year increase of 31.67%, and its net profit attributable to the parent company was 1.04 billion yuan, a year-on-year increase of 28.66%. Among them, Q3's single-quarter revenue was 3.5 billion yuan, a year-on-year increase of 10.44%, a month-on-month increase of 8.01%, operating profit was 530 million yuan, a year-on-year increase of 54.49% and a month-on-month increase of 16%, and a net profit attributable to shareholders of 413 million yuan, a year-on-year increase of 49.12% and a month-on-month increase of 8.93%.
Overall, this is a report card that is not too good but not bad. According to many securities firms, it is generally in line with expectations.
But what is extremely surprising is that when the market opened in the morning, Shengyi Technology quickly increased its volume after opening dived , and it was pressed to the limit down in less than 5 minutes. It was once blocked for 10 minutes. Fortunately, the bottom-buying funds continued to be continuously, and the bears failed to effectively close the board. Since then, the bulls and bears have started a fierce game on the limit down line all day. However, as the market continues to weaken, the stock still failed to escape the fate of being blocked. As of the closing, the stock price was 23.01 yuan, plummeting 10.01%, with a full-day turnover of 2.267 billion yuan, a turnover rate of as high as 4.3%, and its market value evaporated by 5.8 billion yuan in one day.
Judging from today's continuous huge selling orders and trading volume, the market's short-term judgment of Shengyi Technology has obviously turned from crazy bullishness before, and it would rather hit the limit and close the board as soon as possible.
So, what problems does this financial report of Shengyi Technology reveal, making the market so pessimistic?
1
Why is the market not satisfied?
data shows that Shengyi Technology started with the production of copper clad plates, and its main business has not changed until now. The company was successfully listed on the Shanghai Stock Exchange in 1998, and it is considered a veteran technology company.
Currently, the company mainly produces high-end electronic materials such as copper clad plates, semi-cured sheets, insulating laminates, metal-based copper foil boards, resin-coated copper foils, and covering films. The products are mainly used for the production of single and double-sided circuit boards and high multi-layer circuit boards, which are widely used in home appliances, mobile phones, automobiles, computers, aerospace industries, communication equipment, and various mid-to-high-end electronic products. The company's main customers include Huawei , ZTE , Nokia , Bosch, Lenovo , Sony, Samsung, Philips and other internationally renowned companies.
Since 2013, thanks to multiple positive historical development dividends such as China's 4G era, consumer electronics and automobile sales explosion, Shengyi Technology has also been pushed to a height of attention by capital. The company's stock price has increased by more than 10 times so far in the 4G era, and its market value has once exceeded 65 billion yuan. It is one of the big white horses recognized by the market.
However, in the past two years, with the deterioration of the macroeconomic environment and the slowdown in the domestic economy, and the continued decline in the growth rate of mobile phone and automobile sales, Shengyi Technology has also encountered a speed change cycle from running to trotting, which is the bottleneck of development.
Recall this financial report from Shengyi Technology . In addition to the continued high growth in net profit, there are some other data worth mentioning.
The company's estimated PCB board business revenue was 716 million yuan in Q3, an increase of 24% year-on-year, and its net profit margin exceeded 15%. Drive the company's gross profit margin and profit increase. Q3 gross profit margin increased by 1.31pct month-on-month to 28.45%, and net profit margin increased by 0.05pct month-on-month to 12.73%, indicating that the company's profitability has increased quarter by quarter.
At the same time, thanks to the increase in demand for high-level communication boards and the expansion of the server switch market, the price of copper clad plate has also rebounded in the near future, and from the current trend, it will continue to maintain an upward trend in the future, which will have a certain increase in the company's Q4 profit.
In addition, the net cash flow generated by the company's operating activities was 1.402 billion yuan, an increase of 83.4% year-on-year, mainly due to the increase in cash received from selling goods and providing services in this period, as well as the decrease in cash paid for purchasing goods and receiving services.
In addition, the company's inventory turnover days were 75 days, an increase of 1 day on a month-on-month basis, and the accounts receivable turnover days were 114 days, a decrease of 3 days on a month-on-month basis, indicating that the operating indicators are improving.
But some indicators show that the company still has some problems:
First of all, the most important thing is that although the company's operating income in the first three quarters increased month-on-month and medium-term, it only had a single-digit growth rate of 5.53%, which has been showing a double-digit decline for the third consecutive year. Although the revenue growth rate in Q3 alone was 10.44%, it is still relatively small. This growth trend is not actually healthy.
And this is not a special period. Its revenue growth has been slowing down since Q3 2017, completely reflecting the high growth characteristics that the industry should have. There was negative growth in Q4 in 2018 and Q1 this year, which will undoubtedly shake investors' confidence.
At the same time, some small problems can be seen from the third quarter report:
In the first three quarters, although the company's advance payment and prepayment increased significantly compared to the beginning of the year, the actual amount is actually almost negligible compared to the company's revenue scale of nearly 10 billion yuan, which shows to a certain extent that the company is more conservative in its future operations.
In addition, the management expenses increased significantly in Q1-Q3 in 2019, with a year-on-year increase of 130.31%. The company explained that it was mainly the increase in employee salary and salary expenses brought by the expansion of subsidiary Shengyi Electronics and the commissioning of Jiangsu Shengyi, but this is really inconsistent with the company's revenue growth rate.
In fact, the author believes that the stock price of Shengyi Technology has exploded after , and the most important problem is the revenue growth rate.
For the entire technology industry, where the average revenue scale growth rate is dozens of points, the single-digit performance growth rate of Shengyi Technology , the leader in high-end copper clad, is really too low to be able to show off.
After all, the revenue scale has not been increased for a long time, so profit growth is difficult to sustain. A big white horse who has never been full is easy to fly when running with a heavy load, and sometimes it is easy to get into trouble if the brakes are too strong.
2
What should I think about the future?
If we look at the track where Shengyi Technology is located, the industry's growth logic is very hard.
Shengyi Technology 's biggest business highlight is that the positioning is perfect: First, in the 5G communication era, the scale of communication base station laying is at least doubled compared with the 4G era, second, consumer electronics is also facing an update period with the 5G era, and third, the era of unmanned automobiles in China is coming, and these three aspects are pointing to the fact that copper clad board circuit boards will take a huge step in demand and quality levels.
In addition, the high-end copper clad laminate market has been monopolized by foreign manufacturers for a long time. my country has always had a weak voice in this regard. Due to the influence of trade frictions, the country has a clearer affirmation of the domestic substitution strategy of high-end materials. In the future, the trend of domestic substitution of high-end copper laminate will inevitably accelerate. As one of the core leaders of high-frequency copper clad plate in my country, Shengyi Technology will be worry-free in the future order business.
In the company's performance report, we can see that the company's high-frequency copper clad plate Q4 delivery continues to climb upward, but it is still restricted by the shortage of production capacity. The company is currently increasing its production capacity, and the Dongcheng Phase III, technical transformation project and Jiangxi project with a total amount of about 700 million yuan are accelerating construction.
In the long run, if the new production capacity of Shengyi Technology can be implemented as scheduled in the near future, then the company's future business scale will hope to achieve high growth recovery, and there is still a lot of hope in the future.
In addition, there are also potential negative effects of the promotion of 5G communication base stations and the continuous decline in domestic automobile sales.
However, the recent reduction of executives and major shareholders in Shengyi Technology has also been criticized by many market investors. Data shows that since June this year, company executives He Ziqiang and Chen Renxi have successively reduced their holdings at the high stock price several times, with a cumulative amount of more than 23 million yuan.
On October 14, Guangdong Foreign Trade Development Co., Ltd., one of the major shareholders, which accounted for 7.14% of the company's total share capital, also issued an announcement of share reduction, intending to use centralized bidding or bulk trading to reduce holdings at market prices by no more than 1% of the company's total share capital ratio within 6 months from the date of the announcement of the share reduction plan.
Although the shareholders' share reduction is not large, since there is a beginning, no one can guarantee whether there will be shareholders who will announce their share reduction in the future, which undoubtedly has an adverse impact on market confidence to a certain extent.
3
Conclusion
From the identity of the leading white horse of Shengyi Technology and the high expectations that investors will achieve great success in the 5G era, such a report card is difficult to submit.
But judging from the market space of its track and the future increase in production capacity drives revenue growth, there is actually no need to be too pessimistic. As of now, the dynamic price-to-earnings ratio of Shengyi Technology is 42.45 times, which is slightly higher than the average valuation of the leading level of the communication hardware industry in recent times. However, as the core leader of domestic high-end copper clad plates, this valuation level is actually within an acceptable range.
As for today's stock price explosion, will it provide everyone with an opportunity to get on the bus? That is, wise people have the wisdom to see.
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