As an important electronic connector, PCB is used in almost all electronic products and is considered to be the "mother of electronic system products". GF Securities believes that the upstream copper foil capacity is squeezed by lithium batteries, causing supply and demand to reverse, and gradually transmitted to the middle and lower reaches, driving the PCB industry chain into the price increase cycle.
Copper foil supply and demand flipping open price cycle
From top to bottom, the industry chain is “raw material – copper clad laminate – PCBâ€. The middle and upper reaches of the raw material copper foil and copper clad laminate industry have high concentration and strong bargaining power, while the PCB industry as a whole is scattered, but the dominant manufacturers focus on high-end products. High bargaining power.
The domestic new energy vehicle volume will bring lithium battery copper in short supply, and the price will increase first; the lithium battery copper foil will attract the standard foil manufacturer to switch production, the overseas production capacity will be superimposed on the domestically transferred part of the foil production capacity, the standard foil supply will tighten and the price will rise. Foil and standard foil processing fees alternately increase prices; price increases along the industrial chain to the midstream, CCL manufacturers repeatedly raised prices, glass fiber cloth, resin and other raw materials continue to rise; downstream PCB manufacturers are driven by cost increases to follow up, At this point, the price increase caused by the upstream copper foil is transmitted to the entire industrial chain, and the PCB price increase cycle is coming back.
Industry will accelerate integration
Limited by factors such as capital investment, personnel reserve, and environmental impact assessment, copper foil manufacturers have difficulty in building new production capacity, and it takes a long time for core production equipment to rely on imports to cause new capacity to be released. At the same time, most of the ongoing expansion plans are not ready for production in the near future. Although the tight supply of copper foil can be partially eased, it is difficult to reverse it. It is expected that supply will remain tight until the end of 2017.
In addition, affected by the upstream supply side reform, routine shutdown and maintenance, the prices of other raw materials such as fiberglass cloth and resin have recently led the trend, and the price increase period in the first half of the year has a high probability.
For upstream copper foil and mid-half CCL manufacturers, they will benefit from the high performance flexibility brought by high bargaining power. As long as the price increase cycle continues, the upstream and upstream manufacturers will have the strongest profit maximization; for downstream PCBs, the logic of electronic growth Forever, you need to find a superior manufacturer that can take advantage of the price increase cycle and grasp the opportunities for industry consolidation and growth.
Investment Advice
At the current time, the cycle resonates with growth. On the one hand, we are optimistic about the upstream and downstream raw material manufacturers, and we recommend the focus on Shengyi Technology, Jinan Guoji and NORD. On the other hand, we are optimistic about the PCB advantage manufacturers who grasp the opportunities of industry consolidation and growth, giving priority to Shenghong Technology, Yidun Electronics, Dongshan Precision, Ultrasonic electronics, Jingwang Electronics.
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