Shengyi Technology (600183) one of a series of research: Rogers benchmarking research on high-frequency substrate import substitution as a trend of the times

Shengyi Technology (600183) one of a series of research: Rogers benchmarking research on high-frequency substrate import substitution as a trend of the times

Rogers is 杭州桑拿 a leading global supplier of high-frequency copper clad laminates. After studying Rogers’ development strategy, core advantages, and the detailed operation status of the ACS division of the engineering transmission material product line, we believe that the gradual integration of the market in line with the 5G trend will usher in a significant expansion and increase.The scale of the internal market will usher in shuffling. Compared with other high-frequency substrate applications, the expansion of the former leader Rogers ACS Division in the Chinese communications market has been replaced by domestic substitution. It is expected that the domestic construction of 5G macro base stations will be the highest in the year.The revenue scale of the corresponding Rogers ACS product line exported to China is about 42 trillion to 7 billion U.S. dollars, with a median value of 5.6 billion U.S. dollars. Shengyi Technology is continuously transforming the technical basis of microwave and microwave commercialization and is expected to take the lead to benefit from the possibility of import substitution in this field.Cut into most of the supply chain share, it is estimated that Shengyi Technology’s net profit attributable to mothers in 2019-2021 will be 13 respectively.

00, 16.

72, 20.

59 trillion, eps are 0.

614, 0.

790, 0.

973 yuan / share, the current corresponding PE is expected to be 31, 24, 20X respectively, according to 2020 30X PE gives a 6-month target price of 23.

69 yuan / share, maintain BUY rating.

First, the three product lines have advanced advanced engineering materials, and their revenue and profits have steadily expanded.

Rogers is one of the oldest listed companies in the history of the United States. In the early stages of development, it completed the conversion from paper products to special composite materials. In 1992, it changed its main line of development to special polymer materials. After 2000, it entered the epitaxial rapid expansion stage to realize technology.With the strengthening of products and production capacity, we have extensively deployed high-end composite materials.

Rogers products are positioned in a wide range of high-performance engineering materials for downstream applications. At present, the three major product lines are advanced interconnected ACS, elastomer materials EMS, and power electronics PES products are widely used in automotive electronics, new energy vehicles, wireless communications, and industry.Engineering, power energy, consumer electronics and other fields.

Second, both endogenous and epitaxial, the innovation of polymer composites is the core competitive advantage.

Rogers focuses on the pyramid-shaped market, focusing on high performance, differentiation, multi-market applications, and grabbing conventional low-margin markets. It is not Rogers’ market and product strategy. The company entered the stage of rapid expansion of extensions after 2000 to realize technology, products andStrengthening of production capacity.

Polymer composite production technology involves material formulation and high technical barriers, which is Rogers’ core competitive advantage. The company’s continuous innovation and innovation maintain product advantages.

Third, the ACS division benefits from the 5G investment cycle, but faces the threat of domestic substitution.

Rogers’ ACS Advanced Interconnect Division mainly provides high-performance circuit board materials, and the amount exported to China in 2018 was about 1.

At $ 400 million, Rogers estimates that the value of the 5G single base station intermediate substrate is 3-5 times that of the 4G base station. The high-frequency microwave material market is expected to expand rapidly. In 2018, Rogers acquired part of ISOLA’s assets and increased its ACS production facilities and plants worldwide.For equipment, it is planned to increase the capacity of Lamination by 46% between the end of 2017 and 2020, and at the same time do multi-factory product certification, in order to lay out the demand for automotive ADAS and 5G.

Based on Rogers’s past FPC substrate development strategy choices, we believe that this will lead to a substantial expansion of the market and the market structure will usher in reshuffle. The commercialization trend of 5G transition substrates is expected to be a conventional copper clad laminate manufacturer that has achieved technological breakthroughs in ChinaBring the possibility of domestic substitution.

Risk Warning: The price of conventional FR4 is gradually expanding, and the high-frequency commercialization is not up to expectations

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