Solid 1H24 earnings; high copper price to have modest impact in near term

（以下内容从招银国际《Solid 1H24 earnings; high copper price to have modest impact in near term》研报附件原文摘录）
生益科技(600183)
Shengyi Tech released its1H24earnings.Revenue improved by22.2%YoY/10.6%HoH to RMB9.6bn,driven by solid demand of AI servers,growingauto orders and inventory restocking.During the same period,GPM improvedto21.6%(vs.19.3%/19.2%in1H/2H23),benefiting from improving utilizationand a favorable product mix towards high-margin products.Consequently,NPincreased by68.0%YoY/53.1%HoH to RMB932mn.1H24revenue/NPaccounted for47%/43%of our FY24E forecast.From a sequential perspective,Q2revenue/NP were up26%/76%YoY and18%/38%QoQ,while GPMincreased to21.8%(vs.21.3%/18.9%in1Q24/2Q23).The stock is currentlytrading at1SD below5-year historical avg.Given copper price is likely tomaintain at its highs,we think Shengyi’s CCL business will gradually recover.Maintain BUY with TP unchanged at RMB26.41.
By segment,both CCL and PCB segments delivered double-digitgrowth and margin expansion.Shengyi’s CCL/Prepreg sales increasedby20.7%YoY with GPM improving by2.0ppts.PCB revenue increased by23.5%YoY with GPM improving by1.6ppts.Sales from server and automarkets grew;while telecom segment faced ongoing challenges due to softinvestments.According to the mgmt.,PCB revenue from server marketaccounted for38%of the segment sales in1H24,up~20%from1H23.
CCL business is likely to recover on elevated copper price.3M LMEcopper prices peaked above US$10k/t in May before retreating to US$9k/tby late-July.Current price is US$9.3k/t.We believe the impact from copperprice volatility was mild in1H(Shengyi’s CCL GPM was up1.2ppt from2H23).Based on recent channel check,the downstream saw some materialprice adjustment starting from2Q.If copper price maintains at current level,we expect Shengyi’s CCL ASP is likely to increase.We project thecompany’s overall GPM to be21.8%/23.3%in2024/25E(up2.5ppts and1.2ppts each year),on higher sales contribution from AI(Shengyi achievedmass shipment in1H),rising CCL ASP and better consumer sentiment.
Maintain BUY with unchanged TP at RMB26.41,implying a~10%premium to its5-year historical avg.forward P/E,considering its AI upside.2024/25E NP forecasts are slight adjusted by1%/-2%.The stock is currentlytrading at1SD below5-year historical avg.of26x.Maintain BUY.Potentialrisks include copper price volatility and weaker-than-expected demandrecovery.