Costs dropped! Performance of Chinese PCB companies rises
PCB refers to a printed circuit board, which is an important electronic component, a support for electronic components, and a carrier for electrical connection of electronic components. What is obtained is simply understood as a PCB with a patch. The upstream of the PCB industry chain includes copper foil, copper ball, copper clad laminate, prepreg, gold salt and ink, etc. The overall material cost accounts for nearly 60%.
In the first half of 2022, the overall business performance of PCB industry companies is improving, and the performance growth rate is generally 20%-30%.
In 2021, affected by the price increase of upstream raw materials, companies in the PCB industry generally experience a slowdown in performance growth or a decline in performance.
However, since the beginning of the year, with the continuous decline in the prices of upstream materials such as copper, resin, and glass fiber, the profit margin level of the PCB industry has been improved, and the industry’s profitability has steadily recovered.
Profit of China’s PCB companies growing
As of August 25, about 10 PCB companies have released performance reports for the first half of the year, and the industry’s operations are generally improving.
In the first half of the year, Avary Holding achieved a net profit attributable to its parent of RMB 1.426 billion, a year-on-year increase of 125.24%; SCC achieved a net profit of RMB 752 million attributable to its parent, a year-on-year increase of 34.1%.
Net profit of Dongshan Precision attributable to its parent was RMB 796 million, a year-on-year increase of 31.7%; Suntak’s net profit attributable to its parent was 313 million RMB, a year-on-year increase of 27.81%; parent net profit of Victory Giant Technology was 454 million RMB, a year-on-year increase of 16.01%.
The net profit of WUS Printed Circuit attributable to the parent was 534 million RMB, an increase of 11.16% year-on-year; Kinwong’s net profit attributable to the parent was 465 million RMB, an increase of 0.65% year-on-year, which was lower than the industry average growth rate, but the company’s net profit attributable to the parent in a single quarter in the second quarter was 274 million. RMB, a year-on-year increase of 39.28%.
In terms of gross profit margin, in the first half of the year, the gross profit margin of Avary Holding’s printed circuit board business (hereinafter referred to as “PCB business”) was 19.52%, an increase of 1.27 percentage points over the same period of the previous year; the gross profit margin of SCC PCB business was 27.34%, an increase of 1.45% percentage points.
Dongshan Precision PCB business gross profit margin was 16.51%, an increase of 1.56 percentage points; Suntak PCB business gross profit margin was 20.3%, an increase of 8.97 percentage points; WUS Printed Circuit gross profit margin was 30.8%, an increase of 1.26 percentage points.
The performance of China’s PCB companies rise in 2022
Affected by rising raw material prices, in 2021, the overall operating performance of domestic PCB companies will show a downward trend, and some companies will experience negative growth in operating performance.
In the 2022 semi-annual report, PCB companies have stated that the company’s operating performance has improved due to factors such as the decline in raw materials and cost and expense control.
Divided by cost structure, in the cost structure of PCB, direct materials account for more than 60% of the cost of PCB products, and materials include copper clad laminates, prepregs, copper balls, electronic parts and other materials. Among the above materials, CCL is closely related to the quality and performance of PCB. Its production technology and supply level directly affect the quality of PCB, accounting for 30%-70% of the cost of PCB raw materials, and it is the most important raw material of PCB.
The price of PCB materials has dropped
CCL
The price fluctuation of CCL is mainly affected by the price changes of raw materials such as copper foil, resin and glass fiber cloth. The aforementioned three materials account for about 40%, 25% and 20% of the cost of CCL respectively, and the total impact exceeds 80%. Among them, the components of copper foil price mainly include copper base price and processing fee.
Affected by the rapid development of new energy vehicles, since March 2020, the demand for copper foil for lithium batteries has grown significantly, and the market is in short supply, driving copper prices to continue to rise. In 2020, the spot settlement price of LEM copper has risen from US$4,800/ton at the beginning of the year to a high of US$10,700/ton in 2021, with the highest increase in the range exceeding 120%.
At the same time, the processing fee of superimposed copper foil has risen, the price of copper foil once exceeded 100,000 RMB / ton, and the highest price of lithium battery copper foil exceeded 150,000 RMB / ton. Since 2022, copper prices have continued to fall.
By the end of July, the spot settlement price of LEM copper had dropped to US$7,000/ton, a drop of nearly 30% from the beginning of the year. At the same time, the standard copper foil processing fee has been reduced from a maximum of 24,000 RMB / ton to 20,000 RMB / ton, and the battery-grade copper foil (6 micron) processing fee has also been reduced from 48,000 tons to 40,000 RMB / ton, a decrease of nearly 20%. .
Epoxy resin
At the same time, since the beginning of the year, the prices of resin and glass fiber cloth have also dropped significantly. From January 2021, the price of resin has started to increase, and the spot price of epoxy resin has risen from 23,000 RMB / ton to a high of 40,000 RMB / ton.
By the end of 2021, the spot price of epoxy resin will be 38,000 RMB/ton. In 2022, the price of epoxy resin began to gradually fall, and as of the end of July, it was less than 20,000 RMB / ton, down nearly 50% from the beginning of the year.
Glass fiber cloth
In terms of glass fiber cloth, in December 2020, the price of electronic yarn exceeded the 10,000 RMB/ton mark and continued to rise, reaching a high of 16,000 RMB/ton in June 2021 and continued until September. Since October 2021, the price of electronic yarn has begun to fall, falling below 10,000 RMB/ton since April 2022, and dropped to 6,000 RMB/ton by the end of July, a decrease of 57.14% from the beginning of the year.
Conclusion
Relevant agencies believe that the price increase of upstream raw materials suppresses the profitability level, and the cost transfer helps profit recovery. At present, the bottom of the profitability of the PCB industry has been determined.
