Investor Net Zhang Wei
With the improvement of automobile intelligence and networking, more and more attention has been paid to the perception layer technology that provides safety assurance for driving. Recently, driven by Tesla and other companies, millimeter wave radar, as one of the core components of the sensing layer, has become a hot spot in the automotive industry, and the actions of A-share listed companies related to it have also attracted investors’ attention.
A few days ago, Huizhou Zhongjing Electronics Technology Co., Ltd. (hereinafter referred to as “Zhongjing Electronics”, 002579. SZ), a manufacturer of new electronic components, said in an interaction with investors that the company continued to develop vehicle-mounted millimeter wave radar and laser radar application products, and the product samples have been approved by relevant customers.
According to the previous announcement, Zhongjing Electronics estimated that the net profit attributable to the parent company would be a loss of 145 million yuan to 155 million yuan in 2022, and the non-net profit would be a loss of 172 million yuan to 182 million yuan. It remains to be seen whether Zhongjing Electronics can turn losses into profits through new products in 2023.
First loss in 11 years after listing
According to the company’s official website, Zhongjing Electronics was founded in 2000 and listed on the Shenzhen Stock Exchange in 2011. The company’s main business is the research and development, production and sales of printed circuit boards (PCBs), including rigid circuit boards (RPCB), flexible circuit boards (FPC), flexible circuit components (FPCA and IC carrier boards), etc.
Financial data shows that the main business revenue of Zhongjing Electronics in the first half of 2022 is 1.57 billion yuan, of which the revenue of rigid circuit boards (including HDI boards) accounts for more than 66%, the revenue of flexible circuit components accounts for 17%, the revenue of flexible circuit boards accounts for more than 12%, and the rest comes from IC carrier boards and other products.
Composition of main business income of Zhongjing Electronics
It is understood that the main raw materials of printed circuit board include copper clad plate, copper ball, copper foil, semi-solidified sheet, gold salt, etc. Since April 2020, the domestic copper price has been fluctuating and rising, and the production cost of printed circuit board has hit a record high in the first half of 2022 due to the rising labor force and other factors. This has also become one of the main reasons for the performance loss of Zhongjing Electronics in 2022.
According to the announcement, Zhongjing Electronics expects that the net profit attributable to the parent company will be a loss of 145 million yuan to 155 million yuan in 2022, down 198% to 205% from 148 million yuan in 2021; It is estimated that the non-net profit deduction will be a loss of 172 million yuan to 182 million yuan, a decrease of 230% to 237% from 133 million yuan in 2021; Basic earnings per share ranged from a loss of 0.24 yuan per share to 0.25 yuan per share, up from 0.25 yuan per share in 2021.
According to Wind data, this is the first annual loss in the performance of Zhongjing Electronics since its listing in 2011. In fact, in 2021, the profitability of Zhongjing Electronics has shown a certain decline. In 2021, the company’s main business income was 2.945 billion yuan, up 26% year on year; Net profit was 148 million yuan, down 9% year on year.
In the performance pre-loss announcement, Zhongjing Electronics also mentioned that the new factory of Zhuhai Zhongjing Fushan, the subsidiary, was in a climbing stage and was still in a loss state. In addition, the overall capacity utilization rate in 2022 was insufficient, and the profitability of the subsidiary Huizhou Zhongjing and Zhongjing Yuansheng declined. The above factors led to the performance loss in 2022.
Zhongjing Electronics said that with the continuous strengthening of the development and investment of new products and new customers, the mass production of IC packaging substrate projects and the continuous release of the capacity of Zhuhai Zhongjing Fushan new factory, it will inject vitality into the company’s future competitiveness, profitability improvement and enterprise development.
The business prospect of millimeter wave radar is unclear
The growth of the main business is sluggish, and the millimeter wave radar business of Zhongjing Electronics has attracted investors’ attention.
Millimeter wave radar is a radar sensor working in the millimeter wave frequency band, which can accurately detect the range, speed, azimuth and micro-motion of the target. With the rise of automobile automatic driving technology, millimeter wave has become one of the important guarantee conditions for automatic driving because of its strong penetration ability, and is not affected by rain, fog, dust and other environmental factors.
On the other hand, millimeter-wave radar has received great attention, which is also related to the promotion of the new energy vehicle giant Tesla. According to several media reports, Tesla has submitted a vehicle change application to the European regulatory authority to configure high-precision 4D millimeter wave radar in the future HW4.0 hardware system.
It is pointed out that with the further intellectualization and networking of automobiles, the market of millimeter wave radar is expected to grow rapidly in the future.
However, for the printed circuit board industry, the current impact of millimeter wave radar may be limited. Geshi Automotive Research Institute believes that the impact of millimeter wave radar is mainly concentrated in RF front-end, information processing system and back-end algorithm, of which the RF front-end accounts for about 40%, and the printed circuit board, one of the RF front-end modules, accounts for about 10%, in addition, the information processing system accounts for 10%, and the back-end algorithm accounts for 50%.
An investor asked Zhongjing Electronics whether its copper clad technology could enter the field of automotive millimeter wave radar. Zhongjing Electronics replied that the company continued to develop automotive millimeter wave radar and laser radar application products, and the product samples have been certified by relevant customers.
Zhongjing Electronics also said that the company mainly provides supporting products and services for smart equipment brand manufacturers. According to the announcement, the brands that Sino-Beijing Electronics cooperates with include Samsung, Huawei, BYD, Dajiang, etc. At the same time, it is also the supplier of A-share listed companies such as Shenzhen Tianma, Lixun Precision, Oufeiguang, Xinwanda Trude, etc.
Regulatory letter on the reduction of shareholding by major shareholders
In the secondary market, the share price of Zhongjing Electronics has increased significantly in the past year.
According to Wind data, since hitting a recent low of 5.3 yuan/share in May 2022, Zhongjing Electronics has risen all the way up to 16 yuan/share in August 2022. As of the close of February 28 this year, Zhongjing Electronic News was 12.04 yuan/share, up 12% in 2023, and the company’s market value was 7.3 billion yuan.
Share price trend of Zhongjing Electronics in the past year (monthly chart)
During the period of stock price rise, Huizhou Jinggang Investment Development Co., Ltd. (hereinafter referred to as “Jinggang Investment”), the major shareholder of Zhongjing Electronics, reduced its holdings of Zhongjing Electronics through block trading, and the result was a regulatory letter issued by Shenzhen Stock Exchange. According to the Shenzhen Stock Exchange, from December 6, 2022 to February 1, 2023, Jinggang Investment reduced its holdings of 5.82 million shares of Zhongjing Electronics through block trading, with a reduction amount of 61.3108 million yuan.
The Shenzhen Stock Exchange said that the Beijing-Hong Kong investment behavior violated the Shenzhen Stock Exchange’s Stock Listing Rules (Revised in 2022) and the Self-Regulatory Guidelines for Listed Companies No. 1 – Standardized Operation of Main Board Listed Companies and other relevant provisions. Shenzhen Stock Exchange requires Beijing and Hong Kong Investment to learn lessons and make timely rectification to prevent the recurrence of the above problems.
According to the investigation of the equity relationship, as of the announcement date (February 24, 2023), Jinggang Investment and its actual controller Yang Lin held 27.77% of the shares of Zhongjing Electronics. Jinggang Investment is the largest shareholder of Zhongjing Electronics, and Yang Lin is also the actual controller of Zhongjing Electronics. Other shareholders of Zhongjing Electronics also include Guangdong Hengkuo Investment Company, Guangdong Henghang Industrial Investment Fund and other institutions. (Produced by ThinkFinance) ■
Investor Net Zhang Wei