Polarity Reversed! The Price Of Copper Clad Laminates Has Fallen By More Than 30% During The Year, And The Performance Of PCB Manufacturers Will Continue To Be Released

Jiwei.com reported that since March and April, the unit price of bulk commodities has continued to fall, and the futures prices of precious metals such as copper and aluminum have also continued to plummet, which has also relieved production pressure for many companies whose raw materials are precious metals, especially copper clad laminates and PCBs. and other manufacturers. The reduction in the cost of raw materials will also lead to an increase in the gross profit margin of the company.

As time enters the window period of semi-annual reports, many companies have successively released semi-annual report performance forecasts and semi-annual report data. According to the author's statistics, the financial data of CCL manufacturers and PCB manufacturers are divided into two levels. Among them, CCL manufacturers have net Profits have generally declined, while the performance of most PCB manufacturers has been significantly improved.

The volume and price of copper clad laminates fell

As we all know, commodity futures are going up all the way in 2021, and the prices of many varieties hit a record high last year, which can be described as a rare bull market for commodities in several years. However, copper, aluminum, etc. are one of the main raw materials for many traditional manufacturing industries. The skyrocketing futures prices have caused the production costs of such enterprises to rise sharply.

Taking copper as an example, one of the core raw materials required for the production of CCL is copper foil, which accounts for 30%-50% of the cost of CCL, and the rise in copper prices directly puts the production cost of CCL manufacturers under pressure.

However, fortunately, the CCL industry is highly concentrated, high-end products are more concentrated, and CCL manufacturers have stronger bargaining power with downstream. Not only will the cost be passed on to downstream PCB manufacturers smoothly, but it will also benefit a lot from the price increase.

However, this situation reversed in the fourth quarter of last year. On the one hand, the prices of major raw materials for copper clad laminates such as copper prices stabilized and the price of epoxy resin fell sharply. On the other hand, under the influence of the industry cycle, the price of copper clad laminates appeared natural fall back.

This situation is even more apparent in the first half of this year. After the copper price hit a new high in April, it continued to plummet. As of August 5, the LME copper price has fallen back to the level of June last year. It is currently in a volatile consolidation, but according to market expectations, LME copper may have a further downward trend.

The plummeting price of raw materials has greatly hurt CCL manufacturers. How good was last year, how miserable this year is. According to the disclosed results of the interim report, without exception, there has been a sharp decline in net profit.

First of all, the CCL leader Kingboard Laminate is expected to achieve a net profit of about HK$1.7 billion to HK$2 billion for the six months ended June 30, 2022, a decrease of about 40% to 49% compared with the same period last year. The main reason is that the sales volume and unit price of the copper clad panel products produced by the Group both decreased.

Jin An Guoji (9.670, -0.07, -0.72%) expects a net profit of 55 million yuan to 80 million yuan in the first half of 2022, down 85.35% to 89.93% year-on-year. The company said that the industry market boom has declined, and the company's copper clad laminate product sales and product prices have fallen significantly year-on-year, resulting in a larger year-on-year decline in the product's gross profit margin.

According to data from the semi-annual report of Nanya New Materials (29.000, 0.12, 0.42%), both revenue and net profit declined. The company achieved operating income of 1.877 billion yuan in the first half of the year, a year-on-year decrease of 5.82%, and net profit of 82.8955 million yuan, a year-on-year decrease of 62.36%. . The reasons for the decline in performance are the same as those in the above two situations. Nanya New Materials said that the industry market was sluggish, the demand in the downstream terminal market was lower than expected, and the unit price and sales volume of the company's products decreased year-on-year.

Significant improvement in PCB performance

The volume and price of copper clad laminates have fallen, and downstream PCB manufacturers have benefited significantly. After all, the main core raw material of PCB is copper clad laminates. Therefore, last year, many PCB manufacturers faced several price increases of copper clad laminates. Gross profit margins plummeted.

This year, the gross profit margin of PCB manufacturers has improved significantly. Jiweiwang has analyzed it before. In the first quarter of this year, the gross profit rate of more than half of the PCB manufacturers has increased month-on-month.

It should be noted here that copper prices have not yet begun to plummet in the first quarter. The real plummet of LME copper prices was in the second quarter, with a drop of more than 20% in a single quarter. That is to say, the gross profit margin of PCB manufacturers was higher in the second quarter than in the first quarter. Go up one step.

From the financial data of Jingwang Electronics (25.390, -0.34, -1.32%) and Sihui Fushi (43.390, -0.21, -0.48%), which have been disclosed in the semi-annual report, the above point of view can be mutually confirmed. Among them, Jingwang Electronics achieved a net profit of 465 million yuan in the first half of the year, an increase of 0.64% year-on-year, but the company achieved a net profit of 296 million yuan in the second quarter, an increase of 43.24% year-on-year and a month-on-month increase of 65.92%; gross profit margin was 21.96%, an increase of 2.46% month-on-month %.

In the first half of the year, Sihui Fushi realized a net profit of 97.213 million yuan, a year-on-year increase of 16.42%. Among them, the net profit in the second quarter was 62.4558 million yuan, a year-on-year increase of 34.74% and a month-on-month increase of 65.9%.

It is not difficult to find that the performance of PCB manufacturers and CCL manufacturers began to diverge in the second quarter of this year. In this regard, Jingwang Electronics said that the overall trend of bulk raw material prices in the first half of this year was downward, reducing some cost pressures. Due to the impact of the inventory cycle, the pressure on the company's cost side has been gradually released since March.

In addition, Pengding Holdings (33.820, 1.70, 5.29%), Shiyun Circuit (18.300, 0.21, 1.16%), Eaton Electronics (7.390, 0.08, 1.09%) also reported good results this year.

Among them, the net profit of Pengding Holdings in the first half of the year was about 1.393 billion yuan to 1.457 billion yuan, an increase of 120%-130% year-on-year; the net profit of Shiyun Circuit in the first half of the year was 120 million yuan to 150 million yuan, an increase of 55.89% to 85.28% year-on-year; Eaton Electronics achieved a net profit of 116 million to 130 million yuan, a year-on-year increase of 55.56% to 74.33%.

Investigating the reason, the above three companies stated that the main reason is that the price of raw materials has dropped, the production cost has decreased, and the product selling price and comprehensive gross profit margin have improved.

A relevant person in charge of a PCB manufacturer said: "In terms of raw materials, starting from February this year, prices have been reduced one after another. For example, raw materials such as copper foil, copper plate and epoxy resin have a greater impact on us, and the current price reduction has returned to last year's lowest. There is a certain degree of relief to the pressure on our rising costs.”

"The price reduction of copper clad laminates this year is about 30%, but downstream customers are also requesting price reductions, and it depends on how customers adjust product prices." The person in charge of the manufacturer added, but now the control of the epidemic is gradually relaxed, and there are also some stimulus policies. Therefore, we are relatively optimistic about the market in the second half of the year.