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We have enough orders and have well increase in Year 2020

May 30, 2018

We have enough orders and have well increase in Year 2020

On May 7, a PCB (printed circuit board) manufacturer in Foshan, Guangdong, was on the verge of failure due to high debt. In March of this year, an old PCB manufacturer in Panyu, Guangzhou, also announced its dissolution due to a broken capital chain.

The person in charge of the PCB manufacturer interviewed by the reporter revealed that the low-end PCB mainly depends on lowering the unit price to obtain customers, and the gross profit margin is mostly below 10%. Due to its weak position in the industrial chain, on the one hand, it has to provide downstream customers with ample billing periods, and at the same time it cannot obtain "convenience" from relatively strong suppliers. Once the funds cannot be recovered in time, the liquidity of the manufacturers will inevitably be under tremendous pressure.

The sudden new outbreak of pneumonia has plunged many small and medium PCB manufacturers into such a dilemma. But at the same time, PCB leading companies have attracted market attention because of their outstanding performance. With the continuous upgrading of technology and technology, the survival of the fittest is expected, but the epidemic has evolved into a catalyst, and the reshuffle of the PCB industry has accelerated.

Small and medium-sized manufacturers encounter liquidity problems

Mr. Pang currently operates a “plate factory” with a scale of more than 100 people in Guangzhou. He told reporters that he has been in this industry for more than 20 years and has operated factories for 13 years. Although the competition in the industry has been fierce, the impact of the epidemic especially made him feel that his life is not easy.

"Especially for overseas orders, because of the epidemic situation, many of them were stopped by customers. We took the raw materials and labor, but did not receive payment." Mr. Pang revealed that in the PCB industry, especially small and medium-sized manufacturers, the downstream The customer's billing period is relatively long. After the order is stopped, not only can the payment not be recovered, but also have to bear more than 1 million labor and factory rental costs every month, and the liquidity pressure is very large.

"PCB is an asset-heavy industry, and upstream raw material suppliers are very strong. Especially small and medium-sized board factories, they rarely get the suppliers' care. By the time of settlement, you will be granted a maximum of one week or 10 days. But The account period we give to our customers is very long, 6 or 7 months are common, and it is not uncommon to delay for more than 1 year. Once in the middle of the month, if there is no payment for the incoming goods, it cannot be paid to the supplier, and the capital chain is in trouble. . "Zhang, the person in charge of a PCB manufacturer in Shenzhen, also revealed.

Mr. Zhang's PCB board is mainly supplied to customers in the two major industries of electronics and electrical appliances. He pointed out that the technical threshold of low-end PCB boards is low and the competition is fierce. Manufacturers can only obtain customers through unit price. "This has caused the gross profit margin of small and medium-sized board factories to be very low, usually below 10%," Mr. Zhang said that low profits and weak market discourse have made it difficult for small and medium-sized PCB board manufacturers to survive.

The sudden new pneumonia outbreak further exacerbated their operational difficulties. On May 7, the industry spread a "notice" issued by a PCB manufacturer in Foshan, Gaoming Haowang Circuit Board Co., Ltd., to suppliers and creditors. The manufacturer stated in the "Notice" that "due to the difficulty of fund recovery and the impact of the epidemic, the company's operations have been difficult, the debts are heavy, and it is facing bankruptcy." The reporter contacted an attorney responsible for his claims on the afternoon of May 11 and confirmed the news.

In March before this, a manufacturer named "Wannuo (Guangzhou Panyu) Circuit Board Co., Ltd." located in Panyu District, Guangzhou City announced its dissolution, which was also affected by the epidemic situation. . According to publicly available information, the company is an old PCB factory with a history of more than 20 years.

Epidemic accelerates industry reshuffle differentiation

PCB is a supporting body of electronic components, widely used in various electronic products, and it is also an indispensable component. At present, the commonly used classification method divides PCB into single panel, double panel, mult board, HDI board, IC package carrier board, flexible board, rigid-flex combined board, special board and other categories.

According to statistics from the China Electronic Circuit Industry Association, the output value of China's printed circuit board industry in 2019 was 227.499 billion yuan, of which mult boards accounted for 45.97% of the total output value, HDI accounted for 16.59%, packaging substrates accounted for 3.29%, and flexible boards accounted for 16.68%. Mult boards have become the main products for PCB applications, and HDI, flexible boards, etc. are the latest industry development directions.

Mr. Zhang's so-called "high-end and low-end" points can be reflected in the above classification and downstream applications. Shennan Circuit (002916.SZ), Hudian (002463.SZ), Shengyi Technology (600183.SH) and other industry head companies are mainly targeted at relatively high-end downstream customers such as communications, automobiles, and consumer electronics.

The profit margin of high-end PCB board is much higher than that of low-end products. According to the data in the 2019 annual report, the gross profit margin of the PCB business of Shennan Circuit was 27.98%, the gross profit margin of Shanghai Electric Power Co., Ltd. was 30.42%, and the gross profit margin of the PCB business of Shengyi Technology also reached 28.92%.

Under the epidemic, "a few happy and a few sad" can be described as a true portrayal of the PCB industry: small and medium-sized manufacturers are struggling, but the head company's performance in the first quarter is very dazzling. In the first quarter, Shennan Circuit's net profit increased by 48.19%, the profit of Shanghai Electric Power Co., Ltd. increased by 31.68% year-on-year, and the first quarter net profit of Shengyi Technology also increased significantly by 36.09%.

But Xinyunda PCBs have a good quality and good service, so we have the stable customers which release the stable orders, and our products from 2layers~64layers, righd flex PCBs, Rogers etc, so we have enoug orders and can 100% meet with the delivery time, quality and service.


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