| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 68.25 | -71 |
| Intrinsic value (DCF) | 188.50 | -19 |
| Graham-Dodd Method | 30.93 | -87 |
| Graham Formula | 143.22 | -39 |
Shennan Circuit Company Limited (002916.SZ) is a leading Chinese printed circuit board (PCB) manufacturer with nearly four decades of industry expertise since its founding in 1984. Headquartered in Shenzhen, China's technology hub, the company specializes in designing, manufacturing, and selling high-quality PCBs, packaging substrates, and electronic assemblies for domestic and international markets. Operating in the critical Technology Hardware, Equipment & Parts sector, Shennan Circuit serves as a foundational supplier to various electronics industries, providing essential components that enable modern electronic devices. The company's comprehensive product portfolio positions it as a key player in China's electronics manufacturing ecosystem, supporting everything from consumer electronics to industrial applications. With its strategic location in Shenzhen and longstanding industry presence, Shennan Circuit has established itself as a reliable partner for electronics manufacturers seeking advanced PCB solutions. The company's evolution from CATIC Shenzhen Shennan Circuit to its current identity reflects its continuous adaptation to market demands and technological advancements in the rapidly evolving electronics industry.
Shennan Circuit presents a mixed investment profile with several positive fundamentals offset by sector-specific challenges. The company demonstrates solid profitability with net income of CNY 1.88 billion on revenue of CNY 17.91 billion, translating to a healthy net margin of approximately 10.5%. The diluted EPS of CNY 2.82 and dividend per share of CNY 1.15 indicate shareholder-friendly capital allocation. However, the company operates in a highly competitive PCB industry with a beta of 1.29, suggesting above-market volatility. The capital expenditure of CNY -2.53 billion significantly exceeds operating cash flow of CNY 2.98 billion, indicating aggressive investment that may pressure short-term liquidity despite adequate cash reserves of CNY 1.55 billion. The debt-to-equity position appears manageable, but investors should monitor the capital-intensive nature of PCB manufacturing and potential cyclical demand fluctuations in the electronics sector.
Shennan Circuit operates in the highly competitive global PCB market, where Chinese manufacturers have gained significant market share through cost advantages and scale. The company's competitive positioning is strengthened by its nearly 40-year industry experience and strategic location in Shenzhen, China's electronics manufacturing epicenter. This geographic advantage provides proximity to major customers and suppliers within the Pearl River Delta manufacturing cluster. Shennan Circuit's comprehensive product portfolio spanning standard PCBs, packaging substrates, and electronic assemblies allows it to serve diverse customer needs across multiple electronics segments. However, the company faces intense competition from both domestic Chinese PCB manufacturers and international players. The PCB industry is characterized by price sensitivity, rapid technological obsolescence, and significant capital requirements for advanced manufacturing capabilities. Shennan Circuit's scale (market cap of CNY 127 billion) provides some competitive insulation, but it must continuously invest in technology upgrades to maintain relevance. The company's ability to serve both domestic and international markets diversifies its revenue base but also exposes it to global trade dynamics and supply chain disruptions. Competitive advantages include established customer relationships, manufacturing expertise, and China's integrated electronics ecosystem, though these must be balanced against rising labor costs, environmental regulations, and potential trade tensions affecting the electronics supply chain.