Glass fiber cloth/copper foil: the revenue and gross profit margin are higher, and the July boom was a new high in history, indicating that the downstream copper clad laminate inventory went to the end and the new cycle was coming.
The upstream raw materials of copper clad laminate mainly include copper foil, glass fiber cloth and epoxy resin, respectively accounting for 30%, 50% and 20% of the copper clad laminate cost(based on fr-4 1.5 standard copper foil).except for the resin price is relatively stable, copper foil and fiberglass cloth have been in a continuous climb since last year (except the 17Q2 industrial chain to clear inventory stage) :
(1) glass fiber cloth: Q2 economic downturn, July hit a record high, the second half year is expected to be new high again, the stock price reaction is obvious.
Since China glass fiber cloth manufacturers stop production at beginning of 2017 for maintenance, glass fiber cloth price increase a lot from the end of Q3, from 3.2 yuan/m in July 2016 years to 8.7 yuan in April 2017, close to an all-time high of 10.6 yuan/m in ten years, related businesses profitability also significantly improved, glass fiber cloth integrated gross margin from 12% of 2016 central jumped to 23.39% in Q1 of 2017.
Due to the early stage, the downstream of the copper clad laminate high prices lead to supply chain inventory,and appear CCL clear inventory stage and no sales for upstream glass yarn, electronic glass fiber cloth price is weaker, driving vendors get weak revenue in Q2, in Q2 2017 glass fiber cloth total revenue 2.138 billion, fell by 5.31%, gross margin is 24.03%, the promotion is limited compared with Q1 2017.
But in July revenue for the fiberglass cloth is stron again, hit a record high of 7.7578 million new Taiwan dollars, rised up 9.09%, is expected in the second half year the electronic boom is related with further production stop, the taiex related groups surged.
(2) copper foil: Q2 revenue and gross interest rate fell from the previous month, but rose in July. As mentioned above,in late Q2 the downstream copper clad laminate supply chain clear inventory, TG in Q2 performance and gross margin fell by 0.72% and 0.38%, corresponding to the domestic industry chain survey data that standard foil processing fee down to 27000 yuan/ton at the beginning of Q3 from 40000 yuan/ton in March.
End of the industry chain clear inventory in Q2, especially lithium electricity copper foil was raise first, Q3 standard foil raise, RongKe (4989. TWO) and JinjuKaifa (June 8360. TWO) income is rose in July. According to jinjuKaifa, with the advent of Q4, demand for lithium copper foil will further strengthen.
Copper clad laminate: the upstream pull down the boom is expected to ascend further. As stated earlier, copper clad clear inventory is end in Q2, revenue from Taiwan side can see quarter-on-quarter increase in July, and by historical comparison, Q3 is pulled goods season every year, especially considering the upper glass fiber cloth and copper foil Q3 price boost, the boom of copper-clad laminate is expected to further enhance, for example of KB deep layer board, the price raise two consecutive times, plank price increment accumulated 20 yuan/copies.
PCB board: Q2 revenue is stronger month by month, Taiwan's performance compared with mainland China
Taiwan's PCB industry has been strengthening in 2017. In Q2 of 2017 revenue is $47.64 billion TW dollars, up 2.31% year-on-year, from 44% increased, and integrated gross margin was 12.01% in Q2, down 0.24% year-on-year, the boom of PCB traditional climax in Q3, so limited Q2 performance year-on-year increase in line with expectations, but you can see since Apri the revenue is stronger month by month, in July of Q3 revenue data is sequential, year-on-year increase obviously, explain the complex copper price for PCB Q2 performance boost, upstream prices also confirms previous adverse judgment on PCB industry.
Performance you can see, on the other hand, through the analysis of continent PCB whole, maintain rapid growth, by more than 70% in Q1 of 2017.The growth rate of PCB in mainland China is far superior than that of Taiwanese manufacturers. It further confirms our early view that the profit improvement of PCB in this round is attributable to two centralization: one is that the PCB industry chain is centralized to the mainland; The other is that due to the upstream supply constraints, domestic PCB capacity is going to concentrate. Therefore, the mainland PCB industry is positive.
Therefore, through the above analysis, we think the whole PCB industry chain(copper foil, glass fiber cloth - copper clad laminate- PCB) the boom of H2 is positive, the biggest uncertainty comes from the end of Q4 2017 or early 2018, China will have lithium electricity copper foil discharge capacity, whether capacity can be released on schedule, and whether supply can cover demand growth may need further observation.
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