Shenghong Technology: Nantong Shenghong expansion project will be implemented, with an additional production capacity of 1.99 million square meters after reaching full capacity

On May 6, Shenghong Technology stated at the 2021 annual performance briefing that the company's current capacity utilization rate is over 85%, and the Nantong Shenghong expansion project will be implemented in the future, adding 1.99 million square meters of new capacity after reaching full capacity. The Nantong Shenghong high-end multi-layer, high-end HDI printed circuit board and IC packaging substrate construction project plans to invest approximately 3 billion yuan, of which 1.5 billion yuan comes from the issuance of shares to specific objects in 2021. The funds raised are currently under construction.

In addition, Shenghong Technology said about the production situation in the second quarter: "The company's second-quarter utilization rate target is more than 85%, and the capacity utilization rate of 80%-90% is the company's normal level. The poor logistics in the epidemic area has led to the delay of delivery of some products, but the company has full orders on hand, and production and operation activities are carried out in an orderly manner as planned. The impact of the epidemic is controllable."

In response to the recent significant decline in graphics card prices, Shenghong Technology pointed out that the market price of graphics cards is mainly determined by supply and demand, and the price of PCB graphics card boards has no direct correlation with the market price of graphics cards. The company's graphics card board sales price has not dropped significantly.

According to it, the company's net profit in Q4 2021 declined month-on-month mainly due to the increase in raw material prices and the ramp-up of new HDI production capacity. In addition, inventory clearance, year-end parties, foreign exchange, equity incentive expenses and taxes also had a certain impact on the fourth-quarter performance.

Among them: (1) Raw materials: Most of the raw materials used in the fourth quarter are high-priced inventory from the third quarter. In addition, due to the weakening of downstream demand for mobile phones, laptops, etc., the prices of end products did not increase synchronously with the increase in material costs, resulting in a decline in order gross profit margin; on the other hand, the fourth quarter is the traditional peak season. In order to welcome the industry peak season, the company increased its inventory level, resulting in a large number of high-priced raw materials, so the fourth quarter was greatly affected by raw materials; (2) Part of the HDI production capacity was put into production in Q3 2021, and Q4 2021 was in the ramp-up stage. Fixed costs such as equipment depreciation and labor and energy costs were relatively high.