"Jin Jiyan" Senhai/Author Yang Qi Chaofeng/Editor and Reviewer


In recent years, driven by factors such as intelligence and low-carbonization, PCB (printed circuit board) downstream application industries such as 5G communications, cloud computing, smartphones, smart cars, and new energy vehicles have flourished, driving the continued growth of PCB demand. The main business of Jiangxi Welgo Electronics Co., Ltd. (hereinafter referred to as "Welgo") is the R&D, production and sales of printed circuit boards. Its products include double-sided boards and multi-layer boards. The product types cover thick copper plates and Mini LED optoelectronics. boards, planar transformer boards, etc. The products are used in industrial control, display, consumer electronics, communication equipment and other fields.


Affected by the active optimization of product structure, Welgo's revenue has declined slightly in recent years, but its net profit has increased steadily and its gross profit margin has increased. By the third quarter of 2023, Welgao’s revenue and net profit will both increase year-on-year. At the same time, Will's weighted average ROE is higher than the industry average, with outstanding profitability and obvious investment value. Welgo continues to increase investment in research and development and enhance its technological innovation capabilities, and its process capabilities are superior to the industry's technical level. After years of accumulation, Welgo has strong competitive advantages in product performance, quality, delivery time and customer service, and has accumulated high-quality customer resources. At present, Welgo is gradually exploring emerging fields such as automotive electronics to lay a solid foundation for performance growth.


1. Net profit increased by 22.08% year-on-year from January to September 2023, with ROE higher than the industry average and outstanding profitability.


Printed circuit boards have a wide range of downstream industries, including industrial control, communications, computers, consumer electronics, automotive electronics, network equipment, military aviation, medical equipment, etc. The wide application distribution provides huge market space for the printed circuit board industry and reduces the risks of PCB industry development. In the long term, the overall PCB market demand in various application fields shows a growth trend.


As a manufacturer of single-sided, double-sided and multi-layer circuit boards, Welgo's main business is the R&D, production and sales of printed circuit boards. In recent years, Welgo has seized market opportunities and continuously improved its operating performance and profitability.


From 2020 to 2022, Welgo's operating income was 524 million yuan, 861 million yuan, and 837 million yuan respectively, with an average annual CAGR of 26.35%; net profits were 49.0224 million yuan, 61.5903 million yuan, and 87.2677 million yuan respectively, with an average annual CAGR of 26.35%. is 33.42%.


According to Welgo's 2023 third quarter report data, from January to September 2023, Welgo achieved operating income of 601 million yuan, a year-on-year decrease of 3.74%; net profit was 76.8932 million yuan, a year-on-year increase of 22.08%. Among them, Weigao achieved operating income of 200 million yuan in the third quarter, a year-on-year increase of 8.98%, and its revenue resumed a growth trend; its net profit was 25.3403 million yuan, a year-on-year increase of 48.40%, and its net profit further improved.



It should be noted that since 2022, Welgo's operating income has declined slightly mainly because it has implemented a business strategy of optimizing product structure in order to improve the gross profit margin and operating efficiency of its main business, prioritize orders with relatively high gross profit margins, and control Accept orders with lower gross profit margins.


From 2020 to 2022 and from January to September 2023, Welgo's gross profit margins were 25.14%, 20.29%, 24.00%, and 24.20% respectively.


ROE is an important indicator of a company's profitability and a key criterion for attracting shareholder investment. For listed companies, the higher the ROE, the higher the return to shareholders. In recent years, Welgo's weighted average return on equity has been higher than the industry average, and its profitability is outstanding.


According to Oriental Fortune Choice data, from 2020 to 2022 and from January to September 2023, Welgo's weighted average ROE was 26.73%, 22.45%, 20.61%, and 15.12% respectively.


During the same period, Welgo's comparable companies in the same industry were Shenghong Technology (Huizhou) Co., Ltd., Aoshicon Technology Co., Ltd. (hereinafter referred to as "Oscon"), Guangdong Junya Electronic Technology Co., Ltd., and Guangdong Kexiang Electronic Technology Co., Ltd., Shenzhen Zhongfu Circuit Co., Ltd., Ji'an Mankun Technology Co., Ltd., Jinlu Electronic Technology Co., Ltd., and Huizhou Techuang Electronic Technology Co., Ltd. (hereinafter referred to as "Techuang Technology") weighted average ROE average They are 17.44%, 16.41%, 11.42%, and 3.44% respectively. Because Oscon and Techuang Technology did not disclose financial data for the third quarter of 2023, they were not included in the average value for the current period.



It can be seen that in recent years, Welgo has taken the initiative to optimize its product structure, and its operating performance has declined slightly, but its profitability has continued to increase. In the third quarter of 2023, Welgo's operating income has resumed its upward trend, its net profit has further improved, and its performance has improved. At the same time, Welgo's weighted average ROE in recent years has been significantly higher than the industry average, and its profitability is outstanding.


2. Excellent product quality, frequently recognized by customers with awards, and entered the well-known customer supplier system in six major fields


Rich high-quality customer resources are the basis for Welgo to proactively optimize its product structure. With reliable quality, stable delivery, in-depth technical exchanges with customers, and helping customers reduce costs and increase efficiency, Welgo has formed a word-of-mouth effect among customers, thus accumulating a large number of high-quality customer resources.


In terms of product quality, Welgo strictly supervises quality in all aspects from material selection, process control to product testing, etc., forming its own unique product quality advantages, which has been recognized by customers and has won many awards from customers, including The Quality Cooperation Supplier Award issued by Schneider, the Supplier Conference Award issued by TPV Technology, and the Special Contribution Award issued by Fenda Technology have formed a good reputation in the industry.


Good product performance and quality performance have enabled Welgo to gain high recognition from customers.


In the field of industrial control, Welgo has successfully entered the supplier system of world-leading power supply and electronic control product manufacturers such as Schneider Electric and Delta Electronics, and has cooperated with them for more than ten years; in the display field, Welgo has successfully entered Samsung Electronics, The supplier system of industry-leading high-end LCD panel manufacturers such as TPV Technology and Jetstar Display Technology (Fujian) Co., Ltd., among which TPV Technology and Jetstar Display Technology (Fujian) Co., Ltd. have cooperated for more than ten years.


In addition to its deep roots in the industrial control and display fields, Welgo insists on innovative research and development, constantly develops new product fields and successfully enters the supplier system of well-known domestic and foreign customers.


In the fields of energy storage and fast charging, Welgo has successfully entered the supplier system of world-renowned companies such as Luxshare Precision; in the fields of smart home and smart education, Welgo has successfully entered Topband, Yingqu Technology, Fenda Technology, etc. The supplier system of well-known enterprises in the industry; in the field of communication equipment, Welgo has successfully entered the supplier system of well-known enterprises in the industry such as Tianyi Kanghe and Tyco Electronics (Dongguan) Co., Ltd.; in the field of automotive electronics, Welgo has successfully entered The supplier system of well-known companies in the industry such as Bosch.



Different downstream application fields have different technical requirements for PCBs. Obtaining brand customers in specific fields proves that Welgo's product quality is trustworthy and its technology is advanced in this field, forming a unique competitive advantage.


It should be pointed out that since PCB is a customized product provided according to customer needs, well-known customers usually have more stringent requirements for PCB quality, lifespan, and high reliability. Therefore, they have high requirements for supplier qualifications, a long audit process, and certification time. Once a cooperation is reached, based on comprehensive consideration of technical requirements, product quality, procurement costs, etc., a long-term cooperative relationship will generally be formed with the supplier.


At the same time, Welgo attaches great importance to sales services and implements a customer-centered orientation. For existing key batch customers, it maintains and improves customer satisfaction and improvement in terms of front-end product production and design, mid-end on-time delivery, and back-end 24-hour unconditional after-sales service. viscosity.


In short, with its stable product quality and efficient service, Welgo has accumulated high-quality customer resources and entered the supply chain system of many well-known customers in six major fields.


3. The revenue and proportion of core products continue to rise, and emerging areas such as automotive electronics and optical modules are gradually explored.


At this stage, Welgo mainly focuses on the industrial control and display fields. Its core products are industrial power supplies, thick copper plates in the electronic control field, Mini LED and other display field products.


In the field of industrial control, Welgo's products are mainly used in industrial power supplies and electronic control products, including power supplies, frequency converters, servers, controllers, etc.



In recent years, China has continuously introduced policies to support and encourage the development of advanced manufacturing, providing a good policy environment for the industrial control industry. With the development of the domestic economy, the improvement of residents' income levels and the transformation of the demographic structure, the demographic dividend has gradually weakened. The rise in labor costs will boost the level of automation in the domestic manufacturing industry. The improvement in automation levels will boost the steady growth of the industrial control market. Industrial control equipment The degree of automation and electronics has increased, thus forming a stable market demand for the upstream PCB industry.


In the display field, Welgo's products are mainly used in display terminals such as liquid crystals and backlight modules, including Mini LED, LED displays, etc.



First of all, traditional LCD, as the mainstream display technology in the market, will drive the growth of Welgo's product inventory. Secondly, Mini LED, as a new generation of display technology, will drive the incremental growth of Welgo's products.


According to Arizton data, the global Mini LED market size was only about US$10 million in 2018. As upstream and downstream companies continue to promote the industrial application of Mini LED, the downstream demand for Mini LED is experiencing exponential growth. It is expected that the global market size will expand to 2.32 billion in 2024. US dollars, with an annual compound growth rate of 147.88%; Gaogong LED Research Institute (GGII) pointed out that the domestic Mini LED market will grow to US$2.2 billion by 2020, with an annual compound growth rate of 175%, faster than the global average.


From 2020 to 2022, the sales revenue of Welgo's products used in the industrial control field and display field were 320 million yuan, 528 million yuan, and 568 million yuan respectively, accounting for 65.10%, 66.15%, and 72.46% of the main business revenue respectively. %.



With many years of experience accumulated in the fields of PCB power supply and electronic control, Welgo is currently gradually exploring fields such as automotive electronics and communication optical modules.


In the field of automotive electronics, Welgo focuses on developing charging piles, new energy vehicles, etc.


As the concept of "carbon neutrality" continues to gain global recognition and enforcement, new energy electric vehicles around the world are facing historic growth opportunities. With the rapid growth of new energy vehicle ownership, new energy charging piles as supporting infrastructure have also achieved rapid growth. In terms of policy, charging piles will be included in one of the country's seven "new infrastructure" areas in 2020. According to Prismark's forecast, the global automotive electronics market will reach US$324 billion in 2025.


In the field of communication optical modules, Welgo has developed "double-core board" process technology through continuous research on the skin effect under high-frequency and high-speed conditions, which greatly improves the stability of the thickness of the dielectric layer and achieves low-resistance and low-loss signal transmission. , committed to becoming a high-quality supplier of high-frequency and high-speed boards in the communication field.


In summary, in recent years, the sales revenue and proportion of Welgo's products used in the industrial power supply and electronic control fields have continued to rise. At the same time, Welgo is gradually exploring emerging fields such as automotive electronics and communication optical modules, providing strong support for the continued growth of its future operating performance.


4. The two major factories have differentiated positioning and intelligent management, and the construction of the Thai factory is progressing smoothly.


The PCB industry is characterized by a wide variety of products, a high degree of customization, a wide variety of raw materials, long production processes, and multiple processes. At the same time, due to the precision of downstream electronic products and the characteristics of the production model, unstable quality of printed circuit boards or untimely delivery will affect customers' confidence in the products. Therefore, cost control, product quality stability, and on-time delivery capabilities are manifestations of the core competitiveness of PCB companies.


To ensure customer satisfaction, Welgo has fully implemented lean production and batch control at its Huizhou factory in the Greater Bay Area and its Ji'an factory in Jiangxi Province in the Yangtze River Delta.


First of all, Welgo attaches great importance to automation and intelligence, realizing automatic transfer of materials on the production line and real-time monitoring of data, greatly improving production efficiency. Secondly, Welgo implements the "Amoeba" business management model, attaches great importance to cost control in the production and operation process, uses information management methods to track production data in real time, and continues to reduce costs and increase efficiency every month for each process.


Based on years of accumulation of production management experience, Welgo leverages the advantages and characteristics of each factory and conducts reasonable resource allocation to meet the needs of each customer. Through the evaluation and allocation of production resources, Welgo implements differentiated strategic positioning in its Huizhou factory and Ji'an factory.



The Huizhou factory has been established for many years and has a stable management team and an experienced production technology team. The management team is good at taking advantage of the small but sophisticated characteristics of the Huizhou factory, giving the Huizhou factory the advantages of quick response to customers, short delivery time, and stable quality. Wilco's Huizhou factory is positioned as a model allegro, small and medium-sized batches of thick copper plates, gold finger boards, power boards and other special processes as well as high value-added products.


The Ji'an factory in Jiangxi Province is a "5G + Industrial Internet" application demonstration factory in Jiangxi Province. Welgo's Jiangxi factory realizes digital and intelligent equipment management through the mobile 5G cloud project platform. The mobile 5G cloud project platform realizes network management, remote monitoring management, and signboard management of more than 100 devices, thereby optimizing production plans and improving enterprise equipment deployment rates and production efficiency. Welgo's Jiangxi factory is targeting medium and large quantities of Mini LED boards, automotive electronic boards, high-end multi-layer boards, industrial control boards, power boards, etc.


Through the differentiated positioning and complementary advantages of the two factories, as well as intelligent production management, Welgo is able to continuously enrich product varieties while ensuring product quality, providing customers with multiple varieties, different batches, and high-reliability products, and continuously Improve production efficiency and achieve unique production management advantages.


It is worth noting that the Thailand Welgo factory, a wholly-owned subsidiary of Welgo, completed the infrastructure capping in early October 2023. The current factory construction is progressing smoothly and is expected to be fully completed and put into production in the first quarter of 2024. The Welgo factory in Thailand is Welgo's first overseas factory. Once completed, it will be conducive to actively accepting orders from customers in Southeast Asia and other regions, better serving local customers, and increasing Welgo's overseas sales revenue.


According to the prospectus, from 2020 to 2022, Welgo's export revenue was 165 million yuan, 271 million yuan, and 355 million yuan respectively, accounting for 33.61%, 33.93%, and 45.35% of its main business revenue respectively.


In general, Welgo has implemented lean production and batch control at its two production bases, and has achieved unique production management advantages through differentiated positioning and complementary advantages of the two factories, as well as intelligent production management. In addition, the construction of Welgo's Thailand factory is progressing smoothly and is expected to be put into production in the first quarter of 2024, which will help better serve local customers and increase Welgo's export revenue.


5. Increase investment in research and development to build a complete technical system, and the process capabilities are superior to the industry's technical level


PCB production and manufacturing is a technology-intensive industry. It has high process requirements in the product production process and there are high technical barriers.


As a national high-tech enterprise, a national-level specialized and special "little giant" enterprise, a demonstration enterprise for the deep integration of informatization and informatization in Jiangxi Province, a specialized and special small and medium-sized enterprise in Jiangxi Province, a high-growth science and technology enterprise in Jiangxi Province, and a specialized small enterprise in Jiangxi Province As a giant enterprise, Will attaches great importance to R&D investment to maintain the continued competitiveness of its products.


From 2020 to 2022 and from January to September 2023, Welgo's R&D investment was 23.2143 million yuan, 34.8964 million yuan, 35.1829 million yuan, and 27.3216 million yuan respectively. The R&D investment has continued to grow and a number of patented technologies have been formed. with new products. As of December 31, 2022, Welgo and its subsidiaries owned 119 patents, including 30 invention patents.


Over the years, Welgo has accumulated rich experience in the process technology of thick copper plates, Mini LED boards, optical modules, HDI boards, automotive boards, high-multilayer boards and other products, forming 27 core technologies. Welgo's core technologies are derived from its own R&D accumulation, and it has R&D innovation capabilities, technology application capabilities, and new product development capabilities. The core technology covers the entire process of circuit board production and manufacturing, involving the development of new products, the update of production technology, and processes. Improvements in technology, etc., and possess the completeness of the technical system.


At present, Weil's production process capabilities of high-thick copper plates and Mini LED boards have competitive advantages in the industry and are technologically innovative.


In the field of thick copper plates, Welgo has mastered the core technologies of thick copper plates in terms of reliability and durability, and has excellent technologies in terms of product layer number, aperture, etching factor, maximum copper thickness, minimum line width/line spacing, etc. Advantage, the client can be used for more than 10 years.



In the display fields such as Mini LED, Welgo strives to build a full-process automatic intelligent intelligent manufacturing professional-grade Mini LED-specific PCB customization production line, which has outstanding performance in terms of finished product size, lamp bead size, shrinkage rate, yellowing value, reflectivity, etc. With the common technical level, we have successfully developed a large-scale production printing technology that can stably control the thickness of white ink printing in a narrow parameter condition window, and improve the dynamic contrast, brightness and other display effects of terminal displays. It can be used for ultra-large screens and has outstanding performance. technical advantages.



At the same time, Weigao attaches great importance to the integration of industry and research, and continues to promote the in-depth integration of scientific and technological achievements with industry. Many products have been recognized as "Guangdong Province High-tech Products" and "Guangdong Province Famous High-tech Products". From 2020 to 2022, Welgo's core technology product revenue accounted for 93.90%, 92.67%, and 93.67% of operating revenue respectively, all exceeding 90%.


In the future, Welgo will be product-oriented, customer-centered, and innovation-driven. We will become a trusted partner of customers through technological innovation, production capacity reserves, and diversified flexible production, and create a win-win sustainable development model for all parties. , committed to becoming a benchmark enterprise in the global electronic circuit industry.