Guangzheng Hangsheng: There is a large innovation and domestic alternative space in the field of FPCB

On June 18th, Guangzheng Hang Seng Securities recently released this week's electronic industry research report. The report analyzes the field of fingerprint identification, flexible circuit board and LED market. It is estimated that the fingerprint identification industry will exceed 10 billion yuan in 15 years. The growth rate of former smart terminals is slowing down, but there are still some areas in the field of sensing and FPCB. The LED lighting market is starting up with big innovation and domestic alternative space.

The following is a summary of the research report:

Investment points:

our opinion

In the first half of the year, in addition to the smart terminals and LED industry chain that we have been optimistic about, the performance of the basic components is also outstanding, in line with our judgment on integrated circuits and FPCBs (flexible circuit boards) at the end of last year. At present, the growth rate of smart terminals is slowing down, but there is still a large innovation and domestic replacement space in the field of sensing and FPC; the LED lighting market is launched, the price of upstream chips is driven by demand, the orders in packaging and application are full, and the performance of the whole industry chain during the year It is expected to perform well.

Apple iPhone5S launched fingerprint recognition function, currently only supports APP STORE shopping, we think this is Apple's important layout and small-scale experiment in the field of mobile payment. In the fourth quarter of 2013, the scale of third-party mobile payment transactions nationwide reached 745 billion yuan, an increase of more than 150% in the two consecutive quarters. A large number of mobile transactions require a safe and convenient payment method, and fingerprint recognition brings a good user experience to this small payment method. We estimate that the industry scale will exceed RMB 10 billion by 15 years.

The flexible printed circuit board can be freely bent, wound, folded, and arranged according to the spatial layout requirements, so that the electronic product has certain flexibility, such as various smart bracelet products. In recent years, flexible circuit boards have grown rapidly. In 2012, the output value of flexible circuit boards increased by 17.2%. By 2016, the output value of flexible circuit boards (FPCB) will increase to 13.245 billion US dollars, with a compound growth rate of 19%. At present, the market concentration is relatively high, and the production capacity is mainly concentrated in Japanese, Korean, and American manufacturers. The mainland China is only 5.02%, and the domestic replacement space is huge. The transfer of the intelligent terminal industry chain to China has brought unprecedented strategic opportunities to the domestic FPC industry.

The price of LED lighting products has been declining, coupled with the durability and energy-saving features, the cost-effectiveness of LED bulbs has greatly outperformed energy-saving lamps. Coupled with the implementation of the national phase-out of incandescent lamps, the LED lighting market is starting. International companies such as Philips and Osram have increased their efforts to promote the sale of LED lighting products. According to Digitimes, the global LED lighting output value will reach US$35-40 billion in 2014. China's downstream applications and channels have obvious local advantages. The mid-stream packaging capacity has also shifted to China. The upstream chips account for a small proportion, but the technology and scale barriers are breaking through.

We are optimistic about the rapid growth of LED lighting market for about 3 years, and domestic chip, packaging and application channels will benefit in all aspects.

risk warning

Technological breakthroughs did not meet expectations; domestic component yields improved or customer certifications were slower than expected; market competition intensified.