Dingyang Technology (688112)
Electronic measuring instruments have a wide range of applications, with high prosperity in the downstream and new scenes, and the industry will speed up again
As an important basic tool, electronic measuring instruments can be called the "eyes" of electronic engineers. They can transform physical quantities into electrical signals for observation and application. From the perspective of market scale, according to the data of markets and markets, it is expected that the market scale of the global testing and measuring instrument industry will reach US $32.3 billion by 2024. In terms of application scope, electronic measuring instruments are applied to many links in downstream industries, covering many steps from simulation, prototype design to production, manufacturing and optimization. From the perspective of downstream industries, electronic measuring instruments are widely used in semiconductor, new energy, automobile, national defense, scientific research and other scenarios. The accelerated development of several downstream is expected to accelerate the high demand for electronic measuring instruments. Specifically, 1) semiconductors and consumer electronics: multiple steps such as chip design, manufacturing and sealing test, and R & D, production and optimization of electronic products; 2) Intelligent connected vehicles and new energy: automatic driving, vehicle networking, battery and charging infrastructure, etc; 3) National defense and aerospace: radar, missile, military communication and other directions; 4) Mobile communication and Internet of things: 5g, 6G standard setting, R & D, production and scale manufacturing. At the same time, the research, development and technology upgrading in the field of Internet of things need to be based on electronic measurement technology; 5) Scientific research and teaching: electronic measuring instruments are the basic tools for science and engineering majors. China's investment in higher education continues to increase, and the relevant demand is expected to rise further in the future.
China's electronic measurement industry is scarce, and the performance inflection point is accelerated by the three driving forces
Dingyang technology is a scarce target of China's electronic measurement enterprises. It has been deeply cultivated in the industry for more than 20 years and is led by technical executives. At the technical level, the company focuses on R & D investment in core technologies and patent accumulation. At present, there are about 90 R & D personnel, accounting for nearly 40%. At present, the company has preliminarily realized the independent innovation of chips and algorithms, helping the evolution of products from economy to high-end. By the third quarter of 2021, the company had 123 invention patents and 30 software copyrights. In terms of performance, from 2017 to 2020, the company's operating revenue increased from 122 million yuan to 221 million yuan, with a CAGR of 22.5%. In the first three quarters of 2021, the company achieved 48% revenue growth and ushered in a revenue inflection point. In terms of net profit attributable to the parent company, from 2017 to 2020, the net profit attributable to the parent company increased from 20 million yuan to 54 million yuan, with a CAGR of 40%. In recent three years, the company's comprehensive gross profit margin has always been maintained at more than 50%, and the gross profit margin of new products such as spectrum analyzer and vector network analyzer has reached 70%. The acceleration of the company's performance mainly benefits from three driving forces: 1) strong demand in the downstream market, high prosperity in the global general electronic measuring instrument market and continuous expansion of application scenarios; 2) The further release of the demand of China's relevant industrial chains and the superposition of policy incentives to accelerate the development of China's market; 3) With continuous R & D investment and technological breakthrough, medium and high-end products are continuously introduced into the market.
Technological innovation opens up the medium and high-end market, strengthens self-developed brands, and comprehensively upgrades channels
The four main products of electronic measuring instruments account for 77% of the market scale. In terms of product expansion, the company has realized the coordinated development of four products and channel reuse. From the perspective of technological innovation, 1) in terms of digital oscilloscope, the company has three core technologies such as "high bandwidth and low noise oscilloscope technology"; 2) In terms of signal generator, the product bandwidth reaches the high-end level of 20GHz commonly used by European and American enterprises; 3) The frequency measurement range of spectrum analyzer is currently the highest level in China. At the same time, it is also the only manufacturer with vector network analyzer product line in China. In terms of market development, 1) using technological innovation to open the medium and high-end market, the proportion of revenue of related products has increased steadily, from 70 million yuan in 2018 to 116 million yuan in 2020, and the proportion of total revenue has increased from 53% to 65%; 2) Strengthen independent brands. From 2018 to 2020, the company's independent brand revenue increased from 117 million yuan to 195 million yuan, accounting for 90% from 76%. In terms of channel upgrading: 1) while consolidating and strengthening the advantages of products in European and American markets, the company will strengthen the expansion of Chinese market; 2) At present, the company has established a professional sales team in China to explore channels, focusing on increasing promotion in modern electronic information industry intensive areas such as the Yangtze River Delta, the Pearl River Delta, Beijing, Tianjin and Hebei. The proportion of part of the company's revenue in China has increased from 20% in 2019 to 24% in 2021h1. In the future, under the two pronged strategy, the growth of the Chinese market is expected to accelerate again.
Investment advice
As the standard bearer of China's electronic measuring instrument industry, dingyang technology has benefited from the dividends brought by the localization of basic tool chain and the upgrading of industrial chain for a long time while expanding the application of downstream industries. Through technological innovation, we will continue to break through medium and high-end products, improve the value and gross profit margin of single products, strengthen the building of self-developed brands and the comprehensive upgrading of Chinese channels, and are expected to realize the simultaneous rise of volume and price in the future. We expect the company to achieve revenue of 340 / 514 / 778 million yuan from 2021 to 2023, with a year-on-year increase of 53.9% / 51.4% / 51.3%; The net profit attributable to the parent company was 90 / 147 / 230 million yuan, with a year-on-year increase of 67.4% / 63.3% / 56.4%. It was covered for the first time and given a "buy" rating.
Risk statement
1) Technology R & D breakthrough is less than expected;
2) Policy support is less than expected;
3) Downstream demand is lower than expected;
4) Loss of core technical personnel.
