Dongguan Dingtong Precision Metal Co.Ltd(688668) (688668)
Main points:
After 18 years of deep cultivation, we have a deep foundation in precision manufacturing technology.
Dongguan Dingtong Precision Metal Co.Ltd(688668) is a professional supplier of communication connector components and automobile connector components. Since its establishment in 2003, it has been deeply engaged in the field of connector precision manufacturing. With its unique advantages in mold development and leading precision processing technology, it has established a solid cooperative relationship with Tyco, Amphenol, MOLEX, Avic Jonhon Optronic Technology Co.Ltd(002179) and other well-known connector manufacturers in China, and the income scale is growing.
The construction of 5g base station has been steadily promoted, the demand for new energy vehicles is high, and the connector welcomes the development opportunity.
The construction of 5g base stations has come out of the trough of prosperity, and the incremental demand of stock jointly promotes the growth of the scale of the communication market. It is estimated that the scale of China’s communication connector market will reach US $9.5 billion in 2025. The demand for new energy vehicles is high, the value of single vehicle connector is several times higher than that of traditional fuel vehicles, and the automotive connector industry has ushered in the development opportunity of both volume and price.
Focus on the highly customized track, create high gross profit, and provide considerable power by raising investment and expanding production.
The company has unique advantages in mold design and development and precision processing technology. Under the background of high customization of industrial products, the company has cast the characteristics of high gross profit. The company’s future development plan is clear, the share of communication business in downstream customers is expected to continue to increase, the automotive business takes the opportunity of new energy customers to transform to Tier1, expand product categories and customer coverage, and expand the capacity of IPO raised investment projects to provide an important guarantee for further growth of scale.
Investment advice
As a high-quality connector manufacturing enterprise in China, the company’s communication and automobile businesses benefit from the promotion of 5g construction and the release of demand for new energy vehicles, which are expected to maintain a high growth rate and have a promising future growth. We expect that the company’s EPS from 2021 to 2023 will be 1.36 yuan, 2.37 yuan and 3.42 yuan respectively, and the corresponding PE of the latest closing price will be 44.5x, 25.5x and 17.6x. It will be covered for the first time and given a “buy” rating.
Risk statement
The production expansion progress is less than expected; Competition intensifies and gross profit margin declines; Fluctuations in raw material costs; The promotion of new energy vehicle business customers was less than expected.
