The company is a leader in PCB micro tools, with the highest market share in the industry. Dingtai Hi-Tech is an enterprise specializing in providing integrated solutions for tools, materials, and equipment for enterprises in the fields of PCB and CNC precision parts. The company's products cover PCB drills, cutters, automation equipment, CNC tools, special PCB tools, functional films, etc., with a wide product matrix. The company's revenue continued to grow rapidly. From 2018 to 2022, the company's revenue increased from 529 million yuan to 1,219 million yuan, CAGR reached 23.20%, net profit increased from 70 million yuan to 223 million yuan, and CAGR reached 33.60%.
According to Prismark data estimates, the company ranked first in the world in sales of PCB drills in 2020, with a global market share of 19%. The company has a lot of room to increase in the market share of high-end drills (0.2mm) in the future, which will drive a further increase in the global market share.
The competitive pattern of the industry is relatively stable, and demand for micro drills will continue to increase in the future. The company's global PCB drill sales market share is about 19%, ranking 1st. Jinzhou Seiko, Japan Yuneng, and Jiandian Technology ranked 2nd to 4th, with market shares of about 18%, 14%, and 9%, respectively. The PCB micro tool industry has technical, financial and customer barriers, and there is a certain entry threshold. Looking at future development trends, PCBs are developing in the direction of high multi-layer, high density, and high integration, etc., driving an increase in the number of PCB layers, thickness, and wiring density. The line width/line spacing is getting smaller and smaller, driving an increase in demand for micro drills.
Independent research and development capabilities build the company's moat. Through its subsidiary Dingtai Robotics, the company has achieved independent research and development of production equipment, successfully replacing international advanced equipment such as Anka and Walter, greatly reducing equipment procurement costs, greatly shortening equipment delivery times, and achieving a rapid response to customer needs. In addition, it has also mastered the coating process of PCB drills, improving the performance of drill bit products.
CNC tools refer to high-end tools, and functional films will be released in volume. Currently, the domestic high-end tool market is highly concentrated, dominated by European, American, Japanese, and Korean tool companies and a small number of domestic companies. After the fund-raising project is put into operation, the production capacity of 1.8 million CNC tools will increase. The company's future high-end CNC tools are expected to continue to grow in the context of domestic substitution, driving the company's performance and profitability to improve. The company has laid out the field of functional films ahead of schedule, and is expected to continue to break through in the field of functional films such as mobile phone anti-reflective films, mini-LED films, and vehicle screen films in the future, becoming a new growth curve for the company.
Investment suggestion: We expect the company's net profit to return to the mother in 2023-2025 to be 268, 333, and 404 million yuan respectively, corresponding to PE of 37, 33, and 27 times, respectively. The first coverage will be given a “increase in holdings” rating.
Risk warning: risk of technology substitution, fluctuating raw material prices, new business expansion falling short of expectations