Company profile
The company has been deeply involved in the crystal oscillator field for more than 15 years and has a rich product line. Currently, it has covered DIP tuning forks, chip tuning forks, chip high frequency, chip thermal, SPXO/TCXO/VCXO/OCXO series, and automotive grade product lines. The company has mastered semiconductor lithography technology and established key technical barriers to high-end and miniaturization of products; independently developed production equipment to achieve independent research and development of high-frequency chips and covers, and has obvious scale advantages and cost advantages. 1H23 The company's revenue was 385 million yuan, -26.6% year on year; net profit at the same time was 47 million yuan, or -65.3% year on year. The main reason was that the crystal oscillator industry cycle gradually bottomed out, the company's operating rate rebounded, and performance improved month-on-month.
Investment logic:
Mobile communications, AIoT, and automotive electronics are driving the expansion of the crystal oscillator market, and the domestic substitution process is accelerating. The crystal vibration industry chain is widely used, and mobile phone customers are accelerating domestic substitution and developing in the direction of high frequency and miniaturization. Servers place higher demands on crystal oscillators, and differential crystal oscillators have significant advantages. Based on data from Marklines and Taijingtech, we estimate that the global demand for new energy vehicle crystal oscillators is estimated to be about 3.397 billion in 2025, with a 3-year CAGR of 31%. IoT application scenarios are rich. It is estimated that in 2025, the number of IoT terminals connected worldwide will be 27 billion, and the average number of AIoT terminals used will be 3. It is estimated that global demand for AIoT crystal oscillators will reach about 175 billion in 2025, with wearable devices and smart homes as the main growth points.
The market share of Japanese companies reduced production capacity and declined. According to Taijing's technical method, the company's market share rose to 4% in '21, production reached 3,589 million units, +57.14% year on year, and domestic substitution accelerated.
The company's self-developed equipment and automatic lithography process control accelerate the layout of high-end products such as miniaturization, ultra-high frequency, automotive-grade crystal oscillators, and RTC modules. The company adjusts the product structure by relying on the MEMS lithography process mastered by only four companies in the world, as well as self-made equipment such as crystal finishers/frequency modulators/gluing machines, and inspection machines. It has achieved mass production of ultra-high frequency 76.8/80/96/125 MHz and ultra-miniaturized 1612/1210/1008 products; promoted R&D and industrialization in special application areas including vehicle grade, RTC chip, industrial grade, etc.; mass production and yield improvement of active crystal oscillator XO, TCXO, and OCXO series products. The company has been tested and implemented by customers such as Qualcomm, MediaTek, Ziguang Zhanrui, and Ruixin Micro. In '21, the high value-added SMD series accounted for 84.92% of revenue, supplied high-precision clock devices to many Beidou customers, and clarified the high-end route.
Profit forecasts, valuations, and ratings
It is predicted that 2023-2025 will achieve net profit of 1.23, 224, and 351 million yuan, compared to -34.59%, +81.86%, and +56.37%. A valuation of 32xPE will be given in 2024, a target market value of 7.175 billion yuan, and a target price of 18.43 yuan/share. The initial coverage will give a purchase rating.
Risk warning
There is a risk that prices will fall short of expectations, downstream demand will fall short of expectations, the supply and demand pattern will deteriorate, and directors' holdings will be reduced.