The company is a PCB drill leader, and its performance has improved marginally. Dingtai Hi-Tech is an enterprise that specializes 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 products such as PCB drills, cutters, automation equipment, CNC tools, PCB special tools, functional films, etc., with a wide product matrix. The company's revenue continued to grow rapidly. From 2018 to 2022, the company's operating income increased from 529 million yuan to 1,219 million yuan, CAGR reached 23.20%, net profit from 70 million yuan to 223 million yuan, and CAGR reached 33.60%.
In the first three quarters of 2023, the company achieved revenue of 927 million yuan, an increase of 1.91% over the previous year, and net profit of 169 million yuan, an increase of 0.24% over the previous year. Among them, Q3 had revenue of 345 million dollars in a single quarter, up 13.82% year on year, up 12.46% month on month; net profit was 63 million yuan, up 14.27% year on year and 68.61% month on month. The company's performance benefited from a recovery in downstream demand and marginal performance improvement.
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 R&D capabilities build the company's moat. Through its subsidiary Dingtai Robotics, the company has achieved independent research and development of production equipment, successfully replaced advanced international equipment such as Anka and Walter, greatly reduced equipment procurement costs, greatly shortened equipment delivery times, and achieved rapid response to customer needs. In addition, they have mastered the coating process for PCB drills.
CNC tools refer to high-end, and future growth can be expected. The company's CNC tool revenue scale increased from 18.49 million yuan in 2019 to 47.85 million yuan in 2021. The average unit price in 2021 exceeded 33 yuan, positioning itself in the high-end market. Currently, the domestic high-end tool market is highly concentrated, dominated by European, American, Japanese, and Korean tool companies, and a few domestic companies. The company's CNC tool production capacity will expand to 9.6 million units/year. In the future, high-end CNC tools are expected to continue to grow in the context of domestic replacement, driving the improvement of the company's performance and profitability.
Investment suggestions: We expect the company's net profit from 2023-2025 to be 2.39/3.05/383 million yuan, respectively, and the corresponding PE is 35/27/22 times, respectively, to maintain the “increase in holdings” rating.
Risk warning: Technology substitution risks, raw material price fluctuations, new business development falling short of expectations.