Investment summary

Deeply involved in quartz crystal frequency components for 20 years, semiconductor lithography processes have enabled the creation of high-end crystal oscillator product matrices. The company focuses on quartz crystal frequency components. Relying on semiconductor lithography processes, the company has built a product matrix covering various industries such as consumer electronics, automotive electronics, communications and industrial control. The company has always insisted on benchmarking cutting-edge global technology, accumulated independent research and development capabilities, and has independent design capabilities for high-base frequency and mainstream-sized miniature tuning fork chips; since 2011, the company has been the only domestic and one of the few enterprises that have mastered quartz crystal MEMS technology and realized large-scale industrialization of miniature crystal oscillators. Among them, the 76.8 Mbps high-frequency thermal crystal resonator has passed the Qualcomm automotive grade 5G platform SA522 and SA525 certification, using quartz MEMS technology and photolithography as the main material. The vibrator has been officially installed in A high-end NEV recently launched by an own-brand OEM. The strong product strength enabled the company to obtain certification from well-known platforms such as MediaTek and Qualcomm, and has accumulated many high-quality customers at home and abroad.

According to TXC (TXC) quoting QYR Research data, Taijing Technology's share of global revenue in the crystal oscillator industry reached 4.0% in 2021, ranking 8th in the world, a significant increase from 2.1% in 2020.

Frontier technology drives innovation in the terminal industry, and the crystal oscillator industry ushered in a new cycle of scale growth.

2024H1, according to iFind data, global and Chinese smartphone shipments reached 7.66% and 7.44% year-on-year respectively, and global PC shipments also achieved a year-on-year increase of 5.23%. The consumer electronics switching cycle momentum is clear; moreover, as AI empowers the development of traditional smart terminals such as mobile phones and PCs, and various emerging products such as VR/AR, and smart wearable devices, the consumer electronics market is expected to fully recover. According to Statista data, the total size of the global consumer electronics market is expected to exceed 950 billion in 2024 The US dollar continued to grow at a compound annual growth rate of 2.9% from 2024-2029, driving Jingzhen's shipping demand in the long term. The electrification and intelligence of automobiles continue to drive the use of crystal oscillators, while the application standards of automotive-grade crystal oscillators are higher and the average value is higher. Currently, new energy vehicles around the world have entered a period of steady growth, and the intelligent penetration rate continues to rise simultaneously, driving a sharp rise in the price of supporting crystal oscillators over the long term, and the automotive crystal oscillator market has broad prospects for development. The company is optimistic about the application and market changes of UHF crystal oscillators on the end side. UHF crystal oscillator products of 100M and above with corresponding chips in the fields of 5G, WIFI 6/7, optical modules, base stations, etc. have been supplied in small batches, and at the same time have a strong international competitive position and advantage in terms of supply pace and capacity. In terms of supporting certifications of some international chip manufacturers, the company's product process path has comprehensive supporting capabilities. We believe that the continuous improvement of the various application terminal markets is expected to start a new cycle of scale growth in the crystal oscillator industry. According to Yidu data, the compound annual growth rate of the global and Chinese quartz crystal oscillator markets is expected to reach 4.66% and 6.23%, respectively, and local crystal oscillators are expected to take advantage of the momentum.

At the right time to localize the high-end supply chain and go overseas, domestic Jingzhen drinking ice may reshape the global supply pattern in ten years. Along with the restructuring of overseas crystal oscillators and the catch-up of local process technology, domestic manufacturers rapidly expanded production capacity with cost advantages to seize market share, and gradually entered high-end fields such as high-frequency and miniaturized products in line with customer needs. By 2022, Jingzhen in mainland China had accounted for 24.66% of the world's output share. As a local crystal oscillator leader, Taijing Technology has successfully reached the forefront of the global crystal oscillator industry through long-term technology accumulation and global industrial chain layout, leading the domestic replacement of high-end crystal oscillators while gradually opening up overseas customers. It is expected to further stabilize its position under the wave of localization of the industrial chain, and gradually embed itself into the supply system of internationally renowned customers to reshape the global crystal oscillator supply chain.

Investment advice

The first coverage gives a “buy” rating. Benefiting from changes in the competitive landscape of the global crystal oscillator industry, local crystal oscillators have broad room for growth under the dual driving forces of domestic replacement and overseas travel; at the same time, compounded by positive factors such as recovery in consumer electronics terminal demand, automobile electrification, and rising volume and price of smart bikes, the company is expected to usher in a new growth cycle as a local crystal oscillator industry leader. The company is expected to achieve a net profit of 0.112/0.156/0.187 billion yuan in 2024-2026, corresponding to PE of 56/40/34 times.

Risk Alerts

Consumer electronics recovery falls short of expectations, R&D progress falls short of expectations, and industry competition intensifies