1. In 2023, downstream customers' direct demand for Dongguan Dingtong Precision Metal Co., Ltd. was relatively weak. Today, the director of the company, Wang Chenghai, said at the earnings conference that demand for the company's communication connectors and components has gradually picked up this year, and orders have increased. 2. Wang Chenghai stated that there is significant competitive pressure for new energy vehicle products, and the company has gradually adjusted some of its business. In the future, the company will mainly focus on developing products in control systems and high-voltage products.
"This year, the demand for communication connectors and their components has gradually rebounded, and the company's main customers are Molex, Amphenol, TE, etc. At present, the demand and orders of customers have increased." said Dingtong Technology's chairman and general manager, Wang Chenghai, at the earnings conference held today (June 12).
In 2023, Dingtong Technology's revenue and net income both declined, with revenue reaching 682.7 million yuan, a year-on-year decrease of 18.65%; and a net income of 66.57 million yuan, a year-on-year decrease of 60.48%. In the first quarter of this year, the company's revenue was 193.9 million yuan, a year-on-year increase of 19.73%; and a net income of 18.23 million yuan, a year-on-year decrease of 45.11%.
Dingtong Technology stated that the revenue and cost of its communication connectors and their components have sharply declined, mainly due to the unstable external market, the consumption of past inventory, and the decline in direct customer demand. The year-on-year decline in its net income in the first quarter of this year was mainly due to the high cost pressure of some new energy automobile products, low gross margins, and the incomplete release of production capacity.
It is understood that Dingtong Technology's products are mainly applied in communication and automobile fields. Among them, high-speed communication connectors and their components are ultimately applied to large-scale data storage and exchange equipment such as servers, data centers, and base stations; while automobile connectors and their components are mainly used in automobile electronic control systems and new energy automobile batteries, playing a role in transmitting current and signals.
Affected by the global economic downturn and weak demand in the communication field, Dingtong Technology's downstream customers had relatively weak direct demand in 2023. The company mainly expanded its horizontal product category with shell cage products and increased cooperation with customers in the QSFP-DD 112G/OSFP-DD/OSFP series.
At the earnings conference, Wang Chenghai stated that the demand for communication connectors and their components of the company has gradually rebounded this year, with orders increasing. In addition, related connector products are continuously being developed, and product technology is also continuously improving.
Wang Chenghai told reporters from the "Star Market Daily" that the company's main products this year are still the development and promotion of high-speed communication connectors and their components and new energy automobile connectors. "Currently, relatively speaking, the growth in demand for communication module business is greater, and the direct customer demand growth will drive the company's performance."
In the automobile market, the company continues to deepen cooperation with customers such as BYD, China Chang'an, Narada Power, Hesai Energy, FAW Group, Losenoidoomock, etc., and has developed new customers such as China First Automobile, Saichuan Electronics, and Tongyu Automobile.
It should be noted that in the price competition of automobile manufacturers, costs are also being continuously squeezed at the upstream end of the parts supply. Dingtong Technology stated during institutional research in April this year that the customer's bidding requirements are harsh, which has caused the company to bear greater cost pressure, leading to a sharp decline in gross margin.
In 2023, the revenue ratio of Dingtong Technology's automobile connectors and their components was 34.69%, and its comprehensive gross margin decreased by 7.68 percentage points from 2022, with the gross margin of automobile connectors and their components decreasing by 12.54 percentage points.
As for the follow-up response measures, Wang Chenghai answered the reporter's question from the "Star Market Daily" that the overall bidding pressure of new energy automobile products is relatively high this year, and the company has gradually adjusted some businesses. New energy automobile products are still one of the company's important businesses. It will mainly focus on product development in control systems and high-voltage products.
It is understood that in 2023, Dingtong Technology tried to expand into new business areas and achieve diversified development. For example, the company horizontally developed Molex's BMS business modules and obtained the BMS Gen6 battery project, which is currently in small-scale trial production. In addition, in terms of new energy business modules, Dingtong Technology also added the battery management module water-cooled board project.
In terms of expanding overseas markets, Dingtong Technology has optimized its strategic layout for existing customers, carried out horizontal layout and vertical integration, and developed more overseas new customer groups. It has established a subsidiary in Malaysia. According to reports, Dingtong Technology's Malaysian subsidiary has completed relevant environmental assessments, fire protection procedures, etc. Technical personnel and supporting machinery and equipment have all settled in and are gradually beginning mold parts processing business and inviting existing customers to conduct supplier audits.
Regarding the progress of production in overseas factories at the earnings conference, Wang Chenghai stated that the company's Malaysian factory is developing new products and new customers, but considering the components and accumulation of products, it will take time to gradually form scale, and the main focus for development is still on the current existing customers.