(report producer/author: Industrial Securities, Li Shuangliang, Yao Kang, Wang Tiantian)
. Two-round cycle review: the core is the changes in supply, inventory and demand passive components mainly includes capacitors, resistors, inductors , as well as transformers, crystal oscillators, etc. The overall passive component market is about US$40 billion, and the total proportion of resistance sensing is about 90%. This article mainly discusses passive components such as MLCC, chip inductor, chip resistor and crystal oscillator. Because the proportion of downstream mobile phones, PCs, consumer, automobiles and industrial applications is very similar, the periodicity is also relatively synchronous (different from aluminum electrolytic capacitors, , thin film capacitors, tantalum capacitors, etc.).
We have reviewed the two cycles of the passive component industry since 2016 from the perspective of supply, demand and inventory: upward trend in 2017-2018Q3, downward trend in 2018Q4-2019Q3, upward trend in 2019Q4-2021Q2, downward trend in 2021Q3.
Take the MLCC, the largest passive component, as an example. From 2017 to 2018, due to the supply-side Japanese manufacturers Murata and TDK compressing the low-end MLCC production capacity, Samsung Motor extending the delivery cycle, and new applications such as automotive electronics and wireless charging on the demand side, Taiwan factories such as Guoju and Huaxinke seized the opportunity of tight supply and demand relationships and carried out a series of price increases. The continued sharp rise in prices has led to the industry hoarding a large amount of inventory. In the second half of 2018, the demand side was impacted by China-US trade and the decline in sales of mobile phones and cars. The passive component industry was in the stage of destocking in 2019, and the product prices fell sharply. After about a year, the industry's inventory destocking was basically completed at the end of the third quarter of 2019, and the inventory level was lower than the normal level. In 19Q4, it entered the inventory replenishment stage, and product prices continued to rebound in 19Q4 and 20Q1. Entering 2020, with the 5G replacement, the epidemic driving the growth of PC/tablet demand, the rapid growth of ioT equipment shipments, and the pull of new energy vehicle , the epidemic has had an impact on the release of Southeast Asia's production capacity, the industry ushered in a new round of prosperity cycle, and industry inventory has gradually accumulated. Until 21Q3, market demand for mobile phones, PCs, home appliances and other markets began to weaken, new production capacity was released on the supply side, and the impact of the epidemic on Southeast Asia's production capacity was gradually eliminated, and the MLCC industry once again entered a downward cycle, especially in 2022, the pressure of global economic growth appeared, industrial demand weakened, and the industry continued to be sluggish.
We select the monthly revenue of China's major passive components manufacturers Guoju and Huaxinke, and the revenue data of the upstream slurry factory of passive components, Shang Qinkai and the leading paper carrier tape Jiemei Technology as a reference for the industry's prosperity. First of all, the monthly revenue of China's major Taiwanese manufacturers Guoju and Huaxinke. From 2017 to 2018, with the increase in 's and price, the growth rate continued to rise. In 2018, the destocking of 18Q3 began. With the decline in 2019, the year-on-year decline in revenue continued to expand, narrowing at the end of 2019. Guoju achieved positive growth in March and April 2020. Subsequently, due to the demand driven by new energy vehicles, , 5G terminals, and the Internet of Things, the rate of harvest continued to rebound and the growth rate continued to increase. From July 2020 to June 21, it achieved more than double year-on-year growth for 12 consecutive months. Huaxinke's year-on-year growth rate has turned positive since May, and has maintained rapid growth in the following year. Starting from Q3 2021, as the MLCC industry enters a downward period, product prices and crop rate have declined, and the revenue growth rate of Guoju and Huaxinke has slowed down, and this year it has continued to decline (if Qilixin, which is a consolidation of Guoju, will also decline in monthly revenue in recent months).
The revenue growth rate of passive component upstream raw material manufacturers can also reflect the industry's prosperity. Jiemei Technology is a leading enterprise for passive component upstream consumables paper carrier tapes, while Qinkai mainly engages in passive component upstream slurries, both of which are the main raw material suppliers. Jiemei Technology's revenue growth rate basically remained above 30% in the quarter of 2017-2018Q3. The growth rate began to decline in Q4 2018. The revenue in the first three quarters of 2019 declined significantly year-on-year. The decline in Q4 2019 narrowed significantly. In 2020, revenue ushered in a reversal. In the first three quarters of 2021, the revenue continued to grow rapidly. From Q4 2021, revenue began to decline. Qinkai's monthly income is consistent with the trends of Guoju and Huaxinke.
. The current industry prosperity has bottomed out, and it is expected to start a new upward cycle next year. 2.1. Prices and crop rate have dropped sharply, inventory has been sold, and the industry prosperity has bottomed out
Still take MLCC as an example. This round of downward cycle since Q3 last year has lasted for 5 quarters, and the time dimension has exceeded the previous downward period. In order to sell inventory, the industry's crop rate and product prices have continued to decline. At this time point, we judged that the industry cycle has bottomed out, mainly based on the following reasons: 1) The industry's production expansion speed has slowed down significantly since this year. Taking the mainland manufacturers, Sanhuan Group and Fenghua Hi-Tech, the fastest expansion of this round, as an example, capital expenditure has been greatly reduced in Q4 last year. According to our calculations, the industry's new production capacity this year is around 5%. The growth rate of production capacity in the next two years will also be lower than 10%, lower than the expansion rate of production of more than 10% in the past year.
2) Currently, the industry's revenue rate is at a low level, and original factory and channel inventory has also been effectively sold. According to industry tracking, the current rate of non-Japanese manufacturers is generally around 50%, and the inventory water level of the original factory and channel has basically returned to around the normal water level. According to data from Murata, the global MLCC leader, due to its positioning of high capacity and automotive specification products, revenue in this downward period is relatively stable. Murata also disclosed the order amount and backlog order amount for each quarter. We found that after the industry declined in 21Q3, Murata's capacitor orders/sales fell below 1 for several consecutive quarters, but the value of backlog orders/accepted orders in 22Q2 was upward month-on-month (there are exchange rate factors), which can reflect to a certain extent that the industry's inventory continues to sell and the prosperity bottoms out.
3) MLCC price and profitability of major manufacturers fell to their lows in recent years. According to industry tracking, depending on product specifications, this round of MLCC prices have fallen from 20% to 40%, which is at the lowest point in recent years. We have counted the gross profit margins of major manufacturers. The profitability of Huaxinke, Sanhuan Group, Fenghua Hi-Tech and other companies have all declined to the bottom of the previous round (Q3 and Q4 in 2019) (Guoju has acquired more in recent years, Samsung Motors' gross profit margin has increased a lot, and Murata's product structure has continued to be optimized. The three cannot well characterize the profitability of the industry).
In summary, the time and range of MLCC's adjustments are relatively sufficient, the original factory and channel inventory has also been effectively sold, and the expansion of production by industry manufacturers has slowed down. Due to the industry's heavy asset attribute, there is a small possibility that more new production capacity will appear in the medium and short term. Based on the current crop rate and profitability, we believe that the industry's prosperity has bottomed out. Since September, the price of MLCC channel has rebounded, and the original plant's crop rate has also rebounded slightly. Accordingly, the revenue decline of Taiwan factories narrowed in September. The relatively abnormal prices and industry crop rate in the early stage have begun to correct. As inventory sales are completed, as long as industry demand does not further decline, we judge that the rebound in price and crop rate is expected to continue in the fourth quarter.
2.2. Application structure optimization, automobiles have become the main growth driver, and it is expected to nurture a new round of upward cycle
In the long run, demand is the key. The essence of this round of industry downturn is the weakness of overall demand. In the past, in the downstream structure of MLCC, mobile phones, PCs, and consumer products accounted for a high proportion, while automobiles and industry accounted for a low proportion. Therefore, the decline in demand for mobile phones, PCs and consumer products in the past year has led to large industry fluctuations.
In the single-vehicle field, the demand for MLCC has grown very rapidly, mainly due to the trends of electrification, intelligence and networking. The usage of MLCC for automotive electronic drives has increased by 3-8 times, and the value has increased by 5-10 times. According to Murata's data, the consumption of MLCC for traditional fuel vehicles is about 3,000, the consumption of LV2-grade HEVs is more than 6,000, while the consumption of MLCC for LV3-grade electric vehicles is more than 10,000, which is three times that of traditional fuel vehicles, and the consumption of electric vehicles with LV4-grade and above is about 20,000.
Among them, the power system and ADAS system are the two most used parts, and the safety, entertainment and other modules are the configuration. According to our calculations, driven by electrification and intelligence, the demand for automotive MLCC is expected to achieve a compound growth of about 23%, reaching about 1.3 trillion units by 2025.
In terms of specific requirements, automotive MLCC, especially new energy vehicle power system and ADAS system, mainly large-size, high-capacity and high-reliability products. The size of automotive MLCC is basically above 0603, 1005 and 1608 are the two main specifications. The Model 3 of Tesla uses a large number of 2012 specification products, and Murata has also launched 3216M/47μF and 3225M/100μF automotive high-capacity MLCC.
According to Murata's calculations, with the accelerated penetration of electrification and intelligence, the consumption of high-capacity MLCC will nearly double within 5 years, and the consumption of high-reliability MLCC will increase by nearly 3 times.
In the future, automobiles will be one of the main driving forces for the growth of the MLCC industry. We estimate that the compound growth rate of MLCC demand in 21-25 will be 5%-10%, maintaining steady growth. The proportion of automotive MLCC usage will increase to 20% in 2025. Considering that automotive MLCC is mainly large in size and high capacity, the consumption of MLCC production capacity is far higher than that of mobile phones, PCs, and consumer products, and the industry fluctuations are expected to flatten in the future.
Combined with the expansion speed of MLCC manufacturers and the growth of demand, we judge that the oversupply situation in the industry will be the most serious in 2022. With the growth of demand and the slowdown in production expansion, the oversupply situation in 2023 is expected to be alleviated, and the future will be a trend of continuous improvement. With the arrival of the industry turning point at the end of the year, a new upward cycle will also be in fertility.
. Medium- and long-term domestic substitution is the core driving force, with the ability to integrate the company space. Huge 3.1. The industrial transfer of terminals, assembly, and modules provides fertile soil for the localization of passive components
. Around 2010, overseas brands such as Samsung , Nokia , LG are still the mainstream manufacturers in the mobile phone market. In a few years, with the rise of domestic brands such as Huawei, Xiaomi, OPPO, and vivo, the domesticization of smartphones has gradually become the main line. According to IDC statistics, Nokia still accounted for 1/3 of global smartphone shipments in 2010, and its share fell to 4% by 2012. In sharp contrast, domestic smartphones were produced. In 2011, my country only Taiwan, ranked the top five in HTC shipments, with a share of 8%. By 2020, the total shipments of domestic brands Huawei , Xiaomi, OPPO and vivo had reached 44%, accounting for nearly half of the world's share. There are similar situations in the PC field. In the past, HP and Dell have ranked in the top two for many years. Since the Lenovo shipments surpassed HP for the first time in 2013, except for slightly lower than HP in 2017, it has always occupied the first place in shipments from 2013 to 2021.
With the domesticization of downstream terminals, upstream modules, assembly and other industrial chain links are gradually shifting to the country, among which two leading companies were born - Luxshare Precision and Sunny Optical Technology. Luxshare Precision is a typical Apple chain company. It started with a connector. In 2011, it acquired Kunshan Liantao Electronics and entered the Apple industry chain, and successively obtained orders for key components such as Apple wire harness, Apple Watch wireless charging and watch strap, acoustics, antennas, motor . In 2017, it began to enter AirPods assembly, Watch assembly, and iPhone assembly. Revenue has continued to grow rapidly over the years. In 2021, the operating income reached 153.9 billion yuan, and increased by 66% year-on-year. The compound growth rate of operating income from 2007 to 2020 was as high as 54%. Sunny Optical Technology is based on optics, and the Android brand is its main customer. Its main products include modules and lenses. It is one of the few platform companies in the field of optical that have both lenses and module technologies. In the past, smartphone cameras continued to upgrade, and the demand for functions such as large aperture, large wide angle, macro, and high-power zoom has driven the unit price and quantity of cameras to continue to increase, driving the rapid growth of Sunny's performance. At the same time, due to the rich and diverse downstream application fields of optical, Sunny is also actively entering the fields of automobiles, medical care, VR/AR. Through more than ten years of continuous expansion of categories and fields, the company has continuously built high competitive barriers. The compound growth rate of operating income from 2004 to 2021 was 33%, and its revenue has increased by more than 100 times in 17 years.
further upstream, passive components, as essential parts for electronic products, have huge space for domestic replacement.Taking MLCC as an example, in the module and assembly process, my country, as a global electronic manufacturing base, has a complete domestic soil. According to customs data, the number of MLCC imports is counted as trillions each year, and the number of imports in 2021 will reach 345 trillion, with an amount of approximately US$9.694 billion.
From the perspective of market structure, the passive component industry manufacturers are mainly concentrated in Japan, South Korea, Taiwan, the United States and mainland China, among which Japanese manufacturers occupy half of the passive component field. Taking the MLCC industry as an example, according to data disclosed by Guoju, Murata ranks first with a market share of 31%, followed by Samsung Electric's market share of 19%. Guoju's acquisition of Kemet has a market share of 15%, and the market share of Sunsuodian is around 13%. The top five manufacturers account for more than 80% of the market share, with a high concentration.
As for mainland China, my country's electronic manufacturing industry is currently mostly assembled and modules. According to the smile curve, in several ranges of an industrial chain, namely product research and development, component production, module component production, assembly, sales and after-sales service, the production and manufacturing link (i.e. assembly) is always in the low- profit link in the industrial chain. It can also be clearly seen from the comparison of gross profit margins that Sanhuan Group, Rockchip Micro, and terminal brand Anker Innovation enjoy high gross profit margins. Therefore, my country's manufacturing industry upgrading is bound to move towards both ends of the smile curve, vigorously develop upstream components and build brands.
3.2. Vertical integration of materials, equipment and processes is the gene for component companies to become stronger
So what quality companies can benefit the most in the wave of domestic components? As summarized in our previous in-depth report "Inspiration for the development of Japanese components industry: The wave of domesticization begins, and platform-based enterprises with integrated capabilities are huge space" (July 2021), the reason why Japanese manufacturers such as Murata, Kyocera , TDK, and SunsuoDen are able to win in MLCC, inductors, resistors, crystal oscillators, etc. are all deeply engaged in material technology (ceramic materials, magnetic materials, etc.), grinding technology (co-firing process, printing process, dielectric thin layering technology, etc.), and even homemade equipment, and have complete detection/evaluation technology.
's accumulation of materials, processes and equipment is the core barrier of the components industry. We take MLCC as an example to discuss in detail the importance of vertical integration for passive components. The production and manufacturing process of MLCC is very complex, including slurry adjustment, molding, stacking, equalizing pressure, sintering, electroplating and other links. All of them have extremely high requirements for the manufacturers to accumulate ceramic powder, molding sintering process, and special equipment.
powder preparation and formula are key to product performance and cost
MLCC ceramic powder used is a formula powder formed by adding modification additives to barium titanate base powder. The main reason why barium titanate can be used as a dielectric material is that its dielectric constant is high at room temperature, but on the other hand, barium titanate also has defects. At room temperature, the loss tangent of barium titanate material has a large loss tangent value and a large dielectric constant temperature coefficient. Therefore, unmodified barium titanate is not yet suitable as a dielectric. Modifying additives mainly include rare earth elements, such as yttrium, holmium, dysprosium, etc., to ensure the insulating properties of the formula powder; another part of the additives, such as magnesium, manganese, vanadium, chromium, molybdenum, tungsten, etc., are mainly used to ensure the temperature stability and reliability of the formula powder. These additives must form a uniform distribution with barium titanate powder to control the microstructure and electrical characteristics of dielectric ceramic materials during sintering. Modified additives generally account for 5% of the weight of MLCC formula powder.
MLCC The fineness, uniformity and reliability of the electronic ceramic powder used in , directly determine the stability of the size, capacitance and performance of the downstream MLCC products. To achieve higher capacitance values under the same volume, thinner ceramic medium needs to achieve more stacking, that is, the ceramic powder particles are required to be fine enough. At the same time, powder accounts for between 20% and 45% of the cost structure of MLCC, and the homemade powder also directly affects the profit of MLCC. Therefore, Japanese leading MLCC manufacturers have a higher proportion of powder homemade.At present, the main production methods of high-purity barium titanate industrialized at home and abroad are: solid phase method, oxalic acid co-precipitation method and hydrothermal synthesis method. The latter two belong to the liquid phase method. solid phase method is obtained by bac-pure barium carbonate (99.8% or more) and titanium dioxide (99.9% or more), ball milling, mixing, pressing filtering, drying, and then calcining at 1050-1150°C. The reaction formula is: BaCO3+TiO2→BaTiO3+CO2.
co-precipitation method is to mix equimolar soluble Ba2+ and Ti4+, and add precipitant under alkaline conditions to co-precipitate Ba and Ti. Then, after filtration, washing, drying and calcination, barium titanate powder is obtained. Oxalic acid is the most widely used as the precipitant. hydrothermal method refers to a method in which the reaction system water solution is heated to a critical temperature in a closed autoclave to generate a high-pressure environment and perform inorganic synthesis. Specifically, a water slurry containing barium and titanium (usually barium hydroxide and hydrated titanium oxide) containing barium hydroxide is placed at a higher temperature and pressure (relative to normal temperature and normal pressure) to cause them to undergo chemical reactions. After a certain period of time, barium titanate powder is directly generated in this hot water medium.
solid phase method is simple, but the particles are large and the chemical composition is uneven. The co-precipitation method has a high purity and a small particle size, but it is difficult to reach below 100nm. At the same time, the washing process is complex and the cost is high, and the molar ratio of titanium and barium is also difficult to control. Hydrothermal method is currently the most mainstream preparation method. It has high purity, good uniformity and fine particle size, which can reach about 20nm. Of course, the reaction conditions such as temperature and pressure are harsh and the technical level is high.
Currently, manufacturers that can achieve high purity, fineness and uniformity are mainly Japan and the United States. Japan Sakai Chemistry, Japan Chemistry, Japan FujiTi, the United States Ferro and others account for about 85% of the market. They can prepare barium titanate powders with particle sizes below 100nm. The domestic national porcelain material is the second manufacturer in the world that can successfully use hydrothermal technology to mass produce nano barium titanate powders, with a market share of about 10%.
core process and the ability of customized equipment require the accumulation of a large amount of Know-How
In addition to the preparation of high-precision barium titanate powder, dielectric thin-layer technology and co-fired technology are also core technologies that need to be mastered in MLCC production. Increased capacitance over a certain volume is an effective way for MLCC to replace other types of capacitors. The capacitance of MLCC is proportional to the overlap area of the inner electrode, the number of dielectric ceramic layers, and the relative dielectric constant of the dielectric ceramic materials used, and is inversely proportional to the thickness of the single-layer dielectric. Therefore, there are two main methods to increase the capacitance over a certain volume. One is to reduce the dielectric thickness. The lower the dielectric thickness, the higher the capacitance of MLCC; the other is to increase the number of stacks inside the MLCC. The more stacks, the higher the capacitance of MLCC. At present, Japanese manufacturers represented by Murata can reduce the thickness of a single-layer film medium to less than 0.5μm, and the stack is above 1,000 layers, while the higher level of film medium in China is about 3μm thick. The thin layering of the dielectric is mainly used to apply the casting process, and the slurry is evenly coated on the PET Film, and a film of certain thickness, density and uniformity is formed by heating and drying.
molding method selection, the distance between the scraper and the baseband, and the pressure of the extruder will affect the thickness of the film medium. Control of the baseband flow rate and drying temperature will affect the uniformity of the film medium. A large amount of Know-how is needed to accumulate in the entire casting process. At the same time, manufacturers need to have the ability to transform equipment, and standardized equipment is not enough to achieve the greatest performance. Taking the core equipment casting machine as an example, the choice of scraper, the design of Dry Zone, etc. are all reflections of manufacturers' deep understanding of ceramic materials and processes.
Regarding cofiring technology, the MLCC component is mainly composed of ceramic dielectric, inner electrode metal layer and outer electrode metal layer. During the production process, ceramic media and printed internal electrode slurry need to be combined and co-fired, so it is inevitable to solve the problem of how ceramic media and internal electrode metals with different shrinkage rates do not layer or crack in the high-temperature firing process, that is, the so-called co-fired problem of ceramic powder and metal electrodes.To solve the problem of co-firing, on the one hand, it is necessary to carry out continuous research and development on the sintering equipment; on the other hand, it is also necessary that the MLCC porcelain powder suppliers cooperate closely with the MLCC manufacturers during the porcelain powder preparation stage, and adjust the sintering expansion curve of the porcelain powder to make it match the electrode well and easier to sinter with the metal electrode. Vertical integration of ceramic powder, process and equipment is even more important.
4, investment analysis
4.1, Sanhuan Group
Sanhuan Group was founded in 1970. It was originally engaged in the production of ceramic substrates and fixed resistors. It has now expanded to MLCC, ceramic packaging base (PKG), ceramic substrate, fiber optic ceramic ferrule , ceramic appearance parts and other products, and has been engaged in the advanced ceramic industry for 50 years. In 2021, communication components (ceramic ferrules and appearance parts, etc.) accounted for 28%, electronic components and materials (MLCC, ceramic substrates, etc.) accounted for 34%, and semiconductor components (mainly PKG) accounted for 19%. The proportion of electronic components and materials has shown an upward trend in recent years.
has strong execution ability, and has entered multiple sub-sectors, achieving global leading level and widening the gap with its competitors. In 1996, the company put into production of alumina ceramic substrate, and is currently at the forefront of the world; in 2001, the ceramic ferrule and sleeve for luminous communications were developed. When it was launched, the gross profit of the business exceeded 55%, and the market share was about 40%, and in recent years it has exceeded 70%. Others such as PKG in the crystal oscillator field, ceramic mobile phone back cover, and fuel cell diaphragm are all major suppliers.
In recent years, the company's revenue and profit changes have basically coincided with the passive component industry cycle, and continued to grow in 2017 and 2018, and were greatly affected in 2019. From 2020 to 2021, benefiting from the upward trend in the industry and the accelerated capital expenditure, the company's ceramic material platform logic continued to be realized, and its performance achieved rapid growth. Entering 2022, the overall passive component industry has been in a downturn, and revenue in the first half of the year was basically the same as the previous year. In terms of profit margin, although the price of in the industry is large, the company has the advantage of vertical integration. In the past, the comprehensive gross profit margin basically remained at around 50% and the net profit margin remained at around 35%, far higher than the industry average. The excess profit mainly comes from the vertical integration of materials, equipment and processes, which allows the company to ensure product quality and yield, and also lead significantly in cost advantages.
In the medium and long term, the global MLCC market size in 2020 was approximately 101.7 billion yuan. Calculated based on the output value of , the company's market share was very low in 2021. The company continued to explore the vertical integration of ceramic materials, core processes and special equipment, and there was huge room for domestic substitution. We are also continuing to be optimistic about the company's new business expansion capabilities as a ceramic material platform. The company's monetary funds + trading financial assets have exceeded 7.6 billion yuan, and its valuation is at a historical low. The existing production capacity is sufficiently elastic after the industry recovers. At the same time, it has reserved products such as alumina ceramic optical plates, optical communication tube shells, and fuel cell stack modules.
4.2, Fenghua Hi-Tech
Fenghua Hi-Tech is an old passive component manufacturer. It was founded in 1984 and was launched in 1996. Its products include MLCC, chip resistor, chip inductor, ceramic filter, semiconductor devices, thick film integrated circuits, varistor , etc., and are widely used in consumer electronics, communications, computers and smart terminals, automotive electronics, power and industrial control, medical care and other fields.
Since its establishment, the company has continued to increase investment in technology research and development, and has built an industrial technology research and development system with Fenghua Research Institute as the core of technology research and development, reserve, supported by the secondary research and application center of each subsidiary branch, and based on the workshop technology team. It has continued to strengthen cooperation with advanced scientific research institutes and other institutions at home and abroad, forming an innovation system that combines production, education, research and application, ensuring the company's leading advantages in domestic and international markets. In 2021, the company's R&D expenditure was 295 million yuan, accounting for 5.83% of total revenue.
is similar to Sanhuan Group, and the company's performance trend is also consistent with the industry cycle.In the industry with good prosperity, the company's revenue and profit both achieved rapid growth in 2017-2018 and 2020-2021; in the sluggish prosperity, the company's performance was under pressure. In the first half of this year, due to the continued weak demand in consumer electronic markets such as home appliances and communications, the passive component industry's volume and price fell by , and the company's revenue and net profit attributable to shareholders fell by 21.47% and 27.21% respectively. In terms of profit margin, changes in company profit margin are strongly related to MLCC price fluctuations. In the first half of 2022, the company's gross profit margin was 24% and the net profit margin was 18%, both of which declined year-on-year, mainly because the overall consumer demand in the first half of the year was relatively sluggish, and the price reduction of consumer products was relatively large. In the future, as the industry's inventory destocking comes to an end, the company's profit margin is expected to recover.
4.3. Boqian New Materials
Boqian New Materials was established in 2010 and was launched in 2020. It is mainly engaged in the research, development, production and sales of high-end metal powder materials for electronics. The company's products include nano-grade, sub-micron-grade nickel powder and sub-micron-grade, micro-grade copper powder , silver powder , and alloy powder. The downstream is mainly used in the production of MLCC, and has accumulated high-quality domestic and foreign customers including Samsung Motors, Guoju, Huaxinke, Fenghua Hi-Tech, Sanhuan Group, etc.
Due to the certain technical barriers of high-end powder materials, the company attaches great importance to independent research and development, and in recent years, the proportion of R&D expenses in revenue has continued to increase. In 2021, the company's R&D expenses were 44.42 million yuan, an increase of 83.69% year-on-year, accounting for 4.58% of revenue. In 2022, the proportion of H1 R&D expenses increased to 6.16%.
In recent years, the company's revenue and profit have both grown steadily. From 2017 to 2018, due to the good development momentum of the MLCC market, the demand for powders increased; in 2019, although demand in downstream industries declined, Samsung Motors increased its procurement of small-particle nickel powder, and the company's product structure was upgraded, so profits still achieved steady growth. In 2021, benefiting from the development of new energy vehicles and 5G, the company's performance continues to improve. From 2016 to 2021, the compound growth rate of the company's revenue and net profit attributable to shareholders increased by 41% and 55% year-on-year respectively.
The company's profit margin also showed a steady growth trend, with gross profit margin basically remaining above 35%, and net profit margin around 25%. Among them, the significant increase in profitability in 2019 was mainly due to the high price of small-particle nickel powder purchased by Samsung Electric, which raised the company's overall unit price. Profit margins fell slightly in the first half of this year mainly because of the destocking of the downstream MLCC industry and are expected to be repaired in the future.
, as the only supplier of nickel powder for MLCC, is expected to fully benefit from the reversal of MLCC cycle and the general trend of domestic substitution. At the same time, the company continues to develop new products, and the research and development of silver-clad copper powder and nano-silicon powder will provide great impetus for the company's subsequent development.
4.4, Shunluo Electronics
Shunluo Electronics was founded in 2000 and was launched in 2007. The products are mainly chip electronic components, covering four major product development directions: magnetic devices, microwave devices, sensitive and sensor parts, and fine ceramics. The company's product market has a wide range of applications, covering important markets such as automobiles and new energy vehicles, energy storage, photovoltaic , big data, Internet of Things, 5G and communications, mobile terminals, consumer electronics, industrial control, module modules, among which the proportion of automotive electronics or specialized services for energy storage continues to increase, accounting for nearly 10% in the first half of 2022.
Shunluo Electronics has been deeply engaged in precision electronic components for 22 years, insisting on high proportion of R&D investment, having strong R&D strength and rich customer resource reserves, R&D expense ratio is ahead of other domestic competitors, and has developed into the largest chip inductor manufacturer in China, with a market share of chip inductor products in China and the top three in the world. At present, the company's ultra-small stacked RF inductors have been mass-produced to domestic and foreign customers, and various automotive-grade magnetic devices have also been mass-produced.
In recent years, the company's revenue and net profit attributable to shareholders have maintained steady growth, with the compound growth rate of operating income from 2016 to 2021 being 21.39%, and the compound growth rate of net profit attributable to shareholders from 2016 to 2021 being 16.92%. Operating revenue in the first half of 2022 fell by 7.58% year-on-year, mainly affected by the continued weakness of the consumer and communications markets. As the industry's prosperity gradually recovers, the company's performance is expected to rebound.In terms of profit margin, the company's profit margin level has basically remained stable over the years, with gross profit margin basically remaining at around 35%, and net profit margin remained at around 18%. In the first half of this year, the company's gross profit margin and net profit margin both declined. On the one hand, due to the weak demand for consumption and communications, coupled with the supply of new production capacity, it has a certain impact on the productivity; on the other hand, in terms of product structure, the proportion of automotive electronics and energy storage special businesses has increased. As the destocking is coming to an end, the company's crop rate has increased and its profitability is expected to increase.
With the further sales of inventory in the third quarter and the recovery of consumer market demand, the industry's prosperity is expected to recover at the end of the year. At the same time, the company continues to deploy emerging industries such as automotive electronics, energy storage, photovoltaics (especially micro-inverter). New energy vehicles and wind and light storage have a strong demand for magnetic components. The company's automotive electronics business has grown rapidly in Bosch, Valeo and many domestic new energy customers, and there is great potential in the wind and light storage field in the future.
4.5, Taijing Technology
Taijing Technology was founded in 2005 and was launched in 2016. Its main products include quartz crystal resonators, quartz crystal oscillators and other quartz crystal components, and are widely used in information equipment, mobile terminals, communication and network equipment, automotive electronics, smart home, mobile wearable, consumer electronics, industrial applications, and the Internet of Things market.
After years of deep cultivation, the company has accumulated leading domestic and foreign customers including ZTE, Inspur, Siemens, Hikvision, Dahua, Lianxiang, Gree, Midea, Yiyuan, Tuya, BOE, Meige Intelligent, Rihai, Yixin, DJI, Guodian, Huaqin, Foxconn, venture, Jabil, etc.
The company focuses on the accumulation of core technologies and is committed to the research and development and innovation of process equipment, new products and supporting raw materials. The absolute value and proportion of R&D expenses continue to increase. At present, relying on the lithography process technology that has been independently developed for many years, core process technologies such as component packaging and testing, the company has a technical foundation for large-scale production of micro-chip tuning forks, ultra-high frequency crystal resonators, and crystal oscillators. The products are constantly developing towards miniaturization, chip formation, high precision and high stability. The product series is complete, and the total production capacity and production and sales volume ranks among the forefront of mainland China.
Due to the cyclical fluctuations of the crystal oscillator industry, the company's performance in 2018 and 2019 declined. In 2021, benefiting from the innovation of wireless communication technologies such as 5G, Internet of Things, Internet of Vehicles, WIFI6, and the surge in demand for emerging application scenarios and the acceleration of domestic substitution imports, the company's revenue and net profit attributable to shareholders grew rapidly by 97% and 534%, respectively. The compound growth rate of revenue and net profit attributable to shareholders in 2016-2021 was 27% and 33%, respectively.
Looking forward to the future, in the upstream field, the company maintains continuous research and development and improvement of processes, equipment, fixtures, new products and supporting upstream materials; the downstream actively deploys product development and scale application in future advantageous markets, continues to strengthen the research and development of supporting frequency control devices for chip platforms and platform material certification, and continuously improves the supporting design and system construction of automotive specification products. With the company's high-end product line continuing to break through and the introduction of automotive customers, long-term growth is expected.
4.6, Jiemei Technology
Jiemei Technology was founded in 2001 and was launched in 2017. Its products mainly include paper carrier tapes, upper and lower tapes, plastic carrier tapes, transfer tapes (release films), casting films, etc. Among them, paper carrier tapes and supporting tapes account for more than 80% of the revenue, and are the company's main products. The company's products are mainly used in chip electronic components, integrated circuits and other fields. The downstream customers include Samsung, Cuntian, Panasonic, SunsuoDen, Huaxin Technology, Guoju Electronics, Housheng Electronics, Fenghua Hi-Tech, Sanhuan Group, Shunluo Electronics and other well-known passive component companies at home and abroad.
In recent years, the company's revenue and profit have shown a steady growth trend. In 2019, affected by the industry's downstream inventory destocking, its performance declined. In 2020, with the improvement of passive components' prosperity, the company's revenue and profits grew rapidly. The compound growth rates of revenue and net profit attributable to shareholders in 2016-2021 were 20% and 23% respectively. In the first half of this year, due to short-term disturbances in the industry's prosperity, performance declined. As the destocking is over in the future, the company's performance is expected to usher in a turning point.
Through the extension to the upstream, the company's cost advantage is very prominent. Over the years, the gross profit margin has basically remained at around 35%, and the net profit margin has remained at around 20%. In the first half of 2022, due to the impact of the rising price of upstream wood pulp and the decline in crop rate, the profit margin declined. As the industry's prosperity gradually bottomed out and rebounded, the company's profit level is expected to improve in the future.
(This article is for reference only and does not represent any of our investment advice. If you need to use relevant information, please refer to the original text of the report.)
selected report source: [Future Think Tank].
