In recent years, benefiting from the continuous development of data communications, computers and peripherals, consumer electronics, security, automotive and other industries, the global connector market demand has maintained a steady growth trend. Statistics from independent third-party market research agencies show that the global connector market size was $64.2 billion in 2019, with a compound annual growth rate of 5.6% in the past decade.
According to the data of China Electronic Components Industry Association, China's connector market share in the world is 31.4%, ranking first in the world, and the European market and the North American market account for 21.10% and 20.80% respectively.
Weifang Zhixin Electronics Co., Ltd. (hereinafter referred to as Zhixin Electronics) is a high-tech enterprise focusing on the research and development, production and sales of connector cable assembly products, which are widely used in the field of consumer electronics, and gradually expand the field of automotive electronics, smart home and new energy. This issue of Enterprise Magnifier focuses on connector manufacturing enterprises - Zhixin Electronics.
Source: Zhixin Electronics Company official website
Focus on the consumer electronics connector market
Founded in 2006, Zhixin Electronics was listed on the New Third Board in May 2016, and in November 2021, Zhixin Electronics became one of the first listed companies to be transferred from the selected layer of the New Third Board to the Beijing Stock Exchange.
Electronic connectors are used to connect two or more components to realize the transmission of electrical signals and data signals, that is, to bridge two wires on a loop to play a bridge role. At present, Zhixin Electronics mainly focuses on the field of consumer electronics and automotive electronics, in the first half of 2021, the sales revenue of consumer electronics connector cable assemblies was 146 million yuan, accounting for 64.56% of the operating income; the sales revenue of automotive electronics connector cable assemblies was 0.58 billion yuan, accounting for 25.54% of the operating income.
The composition of the company's operating income in the first half of 2021
Source: Zhixin Electronic Prospectus
The company's consumer electronics connector cable assemblies are widely used in smart wearables, entertainment equipment, and gradually applied to smart homes and modern offices, etc., and the product functions are mainly reflected in low-voltage signal transmission, high-definition signal transmission, power control and other aspects. At present, the downstream customers of Zhixin Electronics mainly include Goertek Group, Gongda Electroacoustic, Sony of Japan, Murata of Japan and other well-known enterprises at home and abroad, and have formed long-term and stable cooperative relations with them.
Sales of the company's top ten customers in 2020
It can be seen that the company's first major customer is Goertek Group, with sales revenue of 97.7406 million yuan in 2020, accounting for 27.06% of the company's overall sales revenue; the company's top five customers account for 73.44% of the total, and the top ten customers account for 91.58%, and the company's customer concentration is relatively high. However, it is precisely because of the high concentration of the company's customers that the company saves a lot of marketing expenses and the scale advantage can be better played.
In addition, the company's top ten customers are mainly well-known enterprises at home and abroad in the field of consumer electronics, and the customer resources are rich and stable. Compared with 2018, the company's top ten customers in 2020 are basically the same.
Corporate Partners
Expand the market in the field of automotive electronics to create new growth points
The global connector market size in 2019 was $64.2 billion, with a compound annual growth rate of 5.6% in the past decade. Among them, automotive as the largest application field of connectors, accounting for about 23.7% in 2019, followed by connectors in the communication field and computer connectors, with market shares of 22.4% and 13.4%, respectively.
That is to say, compared with the consumer electronics connector market, the market size of automotive electronic connectors is larger.
Source: Bishop & Associates (independent third-party market research agency)
In the first half of this year, the company's automotive electronic connector cable assembly sales revenue was 57.7 million yuan, an increase of 163.33% year-on-year, far exceeding the growth rate of consumer electronics connector cable assemblies, and the automotive electronics connector business is becoming a new growth point for the company.
In fact, since 2010, Zhixin Electronics has begun to develop electronic connector cable assembly products in the field of automotive electronics, and has mature technologies in the automotive field of on-board auxiliary driving systems, control systems, safety systems, etc., which should be included in products such as automotive assisted driving, audio and video transmission, new energy vehicle three-electric system, seat belts and airbags. At present, the company has realized the indirect supply to FAW, Geely, Toyota, Nissan, Honda, Hyundai, BMW and other car companies, and the self-developed low-voltage wiring harness products have entered the field of new energy vehicles and become the first-class supplier of Geely Automobile system.
Of course, as a parts manufacturer, in general, the company's direct customers enter the supplier directory of automobile manufacturers, while Zhixin Electronics usually does not directly enter the relevant supplier directory.
2020 Automotive Electronics Connector Cable Assemblies
Product sales
It can be seen that the company's first major customer of automotive electronic connector cable assemblies in 2020 is Xingdian Co., Ltd., and sales revenue accounts for 7.1% of the company's overall revenue. In addition, as the fifth largest customer of the company's automotive electronic connector cable assemblies, goertek is also the largest customer of consumer electronics connector cable assemblies, and the good cooperative relationship between the two sides is conducive to the further expansion of the company's automotive electronic connector business.
Fast performance growth The industry has broad prospects for development
From 2016 to 2020, the company's operating income increased from 176 million yuan to 361 million yuan, with a compound annual growth rate of 19.7%; in the same period, the net profit attributable to the mother increased from 18.3678 million yuan to 39.6469 million yuan, with an annual compound growth rate of 21.3%. In the first three quarters of this year, the company's operating income was 346 million yuan, an increase of 45% year-on-year; the net profit attributable to the mother was 47.6749 million yuan, an increase of 55.15% year-on-year.
Source: Wind Data
Not only that, in the past few years, the company's gross profit margin has remained stable as a whole, maintaining between 24% and 25%, higher than peer companies such as Lixun Precision, Shenglan Shares, and Yihua Shares, and is at a higher level in the industry. The company's net profit margin remained at about 11%, and further increased to 13.78% in the third quarter of 2021, significantly ahead of its peers.
In terms of product unit price, in the three years from 2018 to 2020, the unit price of consumer electronic connector cable assemblies was 0.62 yuan, 0.62 yuan and 0.67 yuan, and the unit price of automotive electronic connector cable assemblies was 2.34 yuan, 2.51 yuan and 2.49 yuan, respectively, which remained stable overall. Because of this, the company can maintain the overall stability of gross profit margin and improve the company's net profit margin level by continuously improving production efficiency and optimizing internal management.
Connector cable assembly price changes 2018-2020
In 2020, Zhixin Electronics' return on net assets was 21.4%, back above 20%; compared with 2016, Zhixin Electronics' asset-liability ratio fell from 57.54% to 32.72% in 2020, and further declined to 19.27% in the first three quarters of this year.
In other words, the company's fundamentals as a whole are gradually strengthening. So, what about the development prospects of the industry?
As mentioned earlier, the global connector market size in 2019 was 64.2 billion US dollars, and in the domestic market, according to Bishop & Associates statistics, from 2015 to 2019, the size of China's connector market increased from 16.3 billion US dollars to 22.7 billion US dollars, with an annual compound growth rate of 8.63%, and maintained a year-on-year growth trend.
From the perspective of subdivision applications, it is generally consistent with the global market, and the domestic automotive connector market share accounts for the highest proportion, at 23.60%. Because of this, the automotive electronic connector market has greater growth potential than the consumer electronics connector market. According to the statistics of Huaxi Securities Research Institute, the compound annual growth rate of China's auto parts industry market size from 2012 to 2019 is 12.19%, and it is expected to grow to 115 billion US dollars by 2023. In this context, it is expected to directly drive the growth of demand for automotive electronic connectors.
The demand for automotive electronic connectors is mainly reflected in two aspects:
First, the development of the automotive market. As the carrier of automotive electronic products, the output and growth rate of automobiles directly affect the development of the automotive electronics market; second, the rapid development of new energy vehicles has driven the continuous improvement of the electronic and intelligent level of automobiles, thus driving the development of the automotive electronics market.
summary
In recent years, the government has clearly and vigorously promoted new energy vehicles, stimulated new consumer demand, and promoted the development of the new energy automobile industry. In 2020, the National Development and Reform Commission issued the "Intelligent Vehicle Innovation Development Strategy", which emphasizes the promotion of the development of on-board high-precision sensors, intelligent operating systems, and on-board intelligent terminal products. From this point of view, Zhixin Electronics will directly benefit from the favorable policies of the state, tap out more profound and stable performance growth points, and promote the long-term development of the company.
The consumer electronic device market such as wearable devices, smart phones, computer products, etc., with the increase of residents' disposable income, the pursuit of intelligent and digital high-quality quality of life, with the continuous development of 5G and artificial intelligence technology, this market is also expected to continue to grow.
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Source丨East Asia Economic and Trade News Reporting Group
Editor 丨Li Xinhang
Audit 丨Li Zhuang Zhang Guiming
Final Judgment 丨Han Dachuan
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