In electronic system equipment, connectors are indispensable components, which are mainly used to realize the interconnection between devices, components, electronic devices and various subsystems, and to ensure that unnecessary energy loss and signal distortion do not occur within the system. From the perspective of downstream application scenarios, connectors are widely used in automotive, communications, consumer electronics, industrial, rail transit and aerospace fields.
It should be pointed out that compared with connector products in other fields, the research and development and design of automotive connectors is more difficult, the production process and reliability requirements are more stringent, and the R&D cycle of vehicle standards and the certification cycle of automobile manufacturers are relatively long, and it takes time to form a progressive volume. Therefore, in the market development pattern of automotive connectors, European and American connector manufacturers with earlier entry time and richer technical reserves occupy a certain market advantage.
However, with the continuous development and growth of China's automotive industry, as well as the industrial adjustment and upgrading brought about by the trend of electrification and intelligence, domestic connector manufacturers have also ushered in new opportunities for the development of automotive connector business, among which the industry "veteran" who has been working in the connector field for more than 30 years - Hop Hing Automotive Electronics Co., Ltd. (hereinafter referred to as "Hop Hing Automobile") is at the forefront.
Positioning high-end, focusing on higher safety level of automotive control system connectors
According to the data, Hop Hing Automobile was established in 2006, is a manufacturing enterprise dedicated to automotive electronics and electronic connectors, mainly engaged in automotive connectors and consumer electronic connectors, which account for 75% and 25% of revenue respectively.
Hexing Automobile Industrial Park; Image source: Hexing Automobile
"Hop Hing began to do connectors 30 years ago, when the main focus was on the field of consumer electronics, the standardization of electronic connectors is high, the company has developed a large number of products, widely used in the electronic and electrical industry, throughout the domestic and foreign markets." In the 1990s, it entered the auto parts supply market, supporting automotive wiring harness products, and after 2000, the company focused on automotive electronic connectors and key components of non-standard customized control systems. Wang Hongzhi, vice president of Hop Hing Automobile, told Gaz Auto.
It is understood that in the automotive connector sector, Hop Hing Automobile's main layout has four major categories of products, namely powertrain system, body electronic control system, automotive steering and braking system and new energy three-electric system. According to a research report released by Hop Hing (SH 605005) in January this year, hop Hing automotive powertrain system is mainly divided into transmission management system components and engine control unit components, accounting for about 64% of automotive electronics revenue; body electronic control systems mainly do safety system components, intelligent and comfort control system components, accounting for about 19% of automotive electronics revenue; steering and braking systems mainly do steering system components and electronic stability system components, accounting for about 11% of automotive electronics revenue In addition, the components of the new energy three-electric system are mainly used for battery management systems, electric shaft drive systems, and high-voltage DC inverter systems, accounting for about 6% of automotive electronics revenue.
Image source: Hop Hing Auto
As mentioned in the opening chapter, automotive connectors already have a high threshold of entry, and the requirements of control system parts in terms of experimental level and safety level will undoubtedly be higher. "The company's initial positioning is the high-end market, the benchmarking direction is also a competitor in the international market, the engine, gearbox, brake steering and other system components in the automotive electronic and electrical system is the key core components, the core technology is also mastered in a small number of Tier1 customers, the technical capabilities of supporting suppliers will be higher requirements." For Hexing Automobile to choose control system components with a higher layout threshold, Wang always seems not to have much pressure.
According to reports, as of now, whether it is consumer electronics or automotive electronics products, about 80%-90% of hop Hing's business comes from foreign customers, and Tier1 enterprises such as Bosch, Delphi, United Electronics, and Continental account for about 70% to 80%; the remaining part comes from GM, Volvo, SAIC, Great Wall, Changan and other domestic and foreign OEMs. "In the industry circle, customers also recognize the strength of the company, when the parts of the card neck are encountered, the company will cooperate with customers to customize the development, and achieve domestic substitution from the aspects of development speed, technical development capabilities, cost and service."
Guojin Securities Research Report pointed out that the main customers of Hop Hing Automobile Transmission System are Bosch, BorgWarner, and United Electronics, and the representative products are DQ380 transmission control components, and there are few domestic competitors; the main customer of steering system components is Bosch, and it occupies a higher share in the Bosch system, and there are relatively few competitors in China.
Specializing in technology, research and development of new connectors that meet the needs of intelligent electric vehicles
As a local automotive connector company, Hop Hing Automobile's breakthrough in this field is not unrelated to its technical reserves over the years.
Mr. Wang said that "taking technology as the first priority, rather than sales as the guide" is an important concept for the development of Hop Hing Automobile. "Unlike most companies that grab business and compete for sales in order to make a bigger market, Compared with sales, Hop Hing Automobile has always put the technical layout in the first place."
It is reported that to maintain the leading technology, Hop Hing Automobile will invest 5%-8% of its revenue in research and development every year, of course, it will increase the proportion of investment in a timely manner when it encounters good technology. At the same time, Hop Hing Automobile has also laid out R&D centers in Los Angeles, Stuttgart and Frankfurt, Japan, Tokyo, And Seoul, South Korea, to synchronize the latest global technology.
It is worth mentioning that at the moment when the degree of vehicle electrification and intelligence is constantly improving, Hop Hing Automobile is also developing products including 5G high-frequency connectors, special-shaped terminals, various sensors, and high-voltage high-voltage high-current connectors for new energy vehicles in order to meet the development needs of intelligent, electrified, and high-end manufacturing of automotive connectors.
Among them, after years of research and development, the new energy vehicle related connector products have entered the mass production stage, such as electric drive system components, battery management system components, high voltage DC inverter system components, filters, etc. Among them, some products of Hop Hing Automobile have entered the Volkswagen MEB platform and are exclusively supplied in China.
Automated production line; image source: Hop Hing Automobile
In addition, in the production line equipment, Hop Hing Automobile is also continuing to invest. According to Mr. Wang, as early as the financial crisis in 2008, all production lines and mold processing of Hop Hing Automobile basically achieved fully automated production, which has been at the leading level in the industry, which is convenient for controlling the relative increase in labor costs and turnover.
In January 2021, Hop Hing co., Ltd. landed on the main board of the Shanghai Stock Exchange, raising 212 million yuan. According to the plan, the funds raised are mainly used for the annual output of 13.5 million sets of automotive electronic precision key components technology transformation project, the annual output of 6 million sets of automotive electronic precision parts technical transformation project, the annual output of 50.6 million sets of precision electronic connector technology transformation project, etc., is expected to be put into production in the first half of 2022, which will greatly enhance the connector production capacity of Hop Hing Automobile.
In the face of the acceleration of the era of intelligent cars, Mr. Wang also realized that the role of software in control systems cannot be ignored. Therefore, in order to better match the rapid iterative upgrade of products, Hop Hing Automobile is also planning to cultivate relevant software developers in the future.
Steady upwards, committed to becoming the world's top supplier of automotive electronics industry
It is precisely with this tenacity in the pursuit of technology that even under the influence of unfavorable factors such as the global financial crisis and the new crown epidemic, Hop Hing Automobile maintains a growth of about 20% every year.
According to the financial report data, in 2020, Hop Hing Automobile's revenue was 1.20 billion yuan and the net profit attributable to the mother was 190 million yuan. In the first three quarters of 2021, the main revenue of Hop Hing Automobile was 1.011 billion yuan, up 29.99% year-on-year; the net profit attributable to the mother was 154 million yuan, up 30.92% year-on-year; and the non-net profit was 143 million yuan, up 32.75% year-on-year.
From the perspective of market performance in the whole year of 2021, Mr. Wang admitted that due to the problem of automotive chips, most OEMs have stopped production on holiday, and the overall performance of Hop Hing Automobile has decreased slightly from the previous forecast of 25% to 30%, but the overall growth has remained.
At present, compared with foreign connector giants with annual revenue of more than 10 billion, Hop Hing Automobile may be difficult to match in scale and volume, but with the core technical barriers, cost control capabilities and response speed and service closer to customers cast over the years, the advantages of Hop Hing Automobile as a local supplier may be more prominent, which can be seen from its customer composition and years of customer cooperation. It is believed that with the continuous expansion of production capacity and the gradual increase of new products, Hop Hing Automobile is expected to gain more sound and share in the automotive connector market.
In the long run, Hop Hing Automobile's development vision is to become "the top supplier of the global automotive electronics industry" and has been working towards this goal. "Our original intention has not changed, that is, to focus on cutting-edge technology, to provide customers with valuable products and services, only if the technology can keep up, the product will keep up, otherwise it will be eliminated." Mr. Wang finally stressed.