On April 16, Dingtong Technology (688668. SH) disclosed the 2023 annual report, during the reporting period, the company achieved operating income of 683 million yuan, a year-on-year decrease of 18.65%, a net profit attributable to the parent company of 66.5704 million yuan, a year-on-year decrease of 60.48%, and a non-net profit of 59.0839 million yuan, a year-on-year decrease of 62.43%, showing a double decline in profit.
From 2020 to 2022, the revenue growth rate of Dingtong Technology will be 54.64%, 58.76% and 47.74% respectively, and the growth rate of net profit attributable to the parent company will be 34.84%, 50.39% and 54.02% respectively, and the company's revenue and net profit will maintain double-digit growth rates for three consecutive years. Until 2023, the company's revenue and net profit will both decline, and its performance will encounter a "Waterloo".
As for the reasons for the change in performance, Dingtong Technology said that it was mainly affected by the weakness of the communication market, the decline in revenue and the decline in gross profit margin. In addition to the decline in performance, the company also has problems such as declining gross profit margin and high customer concentration.
In the secondary market, as of the close of trading on April 17, the company's share price closed at 53.55 yuan, an increase of 7.01%, and the current total market value is 5.306 billion yuan.
According to public information, the main business of Dingtong Technology is R&D, production and sales of precision components for communication connectors and precision components for automotive connectors.
In terms of products, in 2023, Dingtong Technology's communication connector components (including communication connector housing CAGE, communication connector precision structural parts) and automotive connectors and their components will achieve revenue of 348 million yuan and 213 million yuan respectively, with a year-on-year change of -36.99% and 31.83%. The reason for the decline in revenue of communication connector components was mainly affected by the instability of external market conditions, inventory consumption in the past period and the decline in direct customer demand.
At the same time, the gross profit margin of Dingtong Technology also declined. In 2023, the company's gross profit margin will be 27.97%, a year-on-year decrease of 7.68 percentage points. Among them, the gross profit margins of communication connector components, automotive connectors and their components were 31.57% and 21.97% respectively, down 5.79 percentage points and 12.54 percentage points year-on-year, respectively.
In addition, Titanium Media APP noticed that the top five customers of Dingtong Technology have a high concentration. It is reported that the company's main customers are Molex, Amphenol, AVIC Optoelectronics, Tyco Electronics and other connector companies. From 2020 to 2022, the revenue of the top five customers accounted for more than 85% of the company's operating income in each period.
However, in 2023, the company's revenue from its top five customers declined. During the reporting period, the company's revenue from the top five customers was 573 million yuan, accounting for 83.96% of the total revenue, a decrease of more than 20% compared with 720 million yuan in 2022.
From the perspective of the industry, Dingtong Technology pointed out in its 2023 annual report that the connector industry in which the company is located is an intensive industry where technology and talents are intertwined, and its production process involves the harmonious resonance of mold design, process scheduling, quality management, material performance, electronic engineering and other fields. In this field, the processing accuracy of the product such as size and appearance is extremely high, and it needs to go through multiple technological processes such as precision machining, stamping and injection molding, and the technical threshold is high.
In this context, Dingtong Technology continues to increase R&D investment to provide sufficient guarantee for product upgrading and new product R&D. From 2021 to 2023, Dingtong Technology's R&D investment will be 37.1556 million yuan, 65.575 million yuan, and 72.6846 million yuan respectively, a year-on-year increase of 32.89%, 76.49%, and 10.84%, respectively.
However, Titanium Media APP noticed that the company's R&D team is not highly educated, and the education of R&D personnel is mainly concentrated in high school and below. Specifically, in 2023, the company will have a total of 285 R&D personnel, of which 26 have a bachelor's degree or above, accounting for less than 1 percent. The number of people with junior college, high school and below is 121 and 138 respectively, and the two together account for more than 9 percent of R&D personnel.
During the reporting period, the company's revenue and net profit attributable to the parent company were 194 million yuan and 18.2326 million yuan respectively, with year-on-year changes of 19.73% and -45.11% respectively, which was in a state of increasing revenue but not increasing profits. (This article was first published in Titanium Media APP, author|Li Ruohan)