In recent years, smart homes have become more and more popular, and intelligence has become a new trend in the home furnishing industry. Far away in the company, through the operation of the mobile phone terminal can make the rice cooker at home start cooking soup regularly, behind this operation is the integration of a variety of new technologies, in terms of the function of rice cooker timing, why can you accurately control the soup for an hour. This involves a basic component called quartz crystal oscillator, which has high frequency stability, which provides a reference frequency signal for the microchip in the rice cooker through a stable pulse, and the chip realizes the control of the soup time after receiving the processing information. Jingsai Technology (NQ:871981) is a company that mainly produces and sells quartz crystal oscillators.
Jingsai Technology (NQ:871981) was established in January 2005 and is headquartered in Tongling City, Anhui Province. According to the product division, the company's main products can be divided into two kinds: quartz crystal oscillator and packaging material. Quartz crystal oscillator, refers to the use of silica crystal piezoelectric effect made of components, its perennial revenue ratio of more than 70%, is the company's main products, packaging materials are the upstream products of quartz crystal oscillator, by the shell, cover plate, can be feller ring three parts, mainly play a role in protecting the wafer, accounting for about 25% of revenue.
Piezoelectric quartz crystal components belong to the core of frequency control components, which can usually be simply divided into quartz crystal resonators (passive crystal oscillators) and quartz crystal oscillators (active crystal oscillators) according to attributes, and the downstream application areas are mobile terminals, consumer electronics, communication networks, household appliances, automotive electronics, medical electronics and other basic industries for national economic development. The consumer electronics field is the main application area of quartz crystals, of which mobile phones are the largest application market for piezoelectric quartz crystals.
Quartz crystal oscillator is a frequency control component made of the piezoelectric effect of quartz crystal (SiO₂), which can generate stable pulses and provide a reference frequency signal for the microchip, which is an indispensable electronic component in the circuit.
According to CS&A statistics, the global sales volume of quartz crystal oscillators in 2019 was about 18.068 billion, and the industry market size was about 3.041 billion US dollars. Among them, the total sales of quartz crystal resonators (XTAL) accounted for about 58%, and quartz crystal oscillators accounted for about 42%.
Passive crystal oscillators (XTAL) can be divided into DIP (Dual Inline-pin Package, dual in-line packaging technology) and SMD (Surface Mounted Devices, surface mount devices) by mounting method.
Active crystal oscillators (quartz crystal oscillators) contain crystals and peripheral circuitry compared to passive crystal oscillators, and can output a stable signal with better accuracy and frequency stability as long as the appropriate DC power supply is provided. Active crystal oscillators can be divided into temperature compensated crystal oscillators (TCXOs), voltage-controlled crystal oscillators (VCXOs), ordinary crystal oscillators (SPXOs), and thermostatic crystal oscillators (OCXOs) according to function and implementation techniques. Among them, the TCXO market accounted for 14%, OCXO accounted for 7%, and VCXO accounted for 7%.
Small size temperature compensated crystal oscillator (TCXO) can provide high-precision, high-stability signal source, with the advantages of small size, easy to mount, mainly can be used in 5G communication network construction, navigation, unmanned aerial vehicles and other emerging industries. Due to its high technical threshold, the domestic market is mainly monopolized by Japanese and Taiwanese enterprises.
With high technical content, domestic production can not be produced or there is no large-scale application demand in China, such as miniaturization, high frequency, high-precision quartz crystal oscillator, thermal crystal oscillator (TSX), temperature compensated crystal oscillator (TCXO) and other products, which are high-end products.
Jingsai Technology has developed and mastered the related technology of thermal crystal oscillator (TSX), which is in the stage of sending samples to customers and has not yet entered the mass production stage; temperature compensation crystal oscillator (TCXO) and other related technologies are still under development.
Whalen crystal has achieved miniaturized SMD resonator, TCXO oscillator, TSX thermal crystal and other high-end products mass production, customers have Wingtech Technology (600745), Quectel Communications (603236), Huichuan Technology (300124), SUNSEA Intelligence (002313), Meige Intelligence (002881), Gongjin Shares (603118), 360 (601360), Zhuoyi Technology (002369), Xiaomi Communications, Shanghai Longqi Technology Co., Ltd., Hisense Group Co., Ltd., etc.
It can be seen that in terms of products and technologies, Jingsai Technology has a certain gap with the domestic leading enterprises Whalen Crystal and Taijing Technology.
SMD quartz crystal resonators account for the highest proportion of the company's revenue and have obvious growth trend, which is the company's main product. Among them, sm3225 models accounted for 51.58% of the products. It can be seen that the company's products are mainly low-end products, and there are fewer high-end products. The SMD3225 is currently the most cost-effective of the quartz crystal oscillator products. SMD3225 has been around for more than 10 years, product performance and stability have been verified for a long time, the market recognition is high, and its size and model can meet the requirements of general electronic products for miniaturization, so in addition to a few application scenarios with extremely high restrictions on product size (such as capsule gastroscopes, etc.), customers will generally give priority to 3225 type quartz crystal oscillator products.
The main customers of SM3225 model products are: Pulian Technology Co., Ltd., Shiyuan Shares, H&ShighTechCorp, Hangzhou Tuya Information Technology Co., Ltd., Shenzhen Qinzheng Electronics Co., Ltd. (distributor), and the end customers are Hytera (SZ:002583), Dineck (SZ:300884), Shenzhen Kaimujin Technology Co., Ltd., Shenzhen Mitang Technology Co., Ltd., Shanghai Yuemian Network Technology Co., Ltd., etc. It can be seen that the company did not enter the largest mobile phone market, but chose communication and smart home Internet of Things as the main market.
The company's downstream customers are mainly manufacturers of electronic products, the scope of application includes the Internet of Things, communication networks, Internet of Things, automotive electronics, smart home, household appliances and other fields, including Sanhuan Group (300408), Shiyuan Shares (002841), MTC (002429), Pulian Technology (TP-LINK), Tuya Intelligence (TUYA), Quectel Communications (603236) and so on.
In addition, the company also has Hikvision, BYD, BOE, Foxconn, Huawei, Changdian Technology and other customers, but the sales are very low, and not direct sales but through dealers.
The raw materials of quartz crystal components mainly include shell (DIP)/upper cover (SMD), wafer, base and so on.
SMD resonator type products are composed of upper cover, wafer, base, etc., and DIP resonant type products are composed of shell, wafer, bracket and so on.
The company's main supplier of SMD bases is Sanhuan Group. Gold is one of the main raw materials for the quartz crystal oscillator base. Therefore, the rise in the price of gold will increase the company's production costs. The supply of bases is concentrated in the three major manufacturers in Japan, kyocera (Kyocera), Sumikin (NSSED) and Japan Special Ceramics Company (NTK), and the market pattern is oligopolistic competition. Kyocera, a major manufacturer with monthly TCXO base shipments of around 120KK, is the largest supplier of raw materials and is in a relatively strong position in peer competition and supply chain. The domestic SMD base is mainly composed of Sanhuan Group (300408. SZ) supply, there is no substitute product, so the company has a certain dependence on the Sanhuan Group.
The main supplier of ICs for TCXO is Asahi Kasei Semiconductor Corporation ("AKM") in Japan.
The suppliers of the company's wafers are Zhongshan Haijing Electronics, Zhuhai Dongjin Quartz, Fett Crystal and so on. Domestic Lun crystal has the ability of all kinds of wafer self-made, which can reduce costs. Jingsai Technology mainly relies on outsourcing, and there is no significant cost advantage in this regard.
The supplier of the company's keva ring is Chongqing Chuanyi Automation.
Direct materials are the company's main operating costs, accounting for more than 70% of the year.
It can be seen that the upstream core materials and core equipment (Japan's sputtering coating machine) are controlled by Japan, especially in high-end products. These core materials account for a high proportion of product costs. Therefore, domestic crystal oscillator companies can only do some low-end products, and the high-end aspect is completely controlled by Japan, and it is difficult to break through in the short term. The core raw materials required by Jingsai Technology also need to be purchased from competitor Kyocera, so it is difficult to compete with its Japanese counterparts.
This causes domestic crystal oscillator enterprises to actually earn material processing fees, typical labor-intensive enterprises, so the gross profit margin and net profit margin are at a low level, and the profitability is poor.
The domestic crystal oscillator industry has actually been very difficult in the past 10 years, and many have been acquired or cross-border: Dongjing Electronics acquired Hero Interactive Entertainment, and wanted to cross-border games; Taijing Technology acquired security companies, cross-border video surveillance; Tangshan Jingyuan Yufeng Electronics was acquired by Unigroup Guowei, and Nanjing Huadong Electronic Information Technology was acquired by Guanjie Technology. After Whalen Crystal was listed in 2015, its revenue did not grow, and its performance declined all the way:
According to statistics from CS&A and China Sankei, the global quartz crystal oscillator market size is stable at about 3 billion US dollars from 2017 to 2020, and the overall market size remains relatively stable. If there is no major industrial change, it is foreseeable that there is basically no increase in this industry. In the domestic market, from 2012 to 2020, the compound annual growth rate of quartz crystal production is about 3.29%, and the growth is slower.
According to the data of the Piezoelectric Crystal Branch of the China Electronic Components Industry Association, the domestic domestic quartz crystal oscillator market size in 2020 was 9.467 billion yuan, and the company achieved revenue of 242 million yuan and a market share of about 2.56% in that year; the market size of domestic quartz crystal oscillator packaging materials in 2020 was 155 million yuan, and the business income of the company's packaging materials after excluding the domestic sales part in the current year was 64.0657 million yuan, accounting for about 41.33% of the market. It can be seen that most of the market is occupied by foreign-funded enterprises, and domestic enterprises may actually only account for two or three billion markets.
From a worldwide perspective, the global quartz crystal oscillator manufacturers are mainly concentrated in Japan, the United States, Taiwan and the mainland. Among them, Japanese manufacturers are leading the industry, with high product grade and the largest output value, leading the development of the industry, accounting for about 50% of the market share. The level of research of American manufacturers is high, but the output is small, mainly military products, accounting for about 10% of the market share; Taiwan and mainland manufacturers are close to the market, and the response to the market is faster, accounting for about 40% of the market share. For example, in the field of miniaturization, although most of the current market demand is 2016, 1612, 1210 and other specifications, Japan has been developing smaller specifications, including 1008, 0806 and so on.
According to CS&A statistics, the top five global quartz crystal oscillator manufacturers in 2019 accounted for a total market share of 46.70%, namely Seiko Epson (Seiko Epson), NDK (Japan Radio Industries Co., Ltd.), TXC (Taiwan Crystal Technology), KCD (Kyocera Co., Ltd.), KDS (Big Vacuum Co., Ltd.). In addition, there are Xihua Crystal, Hosonic Hongxing International Electronics, Micro Crystal, RIVER ELETEC, Vectron Weikechuang International. This market share is not much different from 2013, which shows that the industry competition pattern is stable, and the advantages of leading enterprises are obvious, and it is not easy to be shaken.
However, there are several changes in this industry, and domestic crystal oscillator enterprises are going in a good direction, and finally ushered in the moment when salted fish turned over:
⚫ Industrial transfer
After 2013, Japanese manufacturers were affected by the rising cost of raw materials and human resources and the application of new processes and new technologies, and the market share of low-end products declined significantly, and global production capacity gradually shifted to Chinese mainland. Mainland manufacturers have developed rapidly with the improvement of the automation capabilities and cost advantages of domestic production and manufacturing equipment, and their market share has gradually increased. according to
According to the data released by the Japan Crystal Industry Association, the sales of quartz crystal components of mainland manufacturers accounted for about 10.10% of the world in 2017, an increase of nearly 6.1 percentage points over 4.0% in 2010. China still needs to import a large number of high-end crystal oscillator products, but due to Japan's higher labor costs, slower equipment replacement speed and other reasons, China is more competitive in terms of production efficiency and product cost control of the same type of products.
⚫ Domestic substitution
From 2017 to 2018, the revenue of NDK and KDS businesses in Japan showed a downward trend. Since the second half of 2018, sino-US and Japan-South Korea trade frictions have intensified, and well-known domestic communications, machines, and home appliance manufacturers have actively sought domestic alternatives in the domestic electronic components industry in order to ensure the safety of the industrial chain. In recent years, the continuous application of new product research and development, new technologies and new processes in domestic piezoelectric quartz crystal component enterprises has accelerated the import substitution of high-end products in high-frequency and miniaturized piezoelectric quartz crystal components. Regarding the space for domestic substitution, according to China Customs data, from 2017 to January to August 2020, the import amount of assembled piezoelectric crystals was 34.353 billion yuan, 41.473 billion yuan, 36.519 billion yuan and 24.173 billion yuan, respectively, which is still quite large.
⚫ 5G and the Internet of Things are bringing huge new demands
In recent years, with the increase in 5G penetration, the application scenarios of quartz crystal oscillator have increased rapidly, and the company's future growth space is largely affected by the downstream Internet of Things industry and the market prosperity of smart phones and automotive electronics, of which the development of the Internet of Things has the greatest impact on the industry, according to the prediction of the "Ericsson Mobile Market Report" released in June 2021, the global Internet of Things devices will increase from 12.4 billion in 2020 to 26.4 billion in 2026, with a compound annual growth rate of 13%. If it is estimated that the average quartz crystal oscillator per IoT device is 5 to 10, the market size of nearly 132-264 billion will reach in the next few years.
In addition, 5G smart phones, wearable devices, smart cars, indoor terminal WIFI and other devices will also bring a certain increase to the demand for quartz crystal oscillators. According to the data of China Industry Information Network, by 2025, the global demand for crystal oscillators is expected to reach 312.5 billion, with an annual compound growth rate of about 11.34%, which is a significant increase compared with the industry growth rate before 2020.
Due to the application of 5G technology in the industrial end, the quartz crystal oscillator industry has ushered in a new round of market demand, and the future industry growth rate will be significantly improved. However, 5G and above technology platform products need high-fundamental frequency, miniaturized piezoelectric quartz
Crystal components, so crystal oscillator companies need to be able to develop related products according to these needs in order to meet market demand. At present, Whalen Crystal and Taijing Technology are in the forefront of these high-end crystal oscillator products, and Jingsai Technology has a layout and is still relatively backward.
According to the "2010 China Information Industry Yearbook", there were 38 major manufacturers of piezoelectric quartz crystal resonators in China in 2010. The company's main competitor in China is Dongjing Electronics (002199. SZ), Whalen Crystal (300460. SZ), Taijing Technology (603738. SH), Tangshan Jingyuan Yufeng Electronics (acquired by Unigroup Guowei), Nanjing Huadong Electronic Information Technology (acquired by Guanjie Technology), Hubei Dongguang Electronics, Guangzhou Tianma Telecom, Yantai Qinghu Electronics, Taizhou Yajing Electronics, etc. In 2020, from the comparison of total assets, revenue, patents and other dimensions, it can be seen that the company's gross profit margin is not much different from its peers in the current year, the number of R& D personnel is relatively close, and the proportion of R & D expenses to the company's revenue is at the middle level in the industry. As a large-scale enterprise in the industry, Taijing Technology has more advantages in terms of total assets, patent accumulation and operating income, but the company has strong profitability in the current year from the perspective of deducting non-profits, which is mainly due to the company's high capacity utilization rate and less machine depreciation expenses.
In summary, most of the market in the quartz crystal oscillator industry where the company is located is occupied by Japanese companies, the proportion of domestic enterprises is low, the product is low-end, and the upstream of the industrial chain is firmly controlled by Japanese enterprises. However, the domestic crystal oscillator market is in a stage of rapid expansion driven by domestic substitution, industrial transfer, and new 5G demand, and the production capacity of companies in the industry cannot meet the needs of downstream customers for the time being, and the industry boom is high.
In the first half of 2021, the company's construction projects increased by 486.48% compared with the beginning of the period, mainly due to the construction of new plants and equipment installation.
The number of employees has also increased significantly:
It can be seen that the company's downstream demand is good, production capacity is tight, and it is constantly expanding production capacity.
The company plans to raise 256 million yuan, of which 200 million yuan will be used to expand production capacity, that is, the annual output of 1 billion ultra-small, high-precision SMD quartz crystal resonator project, and another 56 million yuan for the R & D center construction project.
Annual output of 1 billion ultra-small, high-precision SMD quartz crystal resonator project plans to build a two-year cycle, without considering the product price increase and scale benefits to reduce costs, if the price of 10,000 SMD crystal resonators per 10,000 smolder resonators in January to June 2021 is calculated at 0.238 million yuan, the estimated new revenue after full production is 238 million yuan, if the average net profit margin of 9.34% in 2018-2020 is calculated, the net profit is 21.85 million. The company's estimated operating income is 294.00 million yuan (excluding tax), and the total annual profit is 47.8332 million yuan. Compared with the company's operating income of 322 million yuan in 2020, deducting non-net profit of 34.0665 million, there is a more obvious increase. In the context of the current high prosperity of the industry, these new production capacities can be digested with a high probability.
Some potential risks for the company:
First, equity is highly concentrated, and there are corporate governance risks. The controlling shareholder Hou Shiyi directly holds 51.23% of the company's shares, his daughter Hou Xue directly holds 35.89% of the company's shares, indirectly holds 0.64% of the company's shares, and the two hold a total of 87.76% of the company's shares, which is the actual controller of the company, in addition, Hou Xue is the executive partner of Tongling Jingchao and Tongling Jingyi, and Tongling Jingchao and Tongling Jingyi hold a total of 9.4% of the company's equity, so Hou Shiyi and Hou Xue actually control 96.52% of the company's share voting rights. This means that all matters of the company are decided by the father and daughter, and there is no restriction.
Second, there are some irregularities in the company, such as working capital through Anhui Xinke.
In addition, some of the practices of the company's major shareholders are not very reassuring. On the one hand, the company controller pays a large annual dividend, and on the other hand, lends the money from these dividends to the company.
Why do so many dividends directly keep this money in the company for production and operation purposes? It is estimated that because the money paid in dividends to the major shareholders belongs to the major shareholders, the nature is completely different. This is a bit of a matter of putting personal interests above the company.
In terms of valuation, the reserve price of the company's offering is 18.32 yuan / share, and the price-earnings ratio is 28.41 times. The company belongs to the quartz crystal oscillator electronic components industry, and the valuation of companies in the same industry that are similar to the company's business is as follows, and the valuation is generally in the range of 50-90 times. So if the valuation of the issue price is not low, there is still room for growth.
【Special note】The data and information in the article come from the company's financial report, brokerage research report, industry report, enterprise official website, public number, Baidu encyclopedia and other public information, I strive to report the content and views of the article objective and fair, but do not guarantee its accuracy, completeness, timeliness, etc. The information or opinions in this article do not constitute any investment advice, investors are responsible for any investment behavior at their own discretion, and I am not responsible for any direct or indirect losses arising from the use of the contents of this article. For more in-depth analysis of the Beijing Stock Exchange and the New Third Board, welcome to pay attention to @Anfushuang focusing on the Beijing Stock Exchange