New energy vehicle connector market has great potential

Connector is an electronic system equipment between the current or signal transmission and exchange of electronic components, the domestic market size of hundreds of billions of dollars, steady growth year by year. Zhao Qingfu recently said in an exclusive interview with the China Securities Journal reporter, "the future development of automobiles into an intelligent mobile platform trend is becoming clearer and clearer. The company began a few years ago around the intelligent assisted driving, automotive safety and protection and new energy vehicles three electric systems and other areas of substantial investment in research and development, the relevant products have been recognized and adopted by customers, which ensures that the company's automotive-related business faster growth." Industry insiders said that the automobile is a larger application area of the connector market. With the increasing penetration of new energy electric vehicles, intelligent driving, intelligent Internet connection, in-car entertainment and other technology development needs will drive the requirements and demand for automotive connectors to synchronize the increase.

Higher technological threshold of the automotive connector cable assembly market, the company initially focuses on consumer electronics, and gradually expand to the field of automotive electronics. High-speed data transmission connector cable assemblies, miniature precision connector cable assemblies and other related products with high technical parameters requirements, complex production process, there is a certain technical and technological threshold. "These products are widely used and have a large market capacity. Globally, the top ten manufacturers of automotive connector factory in addition to Lixun Precision are foreign enterprises." Zhao Qingfu said. From the per capita output value indicators, domestic listed companies involved in the automotive connector business in the A-share is in the downstream position; from the gross profit margin indicators, this type of listed companies ranked in the midstream position. On these two indicators, connector companies in the A-share market is not amazing, but their "science content" is not low. Automotive connector manufacturers need to master the technology includes: miniaturization requirements of precision mold manufacturing technology, high-speed requirements of signal integrity, electromagnetic compatibility technology, high current requirements of reliable design and manufacturing process, environmental adaptability requirements of precision stamping technology and injection molding technology. For example, USB3.0 to USB2.0 replacement, the transmission rate from 486Mbps to 5Gbps, the signal frequency increased by ten times, by the alternating magnetic field brought about by the interference has also been significantly strengthened, the introduction of USB3.1 is to further increase the transmission rate to 10Gbps. automotive connector manufacturers not only need to be in the mold, welding, and other process aspects of the operation of the refinement in order to reduce magnetic field Interference, in the product design more need to use electromagnetic simulation software for rigorous evaluation and consideration. Zhao Qingfu introduction, automotive connector cable assembly is equivalent to the nerve of the equipment, stable performance is very critical; at the same time, because they are mostly non-standard products, requires strong process development capabilities. The company has formed a technical accumulation in product miniaturization, high-speed, integration. In order to further enhance the competitiveness of the company's products and grasp the initiative in the future market competition, Zhixin Electronics' R&D mechanism is being transformed. "The company's initial scale is relatively small, the comprehensive strength is weak, our R & D investment is mainly centered around the relevant identified projects. The next step we will focus on the industry development trend, forward-looking for related products to increase R & D investment, subsequent R & D efforts will be further increased." Zhao Qingfu said. Automotive business is strong in recent years, with the industry boom as a whole, superimposed on the company's automotive electronics business volume, Zhixin Electronics has achieved rapid growth. In the first three quarters of this year, the company's operating income of 346 million yuan, an increase of 45.00%; net profit of 47.6749 million yuan, an increase of 55.15%. This year, Zhixin Electronics' new energy vehicle-related business revenue has climbed rapidly. Zhao Qingfu said, "in recent years, the country's support for new energy vehicles is very strong, we are in the new energy vehicles 'three electric systems' (battery, electric drive, electronic control) related to the automotive connector cable assembly products in the field of more development investment, there is a certain amount of technical accumulation. New energy vehicle market share increases, is conducive to the company's related business enhancement." In the first 11 months of this year, China's new energy vehicle production and sales reached 3,023,000 and 2,990,000 respectively, both up 1.7 times year-on-year. With the development of society and consumer upgrading, people on the car safety and comfort configuration requirements continue to improve, driven by the car on the related high-frequency data connector cable assembly product demand continues to increase. For high-frequency data connector cable assembly products, Zhixin Electronics combined with USCAR, IEEE and other international standards for the design and development of automotive connector cable assemblies, which can realize the transmission of high-frequency signals such as LVDS signals, RF signals, etc., to meet the automotive function in the field of intelligent driving, V2X, USB charging, etc., so as to achieve the improvement of the overall comfort of the automobile ride. Zhao Qingfu introduction, automotive connectors and related cable assemblies are one of the parts that account for a larger share of the cost of the car. In addition, whether it is a traditional fuel car or new energy vehicles, intelligent assisted driving, safety and security systems will be configured more and more high, these need to use the relevant automotive connector cable assembly products, which is the value of the amount. Enhance operational capacity "listed on the Beijing Stock Exchange, the company's visibility and its own value have been further enhanced, which is very favorable to the company's business expansion. Many of our customers have businesses all over the world, they are very concerned about the risk-bearing capacity of the supplier's operating process to ensure the stability of the supply chain, the change in the identity of the listed company is a plus for the company's product market expansion." Zhao Qingfu said. "The refinancing policy of the Beijing Stock Exchange has been introduced, which can meet the needs of the company's development. Currently, our energy is mainly in optimizing corporate governance, product development, market expansion and improving the company's performance, and there is no consideration of switching boards for the time being. With the increase in the number of listed companies on the Beijing Stock Exchange and the improvement of investor awareness, we believe that the trading activity on the Beijing Stock Exchange will get better and better." In order to further develop the automotive electronics market, and simultaneously amplify the production capacity of consumer electronics cable assemblies, Zhixin Electronics invested 125 million yuan in the construction of automotive connector cable assemblies R & D and industrialization project, is expected to reach full production in 2024. Zhao Qingfu said, "The project is progressing well, is expected to complete the infrastructure in the second half of next year. The related equipment investment, we are synchronizing to promote." After the completion of the above project, it will form an annual production capacity of 120,000 pieces of new energy vehicle control cable assemblies, 1.6 million pieces of in-vehicle intelligent assisted driving cable assemblies, 13 million pieces of automotive safety control cable assemblies, and 40 million pieces of consumer electronic connector cable assemblies. After the project reaches full production, it is expected that the annual average new operating income of 285 million yuan. Consumer electronics automotive connectors are used in a wide range of scenarios, "from the trend, driven by the game, home entertainment, large-screen display and other factors, the performance of the intelligent terminal entertainment system this piece is a little stronger." Zhao Qingfu said, "Despite the current slowdown in demand for consumer electronics, but as far as Zhixin Electronics is concerned, our business volume has not declined, and the order has been improved." Affected by the rising prices of copper and other raw materials, automotive connector manufacturers are facing upward pressure on costs. Zhao Qingfu said, "We didn't raise prices, but focused on internal cost control to absorb the pressure on the cost side by optimizing production and improving efficiency." In 2019, 2020 and the first three quarters of 2021, the gross margin of Zhixin Electronics was 25.32%, 24.18% and 24.62%, respectively, remaining stable.

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