Jingfang Technology plans to set up a grandson company for 360 million yuan to accelerate globalization, and export sales account for more than 70%, with a comprehensive gross profit margin of 42.44%

Yangtze River Business Daily News ● Yangtze River Business Daily reporter Xu Yang

A-share sensor packaging manufacturer Jingfang Technology (603005.SH) promotes its global strategic layout.

A few days ago, Jingfang Technology announced that the company plans to invest 50 million US dollars (equivalent to about 360 million yuan) in Malaysia to set up a wholly-owned grandson company, aiming to build the company's overseas manufacturing base.

The Yangtze River Business Daily reporter noticed that in recent years, Jingfang Technology has continued to deploy overseas markets and continuously expand its core customer groups. In 2023, the company's export revenue will be 663 million yuan, and the corresponding proportion will increase to 72.58%.

Technological innovation is the core driving force for the development of Jingfang Technology. Jingfang Technology continues to build a "moat" for advanced packaging with high R&D investment to achieve business growth and gross profit margin improvement. In the first quarter of 2024, the company's consolidated gross profit margin reached 42.44%, far better than its peers.

The proportion of export sales increased by 22.51 percentage points in three years

On the evening of June 27, Jingfang Technology announced that in order to respond to the development trend of the integrated circuit industry and promote the company's market development, project expansion and global production, the company intends to establish a wholly-owned company in Malaysia (hereinafter referred to as the "Malaysian company") through its Singapore subsidiary OPTIZ PIONEER, with a proposed investment amount of 50 million US dollars and its own funds.

ACCORDING TO THE ANNOUNCEMENT, THE BUSINESS SCOPE OF THE MALAYSIAN COMPANY INCLUDES INTEGRATED CIRCUIT PRODUCT MANUFACTURING, RELATED TECHNICAL SERVICES, RESEARCH AND DEVELOPMENT, PRODUCT IMPORT AND EXPORT, TECHNICAL CONSULTING SERVICES, ETC., AND OPTIZ PIONEER, A WHOLLY-OWNED SUBSIDIARY OF JINGFANG TECHNOLOGY SINGAPORE, HOLDS 100% OF THE SHARES OF THE MALAYSIAN COMPANY.

Jingfang Technology said that the investment aims to build the company's overseas manufacturing base, improve the company's manufacturing and technical service capabilities, better meet the needs of overseas markets and customers, achieve sustainable growth of the company's business, and continue to promote the strategic layout of international market expansion, technology research and development, and global production investment.

The Yangtze River Business Daily reporter noted that in recent years, Jingfang Technology has continued to promote its global business layout and integrate overseas resources. According to the disclosure, the company completed the merger and acquisition of the Dutch company Anteryon in 2019; In 2023, the company will set up a subsidiary in Singapore to expand the company's overseas business center, R&D engineering center and investment and financing platform.

At the same time, Jingfang Technology continues to expand its core customer base, and its downstream customers currently include world-renowned sensor design companies such as SONY, Haowei Technology, Geke Micro, and Smartway. However, due to the relatively concentrated market competition pattern, the sales of the top five customers of Jingfang Technology in 2023 will be 616 million yuan, accounting for 67.41% of the total annual sales.

It is worth mentioning that the foreign market has become the main battlefield of Jingfang Technology, and its export revenue has grown steadily in recent years, and the proportion is also increasing. From 2020 to 2023, the company's export revenue will be 553 million yuan, 739 million yuan, 747 million yuan, and 663 million yuan respectively, accounting for 50.07%, 52.39%, 67.51%, and 72.58% of the total revenue in the current period, an increase of 22.51 percentage points in three years.

In addition, the gross profit margin of Jingfang Technology's export sales is also significantly higher than that of domestic sales. From 2020 to 2023, the gross profit margin of export business will be 51.71%, 53.29%, 46.1% and 45.05% respectively; The corresponding gross profit margins of domestic sales were 48.06%, 51.5%, 39.93% and 19.71% respectively.

The gross profit margin is as high as 42.44%, far exceeding that of peers

Founded at the end of 2005, the company focuses on the development and service of advanced packaging technology for integrated circuits, focusing on the field of sensors, packaging products mainly include image sensor chips, biometric identification chips, MEMS chips, etc., related products are widely used in smart phones, AIOT (security monitoring digital, etc.), automotive electronics, identity recognition and other market fields.

Since its listing in 2014, Jingfang Technology's operating performance has fluctuated greatly. In 2015, 2016 and 2018, its net profit fell by 42.3%, 53.43% and 25.67% respectively, and began to grow steadily for three consecutive years in 2019, and its performance in 2021 set the best record in the past years, with operating income, net profit and non-net profit of 1.411 billion yuan, 576 million yuan and 441 million yuan respectively in the current period.

In the past two years, due to the decline in market demand and the pressure of industry destocking, Jingfang Technology's revenue and net profit have both fallen into a downward trend. In 2022 and 2023, the company's operating income will be 1.106 billion yuan and 913 million yuan respectively, a year-on-year decrease of 21.62% and 17.43%, the net profit will be 228 million yuan and 150 million yuan respectively, a year-on-year decrease of 60.34% and 34.30%, and the non-net profit will be 204 million yuan and 116 million yuan respectively, a year-on-year decrease of 56.70% and 43.28%.

However, with the gradual recovery of the industry, Jingfang Technology has achieved high performance growth in the first quarter of 2024. During the reporting period, the company's operating income, net profit and non-net profit were 241 million yuan, 49.24 million yuan and 39.37 million yuan respectively, an increase of 7.90%, 72.37% and 92.74% year-on-year.

In the first quarter of 2024, the net cash flow from its operating activities increased by 125.73% year-on-year to 41.46 million yuan; The cash received from the sale of goods and the provision of labor services increased by 25.54% year-on-year to RMB257 million.

The Yangtze River Business Daily reporter found that Jingfang Technology's comprehensive gross profit margin is relatively high, and it has always been in the forefront of peer companies. In the first quarter of 2024, the company's gross profit margin was 42.44%, an increase of 6.22 percentage points year-on-year. In the same period, the gross profit margins of Changdian Technology, Tongfu Microelectronics and Huatian Technology were 12.2%, 12.14% and 8.52% respectively.

The main factor that causes the difference in gross profit margin is that Jingfang Technology has advanced packaging technology and continues to maintain a leading position in the industry. It is reported that since its establishment, the company has always paid attention to R&D investment and continuous innovation in technology. As of the end of 2023, the company and its subsidiaries have formed an international patent system layout, and have successfully applied for and obtained a total of 500 patents.

From 2021 to the first quarter of 2024, the R&D expenses of Jingfang Technology reached 180 million yuan, 193 million yuan, 136 million yuan, and 29.83 million yuan respectively, accounting for 13%, 17%, 15%, and 12.4% of the company's sales revenue, respectively. As of the end of 2023, the number of R&D personnel in the company is 210, accounting for 24.39% of the company's total number.

In the asset-heavy industry, Jingfang Technology's asset-liability ratio has been at a good level, only 15.4% in the first quarter of 2024, which is significantly better than comparable companies in the same industry. In terms of liquidity, as of the end of the first quarter of 2024, the company's monetary funds on the books reached 2.65 billion yuan, which is enough to cover a total of about 384 million yuan of long-term and short-term debt, and the strong financial strength can ensure the company's future business development.