Small Devices Make Great Achievements

A connector is a channel through which energy and information are exchanged when constructing an electronic system. Compared with a core device such as a central processing unit (CPU), the connector is a small device, but a domestic connector listed company has made great achievements by relying on this small device. . Derun Electronics (002055), Lixun Precision (002475) and Changying Precision (300115) both recorded significant year-on-year revenue and net profit growth in the first half of the year, and these companies are using the opportunity of industrial transfer to accelerate the expansion of production capacity. The annual benefits are expected to continue to increase.

Derun’s main products are home appliances and computer connectors. The company has forecast that the first half of this year's performance will increase by 200% to 250% year-on-year. Lixin’s main products are communications and computer connectors. The company expects its first-half results to increase by 50% year-on-year. 70%; Changying Precision expects its first-half performance to increase by 40% to 60% over the same period of last year. In 2010, about 40% of the company's revenue was derived from communication connectors.

Mo panic! The main force is still in the fall? The locked stock is likely to be saved! March stock market is likely to change dramatically? The hidden money behind the tussle! These three companies performed well in the first half of the year and the entire year. The sharp increase in profits this year is not the reason for the low base year-on-year. In general, the growth of the connector industry is basically synchronized with that of the electronics industry. In recent years, the development of the electronics industry has been mediocre. Even by the financial crisis, the fluctuations have greatly affected. So where does the growth momentum of the connector listed companies come from?

An executive from Derun Electronics said that in recent years, as the downstream home appliances, mobile phones, computers and other manufacturing industries have moved to mainland China, the international connector market has also been rapidly transferred to China. Compared with other electronic components, connectors have many characteristics such as large product variety, strong customization, and fast service response. Therefore, customers often require connector manufacturers to provide products nearby. In terms of costs, the advantages of domestic companies gradually emerged. In addition, connector products require long certification times and the industry entry barrier is relatively high. Therefore, the rapidly growing domestic connector market provides a rare opportunity for industry leading companies to quickly become bigger and stronger.

In order to firmly grasp the opportunities, the connector listed companies have accelerated the pace of industrial upgrading. Derun Electronics originally relied on home appliance connectors, and its gross margin level has been low. In 2010, the company aggressively tapped into the high-end connector market for computer CPUs and memory, and began to undertake large-scale production transfer of Tyco and other world-class manufacturers. In terms of automotive connectors, the company has become a supplier of connector products for Chery, JAC and other automobile manufacturers. DeRun Electronics' new product in 2010 accounts for less than 10%, and this year it is likely to reach more than 30%.

Lixun Precision will quickly become bigger and stronger by acquiring peer leading companies. In April of this year, Lixin Precision changed some of its IPO fundraising and use plans and acquired Kunshan Lianhe Electronics at a price of RMB 580 million. Through the acquisition, Lixun Precision indirectly became the supplier of Apple's iPad products, and increased a lot of high-end important customers. It is understood that the newly acquired Lianhe Electronics has achieved substantial profit growth in the first half of this year, becoming the main source of Lixin’s profit growth.

At the same time as product upgrades, connector listed companies increased their capacity building. In 2010, DeRun Electronics increased the number of CPU and memory connector projects funded by fundraising. It has already achieved mass production. It is currently in a period of capacity increase, and production capacity will be significantly expanded in the second half of this year. The problem of insufficient capacity is gradually being solved. In the second half of the year, Lixun Precision will also release more production capacity, and it is expected that capacity will be doubled in the future.