As a leading connector manufacturer in China, DEREN Electronics has gradually achieved results in the field of automotive electronics. A few days ago, Qiu Yang, president of the company, and other senior executives accepted an exclusive interview with the reporter of Securities Times·e Company, expounded market strategy and industry trends, the company's planning and deployment around the new energy vehicle electronics field from the aspects of the company's operation, and said that DEREN Electronics aims to become the world's leading supplier of new energy vehicle electronics core components, and plans to increase the share of on-board charger products in the global market to 15%-20% in the future.
New energy vehicle business grew against the trend
For more than 30 years since its establishment, starting from home appliance connectors, DEREN Electronics has become the industry leader in this sub-sector and has made in-depth layout in the fields of consumer electronics and automotive electronics. In December 2020, DEREN Electronics changed its board of directors, and Qiu Yang took office as the president of the company. During the interview, the new senior management members of the company, including Qiu Yang, made it clear to reporters that automotive electronics, especially new energy automotive electronics, has become the strategic development focus of the company.
Financial reports show that the Company's operating performance has maintained steady growth due to factors such as COVID-19 pandemic and the slowdown in the development of domestic automobile market industry. Traditional businesses have seen steady growth, new energy businesses have seen rapid growth, and the revenue structure has been adjusted: the revenue contribution from automotive electronics and electrical related businesses has accounted for more than half. Among them, automotive electronics and new energy vehicle business achieved contrarian growth, with a year-on-year increase of 18.55% to 1.4 billion yuan.
In terms of automotive electronics and new energy vehicle business, DEREN Electronics has entered the field of on-board chargers (OBC) through the acquisition of Italian Meta Company. After years of incubation, the company's OBC products have achieved business volume growth and can supply products in batches to key customers such as Porsche, BMW and PSA.
From the operational point of view, the performance of DEREN Meta, which is responsible for OBC business, in 2020 has obviously improved compared with the previous year. At present, the on-board charger business adopts a two-line operation mode, of which the Chongqing factory in China has already made profits and the new production capacity will be expanded in Yibin factory in the future; Italian Meta Company suffered a loss in net profit last year, but it decreased compared with the previous year, because it undertook the early research and development and mass production of OBC project with a high cost, and the order delivery was delayed due to the epidemic situation.
According to the company's senior executives, Meta's profit has improved in the first quarter of this year. With the continuous realization of mass production and supply in the future, Meta's revenue scale is expected to reach a higher level and its performance is expected to usher in an inflection point.
Cross-bilateral market operation focuses on customer needs
At present, on-board charger has become an essential core component of new energy vehicles. Its core working principle is to convert low-voltage alternating current (AC) into high-voltage direct current (DC) in the vehicle and charge the battery to greatly improve the speed, which is an important link in the user experience and a key area for differentiated competition among different brands and models. At present, on-board chargers are gradually developing towards intelligence, integration, light weight and high efficiency. DEREN Meta has taken the lead in introducing 22KW800V platform high-power on-board chargers in the world and has been used on Porsche Taycan models. The charging speed is 3-4 times higher than that of domestic mainstream products.
According to the estimation of Zhongtai Securities, with the continuous improvement of the penetration rate of new energy vehicles in the world, the global sales volume of new energy vehicles is expected to reach 13 million vehicles in 2025. Considering the unit price of OBC chargers for passenger cars, it is estimated that the market space of OBC chargers for passenger cars will grow to 25 billion yuan.
"In the field of new energy on-board chargers, DEREN Meta is one of the few domestic enterprises that can cross bilateral markets and has basically not met domestic competitors in Europe." the company’s senior executives pointed out, "We have been able to compete with international giants such as Bosch and Panasonic in this field. Last year, the company shipped about 200,000 sets of on-board chargers in the European market, accounting for 10-15% of the single OBC market. DEREN Meta's future goal is to win 15%-20% of the global market share."
Data show that the European new energy vehicle market experienced rapid development last year, with a total of 1.367 million new energy passenger cars registered, up 142% year-on-year, a growth rate almost 10 times that of China in the same period. Europe has the highest share of new energy vehicles in major markets in the world.
The company’s senior executives said that considering the characteristics of products and markets, the company is still focusing on the European market and consolidating its leading share in the European market; At the same time, it will cooperate with the medium and high-end models of domestic vehicle enterprises. The company has set up a local research and development team in Shanghai and has conducted exchanges and cooperation with some "new car-making forces" enterprises. Some of these projects have already been quoted. It is estimated that orders from the domestic market will start in the next few years.
Summing up DEREN's development process, the company’s senior executives told reporters that the company kept up with market trends, continuously adjusted its business structure, integrated effective resources, focused on new energy vehicles, and created value for customers.
On the signal acquisition line of the power battery of new energy vehicles, the company explored replacing flexible printed circuit board with flexible wires, which realized cost saving and efficient automation for customers; The 22kW high-power on-board charger developed and mass produced by DEREN Meta is the first in the world. It adopts silicon carbide high-frequency solution and represents the leading level in the industry at present.
On the other hand, DEREN's electronic automotive wiring harness business is also expanding into the field of new energy automotive electronics. In addition to the traditional vehicle wiring harness, the company also supplies customers with high-voltage wiring harness unique to new energy vehicles; Compared with traditional automotive wiring harness, high-voltage wiring harness has higher value; At the same time, the company also develops and supplies small wire harness products such as battery packs and engines for customers such as CATL and Weichai Power.
With the construction and application of 5G in the world, connector products begin to develop in the direction of high speed, wireless transmission, small precision and intelligent technology. The company is committed to promoting the domestic replacement process of connectors and solving the problem of "neck sticking". Under the background of the two-way increase in the technical content and additional functions of connector products, the market scale and product value of connectors have increased simultaneously, and the volume and price have risen together, making the connector market enter a new round of high-speed growth.
Refinancing helps sustainable development
In terms of capital operation, DEREN Electronics disclosed last year that it planned to issue no more than 142 million new shares in private, with a total of no more than 1.672 billion yuan to be raised for investment in the construction of high-speed transmission connector projects, OBC Research and Development Center projects and supplementary working capital. The matter was officially approved by the CSRC on May 26.
According to reports, the construction of OBC Research and Development Center will strengthen the company's technical research and development strength for OBC core modules of new energy vehicles and enhance the software development capability of OBC hardware products. In the company's OBC project development, the software development cost has already accounted for 40% of the total project development cost. The more integrated OBC functions, the more difficult the software development is. Especially driven by the automatic driving function, the software development cost will account for more than 50% of the total OBC development cost. Through the implementation of the fund-raising and investment project, it will better serve existing customers and have the ability to further provide OBC product development for vehicle manufacturers. In the future, it will use China's research and development resources to serve the global market, so as to continuously increase the market share of the company's products.
Senior executives of the company said that they are actively promoting the fixed increase, hoping to develop the electronic business of new energy vehicles, introduce strategic investors and optimize the shareholder structure. It is worth noting that, as a bail-out fund, Shenzhen Investment Holding Zhongzheng Xinying Equity Investment Fund Partnership accepted 5% shares of Desheng Company, the controlling shareholder, at 9.63 yuan/share in September 2019, and completed its withdrawal in the fourth quarter of last year. According to the average price of the reduction interval, China Securities Regulatory Commission finally withdrew to achieve a floating profit of about 70%.