Seven former Huawei colleagues founded and bet on PCB design to subdivide the track. Did Yibo Technology’s differentiated play work？ ｜ ｜IPO observation
Text | Chen Xining
Editor | Peng Xiaoqiu
Recently, Shenzhen Yibo Technology officially passed the approval of the Municipal Committee on the Growth Enterprise Market of Shenzhen Stock Exchange, which indicates that the PCB industry has ushered in a new listed company. Since then, the IPO road that lasted nearly a year has finally come to fruition.
In the whole global PCB industry, China’s market share has occupied more than half. This also means that this technology-intensive manufacturing industry has entered a stage of fierce competition, and the growth rate of corporate profits has slowed down. However, the performance of Yibo Technology has maintained a high growth against the trend.
According to the prospectus, Yibo Technology’s revenue in 2019 was 406 million yuan, a year-on-year increase of 19%; The net profit of returning to the mother was 82 million yuan, a year-on-year increase of 105%. After entering 2020, the company’s revenue reached 574 million yuan, a year-on-year increase of 41%; The net profit of returning to the mother was 133 million yuan, up 62% year-on-year-still on the track of rapid growth.
Judging from the external evaluation, the first impression of Yibo Technology is that the company has seven actual controllers, all of whom have Huawei experience. The bright technical background makes Yibo Technology cut into the industry in a different way from ordinary PCB manufacturers-Yibo Technology mainly focuses on customized PCB design, and then carries out one-stop service business to gain customers.
Then, in addition, what are the highlights of Yibo Technology, and the future prospects?
From the perspective of revenue composition, Yibo Technology is a one-stop hardware innovation service provider based on printed circuit board (PCB) design services and providing printed circuit board assembly (PCBA) manufacturing services.
The full name of PCB in Chinese is "printed circuit board", which is the support of electronic components. Specifically, it refers to a printed board that forms point connections and printed components on an insulating substrate according to a predetermined design, and is known as "the mother of electronic products".
Some application industries of PCB
How to arrange the connected points and electronic components on the PCB board belongs to the category of PCB design. PCBA stands for "PCB Assembly" in English, that is, bare PCB bare board forms "PCB board with electronic components" after mounting electronic components and packaging manufacturing.
As far as Yibo Technology’s own business is concerned, the company’s PCB design means that PCBA can realize the specific functions of hardware by designing circuit schematic diagrams, and the company can realize income by providing customers with PCB design drawings and production documents that can guide production and manufacturing; PCBA manufacturing is the company’s welding and assembly of PCB boards to form PCBA for re-export.
PCB design is a key link in hardware research and development of electronic products, and all aspects of performance indicators of electronic products can be achieved through PCB design. Specifically, when the market develops an electronic product, only through PCB design can the scheme and idea be transformed into a PCB that can be manufactured.
Device layout in PCB design
Looking back on the development of Yibo technology, it can be divided into three stages:
- Starting accumulation period from 2003 to 2010: this stage focuses on PCB design business;
- The leap period from 2011 to 2014: from PCB design to one-stop service mode including PCBA;
- Rapid development period from 2015 to now: expanding production capacity and steady growth of business scale.
After years of accumulation, Yibo Technology has served about 5,000 customers, including Zhengmeiji, Zoomlion, DJI, Tencent, Intel, Apple and other enterprises.
Because of the different ways of playing in the industry through PCB design, Yibo Technology has successively covered many fields such as industrial control, network communication, integrated circuits, intelligent transportation, medical electronics, aerospace, artificial intelligence and so on.
But in terms of revenue contribution, PCBA is the main source. From 2017 to 2021, the proportion of PCBA manufacturing in the overall revenue increased from 69.7% to 80.1%, and the proportion of corresponding PCB design business decreased from 30.3% to 19.9%, and the weight of PCBA manufacturing continued to increase.
In this regard, Yibo Technology explained that many companies that have become customers because of PCB design business will continue to conduct PCBA business in Yibo Technology after a cooperation, so the proportion of PCBA business continues to rise.
This trend will be consolidated, because in this 800 million-scale IPO increase, Yibo Technology’s funds for PCBA production lines are much larger than those for PCB design projects, and the difference between them is nearly three times.
Image source: Yibo Technology Prospectus
Therefore, based on the revenue contribution and future development investment, PCB design business has played a very good role in differentiating customers, and the final income depends on PCBA.
In the PCB design market, the main players can be divided into two types:
The first category, enterprises that have PCB design business and tend to develop this business, such as Yibo Technology, xing sen technology, Maiwei Technology, Jin Baize, etc., have more than 100 PCB R&D designers;
The second category, a large number of small-scale third-party PCB design companies, some of which exist in the form of studios, mainly focus on low-end, simple PCB design outsourcing needs. According to the prospectus of Yibo Technology, the revenue scale of such enterprises ranges from several hundred thousand yuan to several million yuan, and the personnel scale ranges from 2-3 people to 20 people. It can be seen that the overall concentration of the industry is relatively scattered.
In the PCBA manufacturing market, there are three main players:
The first category is undertaken by a large number of small and medium-sized PCBA mounting factories, which are relatively small and scattered;
The second category, for the product company itself, they often build their own production lines to complete PCBA mounting;
The third category, such as Yibo Technology, which has developed in recent years, has a certain scale and technical strength, and focuses on the research and development of proofing and small and medium-sized batch PCBA high-quality express mail.
Similar Competitive Companies in Yibo Technology Prospectus
Combined with the characteristics of PCB design industry, we can compare the strength of Yibo Technology with competitors from two aspects: design strength and operating results.
First of all, the most intuitive indicator is the number of R&D personnel.
By the end of 2020, the number of R&D personnel of Yibo Technology reached 636, compared with 1,249 in xing sen technology and 201 in another company, Jinbaize. From the perspective of the proportion of R&D personnel, Yibo Technology accounts for 45.04%, xing sen technology and Jin Baize account for 20.83% and 13.60% respectively, and Yibo Technology R&D personnel account for a relatively high proportion.
Source: Yibo Technology Prospectus
Second, look at R&D investment. In the first half of 2021, the R&D expenditure of Yibo Technology was 28.44 million yuan, while that of xing sen technology and Jin Baize was 123 million yuan and 21.7 million yuan respectively. Judging from the proportion of R&D expenses in revenue, Yibo Technology is 8.56%, and the latter two are 5.19% and 6.47% respectively.
Source: Yibo Technology Prospectus
At the same time, for design companies, R&D expenses are mainly related to the salaries and salaries of R&D personnel.
Comparing the "treatment level" of R&D personnel in 36Kr, it is found that the per capita cost of R&D personnel in Yibo is low in the same industry, while xing sen technology and Jin Baize are at a relatively close level.
Cost Comparison of R&D Personnel in Yibo Technology
For design enterprises, the higher the salary/investment of R&D personnel, it can testify the technical level and industry status of the employees from the side. For Yibo Technology, it is undoubtedly the only way to widen the gap with the peers behind and narrow the gap with the peers ahead by continuing to increase the investment of R&D personnel per capita.
Technical indicators
In terms of technical strength, Yibo Technology has a comparative advantage over its peers in terms of the highest number of PCB boards, the highest number of single boards/connections and the highest speed signal.
On the other hand, we can directly compare the operating performance to measure the "results" of the company’s R&D investment. In the first half of 2021, Yibo earned 330 million yuan, with a net profit of nearly 69 million yuan, with a net interest rate close to 21%. In the same period, xing sen technology’s revenue and net profit were much larger than Yibo Technology and Jinbaize, with a net interest rate of 12.3% and Jinbaize’s 9%. From this point of view, Yibo Technology has good overall profitability.
From 2018 to the first half of 2021, the book balance of Yibo Technology’s inventory was 27,482,700 yuan, 53,799,400 yuan, 88,602,100 yuan and 157,302,900 yuan, respectively. In this regard, Tianjian Accounting Firm, the capital verification agency of Yibo Technology, also indicated that its inventory depreciation reserve had been identified as a key audit item in the audit.
Regarding the surge in inventory, Yibo Technology stated in the prospectus that it was due to the expansion of the company’s scale, especially the expansion brought about by the expansion of PCBA business. And since the fourth quarter of 2019, Yibo Technology has begun to strengthen the component storage strategy.
Since the implementation of the inventory strategy, the prices of materials such as semiconductors and passive components have risen significantly, so the balance of raw materials by the end of June 2021 has increased by 97.64% compared with the previous year. This growth rate is at a high level in the industry. Taking Jin Baize as an example, the book value of its inventory in the same period was 27.1755 million yuan, 27.937 million yuan and 36.6062 million yuan respectively, accounting for 8.67%, 8.09% and 8.29% of current assets respectively, showing a downward trend.
The prospectus shows that the inventory turnover rate of Yibo Technology is also lower than the industry level.
According to this, we can know that the surge in the inventory of Yibo Technology is partly a positive feedback to the surge in its business volume, but the other part is likely to encounter greater impairment risk.
Especially the fluctuation of raw material prices. According to the prospectus, nearly 80% of Yibo Technology’s business income comes from PCBA manufacturing, and the raw materials needed for PCBA manufacturing-PCB bare board, semiconductor, passive components, etc.-account for nearly 70% of the cost of this business, so the fluctuation of single raw material price has a great impact on the company’s cost and gross profit.
As we all know, from the second half of 2020 to the first half of 2021, PCB boards and semiconductors are in the cycle of price increase. In the second half of 2021, the revenue and net profit of PCB head enterprises in the third quarter still achieved bright growth compared with Q2, indicating that PCB prices are still in a high operating state in the second half of 2021.
Therefore, the subsequent profitability of Yibo Technology needs to pay special attention to the price changes of upstream PCB.
From a macro perspective, the China PCB track where Yibo Technology is located is in a double positive trend of steady growth of global PCB industry and increasing proportion of China.
The corresponding PCB design industry also has a lot of market space. After all, cloud technology, 5G technology, big data, integrated circuits, artificial intelligence, information technology, Industry 4.0, Internet of Things and other industries are accelerating, and the demand for PCB is obvious.
According to the data released by the market research organization Prismark, the output value of the global PCB industry in 2019 and 2020 is about 61.311 billion US dollars and 62.5 billion US dollars.
In the next five years, the global PCB market will maintain moderate growth. Under the current background, the PCB industry has shifted to China, and the growth rate of PCB market in China is much higher than that in the world.
Prismark data also points out that during 2010-2020, the compound annual growth rate of the output value of PCB industry in China is 5.7%, which is much higher than the compound annual growth rate of the global PCB output value of 1.77% in the same period.
It is estimated that by 2024, the output value of PCB in China will reach US$ 41.77 billion, with a compound annual growth rate of 4.4% from 2020 to 2024.
The growth of PCBA manufacturing depends on the expansion of global EMS (Electronic Manufacturing Service) industry scale.
According to the EMS industry report of New Venture Research in 2020, from 2016 to 2020, the EMS industry market scale developed rapidly, from 329.217 billion US dollars to 477.721 billion US dollars, with an average annual growth rate of about 9.75%.
Therefore, from the general direction, Yibo Technology still has a high growth space.