Ding Tai High-Tech Research Summary: Emphasizing the benefits of PCB drill needles from downstream expansion and inflation logic, the proportion of high-end needles has increased, and prices have risen due to industry shortages. The company’s Q2 revenue reached 481 million yuan, a year-on-year increase of 26.64% and a quarter-on-quarter increase of 14.18%, with a net profit attributable to the parent company of 87 million yuan, a year-on-year increase of 80.86%.
1. The proportion of AI products has increased to over 20%. In Q2, 267 million drill needles were shipped, with AI products accounting for over 20%, and the average price reaching 1.4 yuan. In June and July, monthly production and shipments reached 100 million units, with the AI proportion reaching 30%. The proportion of AI products is expected to continue to increase with future expansions, and price increases can be expected in the second half of the year.
2. Historical high gross margin. In Q2, the gross margin for a single quarter was 40.30%, the highest ever, with a net profit margin of 18.04%. This is mainly due to the increased proportion of AI drill needles, which is expected to continue to rise.
3. Impact of process iteration. According to the company’s test data, the current mainstream GB200 product has a single drill needle drilling capacity of less than 2000 holes (800-1000 holes). In the future, the number of holes drilled by a single needle will gradually decrease from M7 to M9 down to 200 holes, leading to a multiplied increase in drill needle consumption, with prices rising by over 30%. The impact of process iteration on drill needle demand is magnified, and the demand for drill needle consumables is more sustained, with both volume and price rising.
4. Capacity enhancement. At the normal pace, by the end of this year, monthly production capacity can reach 120-130 million units, with a site reserve capable of supporting 200 million units. The factory can provide a capacity increase of 5-6 million units per month, which will be adjusted according to market demand.
5. As a consumable in the PCB production process, the explosive demand and upgrade of stages have brought about a “simultaneous increase in volume and price” for drill needles. It is important to recognize that this is a segment experiencing simultaneous volume and price inflation. Additionally, the company’s downstream customers are all leading PCB manufacturers, who will fully benefit from this beta dividend. From the perspective of the company’s performance rhythm, the product structure will drive the gross margin to continue to rise, and the performance rhythm will maintain high growth.
