Chengchuang Interconnection Technology International Holdings Co., Ltd. (Stock Code:NASDAQ:CCTG) on2024year1month18The company successfully listed on the main board of the US capital market on [date]. Headquartered in Hong Kong, the company mainly engages in the manufacturing of interconnect products such as connectors, cables, and harnesses through its subsidiaries, and applies them in industries including consumer electronics, industry, professional and outdoor lighting, green energy, agriculture, healthcare, automotive, network communications, and power. Frost & SullivanFrost & Sullivan,Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan') provides exclusive industry advisory services for the listing of Chengchuang Interconnect Technology International Holdings Co., Ltd. We hereby extend our warmest congratulations on its successful listing.
Chengchuang Interconnect Technology International Holdings Co., Ltd. (hereinafter referred to as 'Chengchuang Interconnect') was established on2024year1month18The company was successfully listed and issued shares1,375,000share, issue price per share4.00US dollars, with the net amount of raised funds being approximately550Ten thousand dollars.
During the process of listing in the US, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support and highlight the issuer's competitive advantages, assisting the issuer, investment banks and other intermediaries in completing the writing of relevant parts of the prospectus (such as the overview, competitive advantages and strategy, industry overview, business and other important chapters), and assisting the issuer in completingSECCommunication with investors, helping them quickly understand the market ecosystem and competitive landscape, assisting issuers withSECFeedback on various industry-related issues, etc.
Investment highlights
The company has established long-term cooperative relationships with customers and key suppliers;
The company has high standards for customers and a commitment to quality control;
The company emphasizes customer needs and value-added services;
The company has vertically integrated production;
The company has an experienced management team and dedicated employees.
Global Interconnect Products Market Overview
Interconnected products
Interconnected products refer to products that form physical or logical connections between two electronic devices or networks, such as connectors, cables, and wiring harnesses.
A connector is an electromechanical device used to connect electrical conductors and form circuits. It bridges the communication between blocked or isolated circuits, allowing current to flow and enabling the intended function of the circuit. Typical connectors usually consist of three parts: a plastic body, a plastic shell, and hardware terminals. Connectors are widely used in various industrial fields, including automotive, telecommunications, electronic products, industrial manufacturing, healthcare, aerospace, and national defense.
Cables and harnesses are devices used to transmit electrical or magnetic energy, exchange information, generate electromagnetic energy conversion, and form automated control circuits. Cables and harnesses have similar structures, but their differences lie in that cables are mainly composed of conductors, insulators, and additional outer sheaths, which provide additional protection against external elements; whereas harnesses do not have an outer sheath and are mainly composed of conductors and insulators. Conductors are usually made from copper, silver, gold, and aluminum insulating materials; the outer sheath is usually made from synthetic materials such as rubber, polyethylene, and polyvinyl chloride.
Global market size of connected products industry
from2017Year-end2022In the year, the global interconnected product industry market size measured by retail prices was approximately2,460USD billion growth to3,029billion US dollars, with a compound annual growth rate of4.2%.2020Affected by the COVID-19 pandemic, the interconnected product market has experienced production disruptions, logistics delays, and labor shortages, with market scale compared to2019The year shrunk3.2%Mining activities for the supply of raw materials for interconnect products such as copper and aluminum have also been affected.2021In the year, as the pandemic gradually improved, the global interconnected product market grew6.7%Production and logistics issues have been greatly alleviated. Looking ahead, due to continuous technological innovation in the electronics market, demand for interconnected products will increase globally. The global interconnected product market will recover faster from the COVID-19 pandemic, with an estimated market size to grow by5.2%The compound annual growth rate increased, and in2027Annual achievement3,907billion dollars.
In the past, the COVID-19 pandemic has had a negative impact on various industrial chains in the interconnected product market. As the pandemic gradually subsides, it is expected that all industries within this market will achieve stable growth, especially in automotive, telecommunications, computers, industry, and transportation sectors. The demand for interconnected products is expected to grow the fastest, starting from2023From the beginning of the year2027In [Year], the compound annual growth rates will be7.5%,4.7%,3.7%,3.1%and2.8%.
Market-driven factor analysis
The automotive industry's demand for interconnected products is increasing: The automotive industry is experiencing an increasing demand for in-vehicle infotainment systems, safety systems, and other aspects. Factors such as the increase in disposable income among residents in emerging and developed countries have jointly driven the development of the connected product market. In addition, due to the higher electrification level of electric vehicles, their demand for connected products is much higher than that of traditional vehicles. Today, the automotive industry is not only developing in a more digital direction but is also equipped with features including airbags.GPSHeavy electronic components such as navigation and entertainment functions are used to control critical systems. With the rapid increase in demand for sensors and controllers in the automotive industry, there is a rising trend in the demand for interconnect products that connect various electronic devices in vehicles.
The demand for high-frequency interconnect products has surged: With the transformation and in-depth development of wireless network technologies such as satellite communication, especially5GThe emergence of high-frequency electronic devices has made their development trend increasingly evident. Interconnection products applied to wireless networks can be widely used in various telecommunications settings, such as serving as signal and data transmission nodes in base stations, communication antennas, and other equipment. The increasing demand for data transmission has driven the growth in telecommunications equipment needs, not only further stimulating the demand for interconnection products but also raising the requirements for their functions, including the need for high frequencies to prevent signal transmission delays.PCB boardThe board provides lowDK(Dielectric constant) material.
Digitalization of connected products: As downstream applications in the interconnect product market transition towards higher levels of intelligence, interconnect products themselves also need to become more digitalized to meet demand. For example, in the automotive sector, embedded systems in electric vehicles and autonomous vehicles include autonomous driving, relyingAIIntelligent in-car entertainment and more personalized experiences are among the features. Smart cars further stimulate and enhance the demand for product digitization and development. For example, interconnected products with monitoring electronic device functions can detect problems with electronic device functions and provide timely feedback, thereby reducing car owners' maintenance workload.
Mobility of military and defense departments: In the fields of national defense and military industry, interconnected products are required to possess higher and more complex mobility, which necessitates high-speed connection technology for autonomous robots, rescue equipment, and even recreational devices. To improve the efficient mobility of troops and enable them to operate in active battlefields with high impact, strong vibration, or extreme, exposed environments, there is an increasing demand for devices such as miniature electronic sensors, detectors, and transmitters, as well as robust shield wiring.
Interconnect Product Manufacturer
Overview
Original Equipment ManufacturerOEM) refers to manufacturers that produce and assemble interconnected products according to the design and specifications of the brand owner. The semi-finished components manufactured by these manufacturers are usually further assembled by the brand owner to become part of the final product sold under that brand name. Manufacturers who provide product design and manufacturing services for brand owners are known as original design manufacturers (ODM).ODMThe process by which manufacturers and brand owners jointly develop, design, and manufacture new products is called joint developmentJD). Different interconnect product manufacturers may adoptOEM,ODMorJDDifferent business models. The following is a schematic diagram of the process flow for interconnection product manufacturers.
China's interconnection product manufacturing scale
The scale of China's interconnect product manufacturing industry is measured by the total revenue generated from interconnect product manufacturing factories located in China. This market size has grown from2017year4,292RMB 10 billion grew to2022year5,421RMB 10 billion, with a compound annual growth rate for this period of about4.8%This growth is mainly attributed to the continuous upgrading of interconnected products in terms of convenience, connectivity, and compactness, as well as favorable government policies and process optimization in manufacturing and logistics. Looking ahead, the continuous progress of electronic products and the higher demand for high bandwidth and high-speed network transmission will become key driving factors for predicting growth. It is expected that from2023Year-end2027In [Year], the market scale of the interconnection product manufacturing industry will be about5.1%Compound annual growth rate increases.
Analysis of Market Drivers in China's Interconnect Product Manufacturing Industry
The demand in the global downstream markets is booming: The demand for interconnected product manufacturing is mainly driven by technological progress in the electronics industry.2017Year-end2022In the year, the global electronic product market saw a steady increase in sales, from18,573USD billion growth to21,601billion US dollars, with a compound annual growth rate of about3.1%In particular, in developed economies such as Europe and the United States, technological progress has promoted the upgrading of advanced hardware infrastructure that is more convenient, better connected, and more compact. For example, in the field of medical equipment, the demand for cables, connectors, and wiring harness assemblies is increasing, requiring components that are more adaptable, durable, and biocompatible to meet higher industry standards. With the increasing complexity of electronic devices and the trend towards high reliability and durability in electronic product development, coupled with the demand for high bandwidth and high-speed network transmission in downstream industries such as telecommunications, aerospace and defense, automotive, energy and power, and consumer electronics, it is expected that this will drive a continuous demand for the upgrade of interconnect products.
Developing a mature supply chain: According to data from the Ministry of Industry and Information Technology of China and the National Development and Reform Commission,2017Year-end2022During the year, the total revenue of the electronics manufacturing industry was from1.9019Trillions of dollars grow to2.2548One trillion dollars, with a compound annual growth rate of about3.5%As a major producer and exporter of electronic products, China's electronic component supply chain has become very mature. Upstream raw material producers and various midstream manufacturers are often located close to each other, which has promoted close cooperation between them and reduced logistics costs. To better allocate resources, brand owners are increasingly outsourcing the design and manufacturing of interconnected products toOEMandODMConversely, interconnected productsOEMandODMIt is expected to continue as a major participant in the supply chain.
Government's favorable policies: In recent years, to support the growing demand in the domestic electronics manufacturing industry and accelerate product supply, the promulgation of a large number of favorable policies has promoted higher-quality development of the industry. In terms of monetary policy, relief plans have been formulated to reduce the operating costs of electronics manufacturers, including tax exemptions and preferential financing assistance.2017The development plan for the information and communication industry issued by the Ministry of Industry and Information Technology in(2016 - 2020year)In the document, emphasis is placed on the research and development of intelligent hardware, communication equipment, big data, cloud computing, and the Internet of Things, all of which require interconnected products as basic components. The 'Proposal of the Central Committee of the Communist Party of China on Formulating the Fourteenth Five-Year Plan for National Economic and Social Development and the Long-Range Objectives Through the Year 2035' proposes to strengthen technology research and development to achieve an advanced industrial production chain in China. Therefore, it is expected that with favorable policies and support, the demand for interconnected product manufacturing services will continue to grow.
Innovation and automated production: Issued by the State Council2015Manufactured in China2025》(It is clearly stated that efforts should be made to accelerate the development of intelligent manufacturing equipment and products, expedite the intelligent transformation of production equipment in the electronics industry, and enhance precision manufacturing and agile manufacturing capabilities.2025In [year], intelligent manufacturing was fully implemented in key areas, and operating costs of pilot demonstration projects were reduced.50%, product production cycle shortened50%, the defective rate has decreased50%In addition, manufacturers have introduced predictive maintenance technology and enterprise resource planning (ERP) system, to monitor device status, inventory levels, and utilization. ForecastedB2BThe rise of online trading markets will reduce procurement and logistics costs between upstream suppliers and downstream brand owners, and improve information transparency. Therefore, integrating automation and informatization into the supply chain can alleviate the burden of labor costs for enterprises and achieve a greater allocation of human resources.
Competition Overview
2022In1,000Market participants mainly engage in interconnectionOEM/ODMServices. The industry is highly competitive and rapidly changing, with new technologies and market trends evolving continuously.OEM/ODMService providers tend to focus on specific product categories to gain industry recognition and competitive advantage. Business relationships and performance records, as well as long-term relationships established with customers and suppliers, determine interconnected products.OEM/ODMKey factors in service provider competitiveness. Interconnection in ChinaOEM/ODMThe market is relatively fragmented,2022The market share of the top five players before the New Year accounted for approximately5.8%.
2022In the year, the company's revenue was approximately1.65100 billion RMB, accounting for China's interconnectionOEM/ODMThe market is about0.03%.
Market entry barriers
· R&D capability
Strong R&D capabilities enable existing market participants to offer products with diverse downstream applications. High-quality or technologically advanced products are at the core of competition to maintain market share and customer loyalty. Regular product upgrades are also a focal point of competition. Product specification analysis, as well as professional and experienced advice, are equally important because customers not only focus on cost but also onOEM/ODMR&D capabilities. The rapidly changing technical requirements have further increased the demand for R&D capabilities. Therefore, a lack of strong R&D capabilities will prevent new enterprises from entering the industry.
· Build a solid business relationship with customers
Interconnected productsOEM/ODMThe main customers are large enterprises, which often have strict requirements and selection processes when choosing new suppliers. In addition, customers evaluate suppliers based on criteria such as support standards, delivery methods, product performance, and after-sales service. Typically, after approving certain suppliers based on the above criteria, customers tend to establish long-term business relationships with them.OEM/ODMThe relationship with customers is usually long-term and repetitive, which makes experiencedOEM/OEMIt is capable of establishing a solid customer base and setting high barriers for new entrants. Without mature facilities and established networks, it is difficult for new entrants to build close customer relationships in a short period.
· High-quality talents and experienced managers
OEM/ODMThe R&D capability depends on whether a company has high-quality experts with technical knowledge and in-depth industry experience. Manufacturers with strong R&D capabilities can gain an important competitive advantage. In addition, an experienced and professional management team enables the company to better carry out strategic planning and ensure the efficiency and effectiveness of business operations. Without experts with extensive industry knowledge and a professional management team with rich experience, it is difficult for newcomers to quickly distinguish their products or services from those of establishedOEM/ODMcompetition.
· capital investment
toOEM/ODMIn particular, capital investment is crucial. This is mainly because they need a large amount of capital to purchase upstream raw materials, establish production bases, and invest in research and development. To maintain their leading position in the ever-changing market landscape, market participants need to continuously invest in their R&D teams. Therefore, it is difficult for new entrants without sufficient capital to enter and compete in this industry.
View the prospectus
Frost & Sullivan has extensive research experience in the materials industry and has assisted well-known enterprises in successfully accessing the capital market. Successful listings include: Yongtai Technology (YTT), Global New Materials （6616.HK), Yihai International8659.HK), Sanhe Refining0301.HK), Xingyu Holdings2346.HK), Xuyang Group1907.HK), Xinghe Holdings1891.HK), Shandong Gold (1787.HK), Xingye New Materials8073.HK), Zhongqi Group1932.HK), Meigu Technology8349.HK), Huajin International2738.HK), Filtre glass6865.HK), Caike Chemical1986.HK), Chang'an Renheng8139.HK).
Recommended Reading
Frost & Sullivan assisted Sanhe Fine Chemicals in successfully going public in Hong Kong(0301.HK)
Frost & Sullivan assisted Xingyu Holdings in successfully going public in Hong Kong(2346.HK)
Frost & Sullivan assisted Zhongqi Group in successfully going public in Hong Kong(1932.HK)
Frost & Sullivan assisted Caike Chemical in successfully going public in Hong Kong(1986.HK)
Frost & Sullivan assisted Chang'an Renheng in successfully going public in Hong Kong(8139.HK)
*The above order is not sequential and is arranged in reverse chronological order by listing time.
