GF Securities: There is plenty of room to replace general electronic measuring instruments, and it is expected that corporate performance growth will accelerate in the future

The Zhitong Finance App learned that GF Securities released a research report saying that with the intensification of the technology game between China and the US and the release of demand for new quality productivity upgrades, local companies in the general electronics test and measurement instrument industry are gradually breaking the overseas oligopoly pattern through self-developed chips and the iteration of high-end products. The global and Chinese markets are expected to exceed 40 billion and 16 billion yuan respectively in 2024. Currently, the localization rate is only 7%, and there is plenty of room for replacement. The bottom of the industry cycle showed signs of recovery, compounded by demand for high-end manufacturing such as new energy and semiconductors, and the inflection point in the performance of domestic manufacturers has reached an inflection point. Currently, the effects of high-end production+domestic substitution are gradually being transmitted to the reporting level. Since 24Q3, corporate quarterly revenue has reached an inflection point, and contract debt reached a record high at the end of '24. It is expected that future performance growth will accelerate.

The main views of GF Securities are as follows:

General electronic measuring instruments: high threshold+wide space, low localization rate

General electronic testing and measuring instruments include digital oscilloscopes, radio frequency instruments, waveform generators, etc. According to Frost & Sullivan's forecasts, the global market for general electronic measuring instruments in China exceeded 40 or 16 billion yuan in 24; overseas companies such as German Technology, Tec, Like, Rohde and Schwarz formed an oligopoly pattern. According to Frost & Sullivan data, the total domestic share of three companies, Puyuan Precision Electronics, Dingyang Technology, and Ulide increased from 3% to 7% in 18-24. Local companies released high-end products equipped with self-developed chips, making efforts to replace domestic products at a deeper level, such as the supply chain.

The combination of favorable weather, location, and many factors brought together, and years of high-end investment began to pay off

(1) Tianshi: The confrontation between China and the US intensifies and the upgrading of the new productivity industry is booming, and domestic replacement demand for high-end products is booming. Previously, overseas brands were mainly American brands. The localization rate of products such as oscilloscopes was low, and they had great potential for replacement. Looking at the place of import, 50% of the import amount in 24 years came from US companies in Southeast Asia, and 12% came from the mainland of the United States. What Chinese enterprises lack is not the high-end product itself but the opportunity to verify it. Currently, high-end products are used more by research institutes, and if they spread to the industrial field in the future, they will be replaced more quickly.

(2) Geographic advantage: The supply chain and technology research and development reserves have been improved, and the iteration of domestic high-end products has accelerated. Self-developed chips effectively hedge against the risk of external chip dependency, and also speed up product iteration. The core chips for multi-brand instruments are mainly purchased from TI and ADI. Leading chips such as Puyuan Precision Electronics have been self-developed for more than 10 years. According to Puyuan Jingdian's financial report, the company currently accounts for more than 50% of revenue from products equipped with self-developed platforms. According to OneTest's WeChat account, the supply chain of foreign brands represented by Tektronix has recently raised prices one after another; in addition, the industry is concerned about the risk of chip supply cuts, and leading companies are already preparing to develop their own chip supply chains.

(3) People and peace: Years of R&D team and channel construction are fully prepared to replace domestic production. According to Dingyang Technology's financial report, the company's high-end oscilloscopes currently account for about 30%, and the volume of high-end products is highly flexible on performance.

The bottom of the industry is recovering, and domestic high-end products are ready to go

First, the bank uses the import amount of oscilloscopes to measure the cycle position of the industry. Affected by the pace of downstream procurement, the industry cycle is generally 3-4 years. Currently, the industry has experienced a decline of nearly 3 years. The year-on-year growth rate in March '25 has been continuously corrected and recovered to around 5%; second, demand for high-end manufacturing, led by new energy, automobiles, and semiconductors, is strong, and high-end products such as domestic commercial brands of 13 GHz oscilloscopes, 50 GHz spectrum analyzers, and 67 GHz microwave analog signals can better meet the needs of high-end domestic manufacturing. Verification of domestic brands by industrial enterprises is being accelerated.

Risk warning: macroeconomic risk; risk of global trade friction; risk of loss of core personnel and core technology.