Analysis Report on R&D Expense Ratio and Technical Barriers of Dingtao High-Tech (301377.SZ)

Now I will provide you with a comprehensive and in-depth analysis report.

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Dingtao High-Tech was founded in 2013, with its headquarters in Dongguan, Guangdong Province. It is an integrated precision manufacturing solution provider integrating tools, materials, and equipment. The company’s products cover PCB drill bits, milling cutters, brush grinding wheels, automation equipment, industrial film products, CNC cutting tools, and surface coatings, with downstream applications spanning industries such as PCB, 3C electronics, auto parts, and mold manufacturing.

According to Frost & Sullivan data, Dingtao High-Tech ranked first in global PCB drill bit sales in 2020, with a global market share of approximately 19%, becoming the world’s leading supplier in the micro-drill segment of the circuit board industry[1]. The company has been rated as an “Excellent National Brand Enterprise” by the China Electronic Circuit Industry Association for consecutive years. In 2020, it ranked 1st with a global market share of approximately 19% in PCB drill bit sales; it ranked 8th in revenue among domestic PCB special material enterprises, and 2nd among enterprises whose main business is the production of PCB drill bits and milling cutters[2].

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Based on the company’s 2024 annual report and Hong Kong Stock Exchange prospectus data, Dingtao High-Tech’s R&D investment over the past three years and one interim period is as follows:

Period	R&D Investment Amount (RMB 10,000)	Percentage of Operating Revenue	YoY Growth Rate of R&D Investment
2022	7,981.69	6.55%	-
2023	9,772.24	7.40%	22.43%
2024	10,959.72	6.94%	12.15%
H1 2025	5,782.80	6.50%	-

Data shows that the company’s R&D expense ratio has remained in the range of 6.5%-7.5%, reaching 6.94% in 2024, consistent with the data you mentioned[1][3]. In terms of absolute amount, the company’s R&D investment has maintained a continuous growth trend with an average annual growth rate of approximately 17%, reflecting the company’s continuous emphasis on technological innovation.

The company’s R&D team shows a trend of younger age and higher educational attainment:

• Team Size
  : The number of R&D personnel reached 373 in 2024, representing a 7.18% increase from 348 in 2023
• Educational Structure
  : The proportion of staff with bachelor’s degree or above has increased, including 95 bachelor’s degree holders (+39.71%) and 29 master’s degree holders (+61.11%)
• Age Distribution
  : 98 employees are under 30 years old (+34.25%), and 168 are aged 30-40 (+7.01%), forming a talent echelon combining senior, middle-aged, and young personnel[1]

R&D personnel account for 10.88% of the company’s total workforce. The rapid growth of highly educated R&D personnel provides talent support for the company’s continuous technological innovation.

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Dingtao High-Tech is the

, and this capability constitutes the company’s core technical barrier[4]. Through its subsidiary Dingtao Robot, the company independently develops high-precision multi-station grinding machines and other cutting tool production equipment, achieving full independent control from the equipment level to the product level.

Advantage Type	Specific Performance
Cost Advantage	Significantly lower cost compared to imported equipment; imported equipment from Germany’s Walter, Australia’s ANCA, etc., is expensive
Lead Time Advantage	Self-produced equipment takes only about 2 months from assembly to production, while the procurement cycle for imported equipment is as long as 8 months
Efficiency Advantage	The self-developed four-station machine can complete multiple processes in one clamping, with production efficiency superior to imported five-axis single-station machines

Through self-developed equipment, the company has successfully solved problems such as high cost, long lead time, and slow response of imported equipment. It has not only effectively improved market response efficiency and production expansion flexibility, but also further reduced product processing costs, and improved production efficiency and yield rate[5].

The company’s coating technology accumulation began in 2013, and currently covers the following coating types:

• CVD Diamond Coating
  : Suitable for difficult-to-process materials such as high-performance graphite, carbon fiber composites, zirconia ceramics, and high-silicon aluminum alloys
• PVD Hard Coating
  : Improves the surface hardness and wear resistance of cutting tools
• DLC Coating
  : Low friction coefficient, improving chip removal performance
• Ta-C Lubricating Coating
  : Prepared using magnetic filtered arc technology, significantly improving hole position accuracy and processing quality

The company has independently developed PVD, DLC, and CVD coating equipment, enjoying better cost advantages compared to peers. By improving the coating process, coating production capacity is no longer restricted, providing a solid foundation for the expansion of coated cutting tool business[4].

• The company is one of the domestic enterprises that has broken through the minimum diameter specification of 0.05mm for drill bits
• In 2024, micro-drills with a diameter of 0.2mm or below accounted for approximately 16.24% of total sales
• A micro-drill with a length-to-diameter ratio of more than 30 times has passed performance and stability tests

• Coated drill bits accounted for approximately 24.01% of total sales
• The company continues to expand the product categories and production capacity of micro-drills, and continuously increases the proportion of high-end products

As of December 31, 2023, Dingtao Robot holds a total of 291 patents, including:

• Invention patents: 44
• Utility model patents: 226
• Design patents: 21[2]

These patents cover multiple links such as cutting tool production equipment, processing technology, and coating technology, building a strict intellectual property protection system.

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• The company’s R&D expense ratio is stable in the range of 6.5%-7.5%, which is at the upper-middle level of the industry
• The absolute amount of R&D investment has an average annual growth rate of over 15%
• The number and quality of R&D personnel continue to improve

• Long-term cooperation with major universities and colleges
• Established strategic R&D relationships with several well-known enterprises in the industry
• Adheres to the innovation principle of enterprise as the main body, R&D as the core, and market as the guide

• The high-density development of PCBs drives the growth of micro-drill demand (the CAGR of IC substrates and HDI boards is expected to reach 8.6% and 4.9% respectively)
• The industrial transformation of AI servers brings structural demand for high-end cutting tools
• Emerging application scenarios such as automotive electronics and 5G communication continue to expand

• The Thai subsidiary has achieved mass production, with an initial drill bit production capacity of 15 million units per month
• Acquired MPK Kemmer assets in 2025 to expand into the German and European markets
• Plans to further increase investment in Asia and Europe to build a global operation network

• Jinzhou Seiko ranks second with a global market share of approximately 18%, with a small gap from the company
• Japanese and Taiwanese enterprises still hold a certain market share
• The concentration of the domestic industry needs to be improved, and competition in the low-end market is fierce

• The PCB industry is developing rapidly in technology, requiring continuous tracking of new technological trends
• There is great room for penetration improvement of high-end coated cutting tools, but international giants are technologically leading
• Fluctuations in raw material prices (such as tungsten steel) may affect the pace of R&D investment

• High-end technical personnel have high mobility
• Talent competition in the industry is becoming increasingly fierce
• It is necessary to continuously provide competitive salary incentives

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Company Name	2020 R&D Expense Ratio	R&D Expense (RMB 10,000)	Market Position
Dingtao High-Tech	6.06%	5,864.61	Global No.1 (19% market share)
Worldia	7.37%	1,782.82	Superhard cutting tool segment
Hengfeng Tools	5.27%	2,042.29	Precision cutting tool segment
Acme Technology (Taiwan)	3.76%	2,595.65	Top 5 globally
Industry Average	4.99%	1,705.98	-

From the peer comparison, Dingtao High-Tech’s R&D expense ratio is at a relatively high level in the industry, reflecting the company’s emphasis on technological innovation[2].

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1. Obvious First-Mover Advantage
   : The company is the only domestic manufacturer that has achieved independent R&D of full-process equipment, and this advantage is difficult to replicate in the short term. Self-developed equipment not only reduces costs and shortens lead times, but more importantly, forms an in-depth understanding of production processes and process know-how.

2. Steady R&D Investment
   : The R&D expense ratio of 6.94% is within a reasonable range of the industry. Continuous growth in R&D investment and rich patent reserves provide financial and intellectual support for sustained technological leadership.

3. Strong Downstream Demand Support
   : Demand for high-end PCB cutting tools in emerging fields such as AI servers, automotive electronics, and semiconductor packaging continues to grow, providing a clear market return path for the company’s technological investment.

4. Global Layout Unlocks Increment
   : Overseas production capacity construction and market expansion not only bring revenue growth, but also enable the company to access more cutting-edge technological needs and market trends.

• Raw material price fluctuation and supply risk
• Cyclical fluctuation risk of the PCB industry
• Risk of intensified market competition
• Technology substitution risk
• Risk of exchange rate fluctuations affecting overseas business

Tianfeng Securities initiated coverage with a “Buy” rating and a target price of RMB 24.96[3]; Soochow Securities’ 2025 forward-looking report believes that the company’s expense control is overall appropriate and has stabilized with a downward trend[6]. With the in-depth application of AI and the increase in the proportion of high-end products, the company is expected to continue to benefit from the structural development of the industry.

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[1] 2024 Annual Report of Guangdong Dingtao High-Tech Technology Co., Ltd. Official Announcement of Dingtao High-Tech. https://file.finance.qq.com/finance/hs/pdf/2025/04/23/1223213364.PDF

[2] Prospectus of Guangdong Dingtao High-Tech Technology Co., Ltd. Disclosed by CSRC/Hong Kong Stock Exchange. https://spdf.askci.com/pdf/广东鼎泰高科技术股份有限公司.pdf

[3] Tianfeng Securities. Initiation Coverage Report on Dingtao High-Tech (301377): Global Leader in PCB Drill Bits, Multi-Track Layout Unlocks Growth Ceiling. November 28, 2024. http://pdf.dfcfw.com/pdf/H3_AP202411291641110991_1.pdf

[4] Huajin Securities. In-Depth Analysis Report on Dingtao High-Tech (301377). March 27, 2023. https://pdf.dfcfw.com/pdf/H3_AP202303271584582735_1.pdf

[5] Shanghai Securities. Leading Enterprise in PCB Drill Bits, Multi-Business Layout Unlocks Future Growth Space. January 18, 2024. https://aigc.idigital.com.cn/djyanbao/

[6] Soochow Securities. Dingtao High-Tech (301377): Computing Power Construction Drives Surge in PCB Processing Demand. December 2025. https://pdf.dfcfw.com/pdf/H3_AP202512011791944813_1.pdf