Dingtai High-Tech (301377.SZ): In-Depth Analysis of Its High Gross Profit Margin Model Driven by Self-Developed Equipment

Based on collected data, I will systematically analyze how Dingtai High-Tech’s self-developed equipment supports its high gross profit margin of over 35%.

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Dingtai High-Tech is a global leader in PCB drill bits. According to Frost & Sullivan data, based on sales volume, the company has ranked first among global PCB drill bit suppliers for consecutive years, with a global market share of 26.8% in 2024, which further increased to 28.9% in the first half of 2025, meaning

[1][2].

The company has achieved a full product line layout of “Tools + Materials + Equipment”, with its product portfolio covering four categories:

• Precision Cutting Tools
  : PCB drill bits, milling cutters, CNC cutting tools (accounting for 75.4% of revenue)
• Grinding and Polishing Materials
  : PCB surface brushing, grinding, polishing and metal surface polishing (accounting for 9.55% of revenue)
• Functional Film Materials
  : Vehicle-mounted light control films, home appliance explosion-proof films, etc. (accounting for 4.06% of revenue)
• Intelligent CNC Equipment
  : Automated equipment (accounting for 9.49% of revenue)

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Dingtai High-Tech’s most notable competitive advantage lies in its

:

Indicator	Data
Self-developed ratio of production equipment	95% [1][2]
Core equipment	Rough and precision grinding machines, slotting machines, high-precision multi-station grinding machines, vacuum coating equipment
Expansion speed with self-made equipment	Leading in the entire industry
Monthly production capacity (Q3 2025)	Exceeded 100 million units [3]
Planned monthly production capacity (end of 2026)	180 million units [3]

In the PCB drill bit industry, most competitors generally rely on purchasing expensive imported Swiss equipment, which limits both expansion speed and cost control. In contrast, Dingtai High-Tech has the capability to independently develop core processing equipment, achieving full-chain R&D and production[1][2].

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Self-developed equipment has brought significant cost advantages to the company:

1. Avoiding imported equipment premiums
   : Imported equipment from Switzerland and other regions is expensive; self-developed equipment can reduce procurement costs by more than 50%
2. Zero marginal cost for independent iteration and upgrade
   : Equipment upgrades do not require re-purchasing, saving large capital expenditures
3. Amortized equipment depreciation costs
   : The cost of self-developed equipment is controllable, resulting in lower depreciation costs per unit product
4. More flexible large-scale capacity expansion
   : Adjust production capacity quickly according to market demand, without being restricted by the delivery cycle of imported equipment

Efficiency Indicator	Performance
Capacity expansion speed	Leading in the industry; monthly production capacity reached 100 million units in H1 2025, with a target of 180 million units by the end of 2026
Equipment utilization rate	Remains at a high level; delivery of some products is tight
Process optimization	Continuous iteration, with continuous improvement in production efficiency
Delivery cycle	Shorter than that of competitors

Self-developed equipment enables the company to achieve

, supporting the high-end upgrade of its product structure:

High-End Products	Proportion Change	Technical Features
Micro-drills (below 0.2mm)	21% → 28% (2024 → H1 2025)	Ultra-precision machining capability
Coated drill bits	31% → 36% (2024 → H1 2025)	PVD physical vapor deposition coating

:

• Physical Vapor Deposition (PVD) Coating
  : Can significantly reduce tool wear by more than 50% in high-frequency, high-speed laminated drilling[1][2]
• Tetrahedral Amorphous Carbon Coating
  : Alleviates the problem of copper chip (ICD) and back-drilling chip blockage in server boards, reducing fracture of high aspect ratio holes[1][2]
• High Aspect Ratio Drill Bits
  : Successfully achieved technological breakthrough and mass production

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Period	Gross Profit Margin	Net Profit Margin	Remarks
2020	40.75%	18.16%	Historical high
2021	33.21%	19.41%	Short-term fluctuation
2022	45.30%	18.27%	Resumed growth
2023	38.35%	16.62%	Remained stable
2024	38.59%	14.39%	Steady with slight growth
Q1-Q3 2025	40.62%	19.28%	Significant increase[1][2][3]

Business Segment	Gross Profit Margin	Revenue Proportion
Cutting Tools	40.75%	75.40%
Functional Film Products	45.30%	4.06%
Automated Equipment	38.35%	9.49%
Grinding and Polishing Products	33.21%	9.55%

1. Product structure optimization
   : Increased sales of high-profit products (coated drill bits and other high-spec precision cutting tools)
2. Economies of scale
   : Improved capacity utilization and optimized production efficiency
3. Expense control
   : Year-on-year decrease in sales/administrative/financial/R&D expense ratios

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┌─────────────────────────────────────────────────────────────┐
│                Dingtai High-Tech's High Gross Profit Margin Moat                │
├─────────────────────────────────────────────────────────────┤
│                                                                                 │
│   [Self-Developed Equipment] ──┬──→ Cost Advantage ──→ 35%-45% Gross Profit Margin           │
│                                 │                                                                 │
│                                 ├──→ Efficiency Improvement ──→ Scale Effect ──→ Net Profit Margin Growth   │
│                                 │                                                                 │
│                                 └──→ Technical Barriers ──→ High-End Upgrade ──→ Premium Pricing Capability       │
│                                                                                 │
└─────────────────────────────────────────────────────────────┘

1. Cost leadership through self-developed equipment
   : 95% of equipment is self-developed, avoiding imported premiums
2. Continuous process iteration capability
   : Self-developed equipment supports process optimization and upgrade
3. High-end product structure
   : Increased proportion of high-margin products such as coated drill bits and high aspect ratio drill bits
4. Flexible capacity expansion
   : Self-developed equipment supports rapid capacity expansion, seizing opportunities from the explosive growth in AI computing power demand

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1. Single business structure
   : Over 80% of revenue in H1 2025 relied on precision cutting tools, which is tied to the PCB industry cycle
2. Fluctuations in raw material prices
   : The price of tungsten steel bars, a core raw material for PCB drill bits, has continued to rise (over 50% increase from 2020 to 2024)
3. Insufficient globalization
   : Overseas revenue accounts for only 8.8%, and the overseas expansion is still in the initial stage
4. Industry cyclicality
   : Downstream AI server and PCB industries face cyclical fluctuation risks

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[1] NetEase News - “Rushing for ‘A+H’ Listing! Global No.1 in PCB Drill Bits: Dingtai High-Tech’s Glory and Concerns” (https://m.163.com/news/article/KG0P2IFL05198R91.html)

[2] Sohu - “Rushing for ‘A+H’ Listing! Global No.1 in PCB Drill Bits: Dingtai High-Tech’s Glory and Concerns” (https://m.sohu.com/a/961769178_211762)

[3] Soochow Securities - “In-Depth Research on Dingtai High-Tech (301377): Computing Power Construction Drives Surge in PCB Processing Demand” (https://pdf.dfcfw.com/pdf/H3_AP202512011791944813_1.pdf)

[4] Southwest Securities - “Global Leader in PCB Drill Bits, Focusing on CNC Cutting Tools” (https://pdf.dfcfw.com/pdf/H3_AP202311051609023007_1.pdf)

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: This analysis is based on public market data and research reports, for reference only, and does not constitute investment advice.