Main points of investment

On August 18, 2023, Hongwei Technology released its half-yearly report on 2023. During the reporting period, the company achieved operating income of 760 million yuan, an increase of 129.70% over the same period last year. The net profit of returning to its mother was 63 million yuan, + 93.90% compared with the same period last year. The net profit of non-return was 58 million yuan, an increase of 121.17% over the same period last year.

The order is full and the performance is outstanding. The company accepted full orders in the first half of 2023, increased overall production capacity, realized double growth of income and profit, with operating income + 129.70% compared with the same period last year; realized net profit of 63 million yuan, + 93.90% compared with the same period last year; gross profit margin 21.28%, which was higher than that of 2022; net profit rate was 8.17%.

Rich in self-developed products, accelerate the penetration of market space. The company's products have covered more than 80 kinds of IGBT, FRED, MOSFET chips and single tube products, and more than 270 kinds of module products such as IGBT, FRED, MOSFET, rectifier diode and thyristor, etc., which are mainly used in industrial control (frequency converter, servo motor, UPS, switching power supply, etc.), some products are used in new energy power generation (photovoltaic inverter, etc.), electric vehicles (electronic control system, etc.) and other diversified fields. Among them, the single tube in the main business uses self-developed chips completely, and the module products are mainly self-developed chips with the assistance of purchased chips; the fund-raising project plans to complete the development of multiple current specification modules of 650V-1700V to meet the needs of industrial control and photovoltaic customers; among them, the photovoltaic 400A/650V three-level customized module has been developed smoothly and has been delivered in batches, with stable production capacity and good terminal performance. The 12-inch 1700V high-performance continuous flow tube and 1700VIGBT chip have been developed and verified.

We will actively distribute the market in the field of new energy vehicles. In the field of new energy vehicles, the vehicle 800A/750V double-sided heat dissipation module independently developed by the company has passed the relevant vehicle reliability test and system test; the smooth development of the 750V chip for 12-inch vehicle and its corresponding vehicle module have been quickly added; a number of products such as vehicle 650V/600A module, 1200V/450A module and 400A/750V custom module have been verified by customers and started to be delivered in batches, and the overall performance and reliability are good. At the same time, it has established a stable cooperative relationship with Huichuan Technology, BYD and Zhenchuan Technology; the revenue in the field of new energy vehicles is growing rapidly, bringing revenue of 1.2376 million yuan, 7.3268 million yuan and 133 million yuan respectively in the past three years.

The SiC module is progressing steadily. The company has successfully developed SiC diodes and achieved small batch delivery. in terms of modules, we have mastered the key technology in SiC module packaging-pressureless silver sintering technology, which can resist high temperature working environment and improve reliability. related modules will be used in the field of new energy. Driven by huge demand in the electric vehicle industry and higher efficiency and power requirements in areas such as photovoltaic wind power and charging piles, the market for SiC power devices is expected to exceed $10 billion in 2027 and nearly 40 per cent of CAGR in 2018-2027, according to IHS.

Investment advice:

We estimate that the company's 2023-2025 homing net profit of 1.3 pound 1.9 billion yuan will cover the "buy" rating for the first time.

Risk Tips:

The risk of SiC and automotive product research and development is lower than expected; the competition pattern of the industry aggravates the risk; the risk of production expansion is not as expected.