Lion released its 2023 semi-annual report on August 14: in the first half of 2023, the company achieved operating income of 1.342 billion yuan, down 14.22% from the same period last year, and net profit of 174 million yuan, down 65.49% from the same period last year. It is calculated that in 2023, Q2 company achieved revenue of 710 million yuan, an increase of 12.34% over the previous month, and a net profit of 139 million yuan, an increase of 304.25% over the previous year.

Main points of investment

The performance of H1 is under short-term pressure in 2023, and the profitability of Q2 increases rapidly compared with the previous month.

In the first half of 2023, the company achieved an operating income of 1.342 billion yuan, a decrease of 14.22% over the same period last year, and a net profit of 174 million yuan, a decrease of 65.49% over the same period last year. The main reasons for the decline in the company's performance in the first half of the year are not only affected by the decline in the prosperity of the industry, but also affected by factors such as production expansion, mergers and acquisitions, convertible bonds and so on. it belongs to the labor pains in the process of the development and growth of the company: (1) due to the influence of the prosperity of the industry, the downstream demand is weak, the order volume of H1 decreased and the prices of some products decreased in 2023. (2) the fixed additional investment projects in 2021 have been transferred to production since June 2022, and the corresponding fixed costs such as depreciation expenses have increased a lot; (3) the financial expenses of 3.39 billion yuan of convertible bonds issued in November 2022 are 62.36 million yuan; (4) Jiaxing Jinruihong acquired in March 2022 is in the process of capacity climbing, resulting in phased losses. It is calculated that in 2023, Q2 company achieved 710 million yuan in revenue, an increase of 12.34% over the previous month; the net profit returned to its mother was 139 million yuan, an increase of 304.25% over the previous month; and its profitability increased rapidly.

The three major business sectors Q2 are better than each other, creating an one-stop manufacturing platform.

From a business point of view, the month-on-month growth rates of the three major business sectors are all positive: semiconductor wafer business Q2 achieved business income of 402 million yuan, an increase of 13.97% over the previous month; semiconductor power device chip business Q2 achieved revenue of 280 million yuan, an increase of 8.37% over the previous month; compound semiconductor chip business Q2 achieved business income of 22.84 million yuan, an increase of 46.3% over the previous month. The company's three major business sectors, four major product lines (silicon polishing wafer, silicon epitaxial wafer, power semiconductor chip, compound semiconductor RF chip), in addition to the polished wafer affected by the decline in consumer electronics, insufficient capacity utilization, the other three types of product epitaxial wafers, power semiconductor chips, compound semiconductor RF chips, shipments for the whole year are expected to have substantial growth compared with the same period last year. At present, in the three business sectors, capacity reserves have been completed, technological breakthroughs have been completed, customer verification has been basically passed, and the performance is expected to improve rapidly after the recovery of the industry boom.

The company has grown into one of the few one-stop manufacturing platforms from wafers to chips in China, forming a profitable small-size silicon products to drive the R & D and industrialization of large-size silicon wafers, and the business model of compound semiconductor RF chip industry driven by mature semiconductor wafer business and semiconductor power device business, taking into account the profitability and future development potential of the enterprise. It has laid a solid foundation for the sustained and rapid development of the company.

The continuous rich product matrix company covers many production links in the upstream and downstream of the semiconductor industry chain, including silicon single crystal drawing, silicon grinding wafers, silicon polishing wafers, silicon epitaxial wafers, power devices and compound semiconductor RF chips, and runs through the whole chain technology from materials to devices. The company's power device chip manufacturing materials come from the company's own silicon wafers, which is conducive to giving full play to the advantages of the integration of the upstream and downstream of the industrial chain, enabling the company to carry out quality control and process optimization from the raw material end, and shorten the R & D verification cycle. ensure R & D design flexibility, ensure profitability while resisting short-term supply and demand shocks, improve performance stability, and facilitate the company's sound operation.

The company gives full play to the advantages of the integration of its industrial chain, fully meets the diversified needs of customers with continuous technological innovation and solid technical cooperation, in the face of increasingly fierce market competition, further enriches the product range, optimizes product structure, expands high-quality customers, around the two major product categories of photovoltaic and vehicle regulations, gives priority to expanding the sales scale and proportion of groove products, and steadily increases the production and marketing proportion of FRD products. Speed up the development of IGBT and other products, IGBT products successfully completed technical development, through the verification of some customers, began to enter the stage of small batch shipment.

Profit forecast

It is predicted that the company's income from 2023 to 2025 will be 30.94,34.36 and 4.057 billion yuan respectively, and the EPS will be 0.60,0.93,1.24 yuan respectively, and the current stock price corresponding to PE will be 53,34 and 26 times respectively. We are optimistic about the company's business sector layout and industrial chain integration advantages, and maintain the "buy" rating.

Risk hint

Downstream demand weakness risk, market competition aggravating risk, technology iteration risk and so on.