Event: according to the company's semi-annual report for 2023, the revenue of H1 company in 2023 was 2.52 billion yuan, up 24.09% from the same period last year; the net profit was-1.109 billion yuan, down 93.55% from the same period last year; and the non-net profit was-1.248 billion yuan, down 88.66% from the same period last year. On a quarterly basis, Q2 achieved revenue of 1.365 billion yuan in 2023, an increase of 55.31% over the same period last year and 18.26% month-on-month; net profit from home was-609 million yuan, down 191.57% from the same period last year and 21.90% from the same period last year; deducting non-net profit from-716 million yuan, down 151.59% from the same period last year and 34.56% from the previous month.

Revenue from the main business has grown rapidly, and new energy orders have contributed to a substantial increase in output: H1 in 2023, thanks to the growth of wafer sales and the improvement of product portfolio ASP, the company's main business revenue has increased significantly.

Excluding non-main business income such as selling supporting houses to employees, the company's main business income in the first half of the year was 2.482 billion yuan, an increase of 60.75% over the same period last year. In terms of application areas, in 2023, H1, revenue from vehicle applications increased by 501.67%, accounting for 51.86%; revenue from industrial control applications increased by 72.41%, accounting for 29.60%; revenue from high-end consumer sectors decreased by 49.27%, accounting for 18.54% of revenue. In 2023, H1 company's gross profit margin was-1.12%, year-on-year + 0.54 pcts; net profit rate was-56.00%, year-on-year-17.25pcts, mainly due to the substantial increase in expense rate during the company period compared with the same period last year. In terms of expenses, the rates of sales, management, R & D and financial expenses of H1 company in 2023 were 0.54%, 2.32%, 25.79%, 8.71%, respectively, and the year-on-year changes were + 0.04/-0.47/+7.01/+3.27pcts. Among them, the expense rate and absolute value of R & D expenses and financial expenses have increased compared with the same period last year, respectively due to the increased R & D investment in the third phase of the 12-inch project and the company's use of bank loans to raise investment in advance. In 2023, H1, affected by the weak demand in consumer electronics-related markets, the overall demand of the global integrated circuit industry continued to show a lack of growth momentum, and the company's consumer business was also partially affected. However, with its strong independent research and development capability and close customer relationship, the company has achieved high penetration in markets such as new energy power generation and new energy vehicles, and made many breakthroughs in high-end high-power applications, therefore, orders from new energy vehicles and landscape energy storage enterprises at home and abroad have promoted the substantial growth of the company's production capacity and output value.

A breakthrough has been made in the research and development of vehicle products, and the expansion of industrial control business is progressing smoothly: in 2023, the company's SiCMOSFET has completed a full range of product parameters and reliability identification, and realized mass production and loading; the 40V-150V products corresponding to the first-generation and second-generation vehicle SGT (shielded grid groove MOSFET) technology have entered the vehicle specification for mass production. The 750V IGBT filling module applied to the main drive inverter of the new energy vehicle has achieved large-scale mass production, and the 1200V IGBT filling module has also passed the client verification; the double-sided heat dissipation plastic packaging vehicle IGBT module has achieved large-scale mass production; the platform products of the vehicle super-size PDFN (TO-LL) packaging technology have passed the client function verification, and completed the AECQ101 certification of automotive electronic products simultaneously. At the same time, the company has increased its R & D investment in high-voltage power transmission and distribution, photovoltaic, lithium battery power protection, commercial UAV, charging piles, power supply and other industrial control fields. Among them, the company's high voltage 4500V IGBT has been successfully applied; the second generation ultra-low voltage and high density grooved MOSFET has completed the identification of parameters and reliability and entered the stage of mass production; and the third generation shielded gate grooved MOSFET technology has completed the performance identification and reached the design expectations. In addition, according to the needs of customers, the company extends the packaging module technology in the field of industrial control.

In 2023, H1, the company's photovoltaic module 650V platform has achieved mass production, 1000V photovoltaic module has passed the client verification, the performance has reached the world's advanced level.

The demand of new energy track is increasing, and the market space of vehicle plus landscape storage is broad: the integrated system of photovoltaic power generation, electric energy storage and household electricity not only solves the problems of power generation, but also solves the problems of power storage and power use. therefore, the integration of optical storage is an important trend in the future development, and the application of energy storage system will become the key element of large-scale photovoltaic application and energy structure transformation. According to the company report, data from the National Energy Administration show that from January to June 2023, more than 100 million kilowatts of wind power and photovoltaic were installed nationwide, accounting for 71% of the newly installed wind power and photovoltaic. At the same time, with the development of markets such as 5G and new energy vehicles, the demand for silicon carbide (SiC) devices and modules keeps growing at a high speed.

According to the company's report, according to the forecast of Yole, it is estimated that by 2027, the market size of the third generation semiconductors, mainly represented by silicon carbide (SiC), will reach 6.297 billion US dollars, of which the market size of new energy vehicles will reach 4.986 billion US dollars. The company reported that the company has become the largest contract manufacturing enterprise with the production capacity of automotive specification-grade IGBT chips and modules in China. The company's IGBT products have been widely used in main drive inverter, photovoltaic inverter and boost of new energy vehicles, and ultra-high voltage IGBT has also been applied to the national grid intelligent flexible transmission system. In addition, the company has realized the large-scale mass production of vehicle gauge-grade silicon carbide (SiC) MOSFET used in vehicle main drive inverter power module in 2023. In the future, with the rapid growth of the global silicon carbide (SiC) market, domestic brands of new energy vehicles and photovoltaic inverters continue to increase their global market share, and there is a broad space for domestic substitutions. the company is expected to benefit from the rapid iteration of technology and capacity expansion to seize the growth opportunities brought about by the development of the new energy market.

The company is mainly engaged in the R & D, production and sales of MEMS, IGBT and MOSFET. The company's products are mainly used in industrial control fields such as new energy vehicles, landscape storage and power grids and high-end consumer goods markets. The company has become the largest contract manufacturing enterprise with the production capacity of automotive gauge-level IGBT chips and modules in China, and has a complete and technologically advanced platform for R & D and mass production of automotive gauge-level high-quality power devices, and is an important domestic manufacturing base for automotive gauge-level IGBT chips and modules.

The company reported that the company is also the largest and most technologically advanced MEMS wafer generation plant in China. According to the "2023 MEMS Industry status report" released by Yole, SMIC ranks fifth in the world's major MEMS wafer foundry. In the future, with the recovery of consumer electronics demand and the semiconductor industry entering the upward cycle, the company is expected to gradually repair profitability and achieve a turnaround. At the same time, with the continuous growth of new energy power generation, new energy vehicles and other market segments, as well as the company's on-board, industrial control and other areas of technology research and development, business development continues to make breakthroughs, the company is expected to further improve profitability and open up growth space. It is estimated that the return net profit of the company from 2023 to 2025 is-714 million yuan,-468 million yuan and 50 million yuan respectively, the EPS is-0.10,0.07,0.01yuan respectively, and the PE is 741x in 2025.

Risk hints: macroeconomic fluctuation risk; overcapacity risk; supply chain risk; industry competition aggravating risk.