Hongwei Technology is a domestic veteran manufacturer of IGBT and FRED chips. At the same time, it has laid out SiC devices, opened up new generation factories such as integrated towers, and has gradually increased its own closed test capacity. Acer and Micro Technology released its Quarterly report in 2023. Combined with the announcement information, the comments are as follows:

23Q3 demand weakening in some areas and other factors affect revenue, single-quarter gross profit margin decreased 1.03pcts.

1) 23Q1-Q3: revenue 1.135 billion yuan, year-on-year + 84.69%, net profit 86 million yuan, year-on-year + 39.69%, gross profit 21.4%, year-on-year slightly lower 0.37pct, net profit 7.48%, year-on-year-2.47pcts 2) 23Q3: revenue 371 million yuan, year-on-year + 31.58% / month-on-month-14.37%. The decline in revenue in a single quarter is partly due to weak photovoltaic demand and other factors. The net profit of the parent is 23.04 million yuan, year-on-year-20.56% / month-on-month-27.15%. It is expected that the payment level of Q3 shares is the same as that of Q2, gross profit 21.65%, year-on-year-0.19pct/-1.03pcts Due to the company's capacity utilization, increased competition in the industry and upstream fab cost transfer and other factors led to a slight fluctuation, net interest rate 6.55%, year-on-year-1.32pcts/-0.62pcts.

The proportion of Q3 downstream areas has changed slightly, pay attention to the progress of the company's products in the domestic automobile market. From a downstream point of view, some of the company's 23Q3 photovoltaic customers' demand for single-tube products has declined, resulting in a slight decline in the proportion of photovoltaic revenue, relatively good demand for vehicle specification-level modules, an overall increase in the proportion of automobile business income, and a relatively stable industrial sector. At present, the sales of some new energy vehicles and new models in China are booming. Take MJ Automobile as an example, the cumulative total of the new M7 has exceeded 60000 in the first month on the market, and the M9, the panoramic flagship full-size SUV, is scheduled to exceed 15000 on October 25. Hongwei's current automotive 800A/750V module has been delivered in small batches, and it is recommended to pay attention to the improvement of the company's domestic market share in the future.

Upstream fab cost end or continuous gradual optimization, major customer orders to ensure long-term growth. The current capacity utilization of global foundry has declined this year as a whole. According to Huahong 23Q2, Huahong 23Q2 capacity utilization rate is 102.7%, month-to-0.8pct, equivalent to 8-inch ASP year-on-year-2% / ring ratio-6.8%. In the case of reduced production capacity, the company may have room for further optimization on the cost side. The company announced on August 22 that it had signed a major daily operation contract with customer A for a period of 23M9-26M7. At the initial stage of signing the contract, the actual production capacity of the product had reached 100,000 yuan per month, but it is now in a state of climbing and has not yet reached 200,000 yuan per month.

? Investment advice. Hongwei Technology is a leading IGBT enterprise in China. It is recommended to pay attention to the competitive situation of the IGBT industry and the market's expectation for plate valuation. our latest estimate for 23-25 is that the company's revenue in 23-25 will be 1557 and 2.62 billion yuan, and the corresponding net profit will be 1.31 million and 191 million, respectively. The corresponding EPS is 1.86 and 1.26, respectively, and the corresponding PE will be 54.9, 37.4 and 28.7 times. Maintain the "overweight" rating.

Risk tips: the risk of downward prosperity of the industry, the risk of lower-than-expected demand downstream, the risk of production line construction and capacity expansion not as expected, the risk of intensified competition in the industry.