Matters:
On October 27, 2023, the company released its report for the third quarter of 2023:
1) 2023Q1-Q3: The company achieved operating income of 7.530 billion yuan, -1.33%; gross profit ratio of 33.42%, year-on-year -3.94pct; net profit of 10.56/920 billion yuan, net profit of 10.56/920 billion yuan, -48.66%/-50.60% year-on-year;
2) 2023Q3: The company achieved operating income of 2,500 million yuan, +0.57%/-6.83%; gross profit ratio of 31.66%, y-48pct/-2.19pct; net profit margin of 278 million yuan, -60.40%/-30.00%; net profit of 278 million yuan, -60.40%/-30.00%; net profit after deduction of 188 million yuan, year-on/month-on-month -66.18%/-52.57%.
Commentary:
The product structure continues to be optimized, and the company's “IDM+ OEM” two-wheel drive has maintained stable performance. The industry cycle bottomed out and stabilized. The company gave full play to the advantages of the IDM model, and overall profitability stabilized at a high level. 2023Q3 achieved operating income of 2,500 million yuan, +0.57%/-6.83%; gross profit ratio of 31.66%, year-over/month-on-month -5.48pct/-2.19pct; net profit margin of 278 million yuan, y-60.40%/-30.00% year-on-month. The decline in profit was mainly due to current R&D investment and high share payment costs. The company continues to optimize its product structure, and the revenue and scale of IGBT and third-generation and half-generation products have achieved rapid growth. As downstream demand gradually picks up, the company's new production capacity gradually reaches production, and future performance is expected to return to a growth path.
The sales scale of the high-end product line has increased significantly, and the company's product structure continues to be optimized. The company continues to increase investment in R&D, continuous breakthroughs in high-end product lines, and the sales scale of IGBT products and third-generation semiconductors continues to increase. The technical level of the company's IGBT process platform and corresponding modules and system application solutions is leading in China. It continues to launch high-power module products. At the same time, product applications are continuously upgraded, and the sales share of industrial control and automotive electronics markets continues to increase. In terms of third-generation semiconductors, the company has accelerated product technology iteration, SiC and GaN power devices continue to be promoted to high-end applications, SiC MOS sales share has increased to more than 50%, and second-generation GaN products have entered the batch supply stage. In the future, the company's high-end product line is expected to continue to expand, with sufficient momentum for long-term development.
The Chongqing 12-inch production line+Greater Bay Area project continues to advance, and sufficient production capacity supports the long-term development of the company. The company's manufacturing resources are in a leading position in the country. At the same time, the scale of the 12-inch production capacity continues to expand, the Chongqing project production line continues to rise in volume, and the construction of the 12-inch production line in Shenzhen continues to advance. In terms of product structure, the company has accelerated 8-inch IGBT product serialization and production capacity construction, and promoted third-generation semiconductor R&D and production. With the release of production capacity on the 12-inch platform, the company's share of high-voltage superjunction MOSFET sales will further increase. With the steady expansion of production capacity and the upgrading of the product structure, the company is expected to further consolidate its leading position in the domestic power semiconductor field.
Investment suggestion: “IDM+ OEM” dual-wheel drive company's revenue continues to grow, and continuous breakthroughs in IGBT and other products have led to product structure improvements. As a leading domestic power semiconductor manufacturer, the company's performance is expected to maintain steady growth. Considering the short-term pressure on industry prosperity, we lowered the company's net profit forecast for 2023-2025 from 1,901/24.82/3,050 billion yuan to 14.11/17.44/2,099 billion yuan, corresponding to EPS of 1.07/1.32/1.59 billion yuan, maintaining a “strong push” rating.
Risk warning: Changes in the external trade environment may cause uncertainty; downstream demand falls short of expectations; expansion of new products and fields falls short of expectations; industry competition intensifies.