Tianyue Advanced released the operating data report for the first three quarters of 2023: the company achieved revenue of 825 million yuan in the first three quarters of 2023, an increase of 206.06% over the previous year; realized net profit of 68 million yuan, an increase of 42.06% over the previous year. According to calculations, the company achieved revenue of 387 million yuan in a single quarter of 2023, an increase of 57.91% over the previous quarter; net profit of 104 million yuan was realized, turning a month-on-month loss into a profit.
Key points of investment
Operating income grew rapidly in the third quarter, and the company's production capacity was released in an orderly manner, long-term and short-term orders were sufficient, and operating income grew rapidly. Revenue for the third quarter was 387 million yuan, an increase of 255.89% over the previous year and 57.91% over the previous year. The company's gross margin has increased, and cost control is reasonable. The gross margin for the third quarter was 18.69%, up 8.0 pct year on year; sales/management/R&D expense ratio was 0.66%/9.80%/8.64%, respectively, down 1.77/4.19/12.19 pct year on year. Net profit was realized at $04 billion, turning a loss into a profit in a single quarter.
Production capacity in Lingang is rapidly rising, and the release of production capacity is expected to drive performance growth. The company accelerated the construction of the new Shanghai Lingang plant, gradually increased the production capacity of conductive substrates, and successfully began product delivery in May 2023. It is expected that production capacity production will continue to increase in the fourth quarter of 2023. Benefiting from strong demand from downstream customers, the company has sufficient orders in hand. Currently, the production capacity of 300,000 pieces in the first phase is expected to reach production ahead of schedule, and the production capacity plan for the second phase of 960,000 pieces has also begun.
Excellent R & D strength, sufficient orders in hand
The company focuses on the preparation technology of silicon carbide monocrystalline semiconductors. It is one of the few companies in the world that can supply high-quality 4-inch and 6-inch semi-insulating silicon carbide substrates in batches, and has achieved mass sales of 6-inch conductive silicon carbide substrates and the preparation of 8-inch conductive silicon carbide substrates. The company has always maintained a high level of R&D investment. In the first three quarters of 2023, the company spent 123 million yuan on R&D, an increase of 41.15% over the previous year.
The company has sufficient orders in hand, and the contract debt for the first three quarters of 2023 is 119 million yuan.
In May 2023, the company signed a substrate and crystal bar supply agreement with Infineon. The agreed supply is expected to account for a double-digit share of Infineon's long-term demand. In August 2023, the company signed a framework agreement with customer F. It is estimated that the total amount of sales including tax for three years will be 804.08 million yuan.
Profit forecasting
It is predicted that the company's revenue for 2023-2025 will be 12.84, 26.22, and 4.195 billion yuan, EPS 0.07, 0.37, and 1.17 yuan respectively, and the current stock price corresponding to PE is 882, 167, and 53 times, respectively. The company's production capacity in Lingang is rapidly rising, and there are plenty of orders on hand. We are optimistic about the increase in the company's revenue and profit volume, and give it a “buy” investment rating.
Risk warning
Downstream demand falls short of expectations, production capacity falls short of expectations, risk of increased market competition, risk of technology iteration, etc.