Event: The company released its report for the third quarter of 2023. In the first three quarters of 2023, the company achieved operating income of 1,907 million yuan, +1.69% year-on-year; net profit of 343 million yuan, -3.43% year-on-year. In the third quarter of 2023, the company achieved operating income of 645 million yuan, +5.02% year-on-year; net profit of 122 million yuan, -3.40% year-on-year.
Comment: 1. Revenue grew steadily in the first three quarters under fluctuating demand, and future business trends are expected to gradually improve.
The company acquired assets and added new shares to achieve listing. This time, the company announced and published financial data. In the first three quarters of 2023, downstream demand in the domestic and foreign electronic ceramic shell industry was sluggish, compounded by the double pressure of the slowdown in 5G base station construction. The company accelerated domestic production substitution and share growth, and achieved steady revenue growth. Due to price and cost fluctuations in the optical module and consumer electronics business, the gross margin for the first three quarters was about -2.00pct to 34.70% year on year; under the scale effect, the company continued to reduce costs and increase efficiency, but the National League of Nations is in a period of expansion, which is dragged down by increased production capacity expansion and declining performance, and net sales interest is about -0.86pct to 20.85% year on year. Looking ahead, the production capacity of fund-raising projects has been released, traditional businesses such as optical modules and consumer electronics have grown steadily, precision ceramic components have accelerated customer breakthroughs, and business trends have improved markedly; the acquired GaN business continues to grow, and the SiC business has opened up new growth space.
2. Semiconductor precision ceramic components continue to break through, and the ceramic shell of high-speed optical modules accelerates release. As the US and Japan increase import restrictions on semiconductor equipment, the trend of domestic substitution of precision ceramic parts continues to consolidate, driving the company's new customers to explode, speeding up verification and passing, and large future profit margins. The company's high speed optical module ceramic cases are “outstanding” in China, and 400G ceramic cases have been shipped in batches; the technical level of 800G products is already comparable to overseas, and the future is expected to benefit from the AI wave and accelerate release.
3. The share of GaN PA has been steadily increasing, and funding has been raised in the fields of satellite communications and 6G. Gallium nitride PA is widely used in 5G base stations, and Boway's integrated gallium nitride PA has strong technical strength, and overseas market share is expected to increase steadily. The capital raised will mainly be used for RF device technology for 6G and Starlink communications. In the future, with the commercial use of 5.5G/6G, the demand for high-frequency gallium nitride PA will further increase; in the field of satellite communications, GaN PA can be used in low-orbit satellites, and there is broad room for future growth.
4. SiC main drive parameters have been verified, and batch shipment is imminent. More than one million SiC MOS modules have been supplied for the National League of Nations Wanzhong vehicles, and SiC MOS for the main drive has successfully passed parameter verification. As mass production verification progresses, it is expected that it will be the first batch shipment in China. The company currently has a monthly SiC production capacity of 2,000 pieces, and will gradually expand production to 5000-10,000 pieces/month next year, and it is expected that production will be released rapidly next year.
5. Profit forecast and investment advice: We have adjusted our profit forecast. It is estimated that the company's net profit for 2023-2025 will be 5.01, 8.23, and 1,132 billion yuan. According to the closing price on November 13, the corresponding PE is 60.8, 37.0, and 26.9 times, respectively, maintaining the “increased holding” rating.
Risk warning: Capacity expansion falls short of expectations; new product development progress falls short of expectations.