The best domestic silicon carbide substrate. The company was founded in 2010 and initially focused on 4-inch semi-insulating substrate products. After more than ten years of technological development, we have been able to sell 6-inch conductive silicon carbide substrates in batches, and independently expand the diameter to complete the preparation of high-quality 8-inch conductive silicon carbide substrates.
800V SiC is being launched intensively, and the prospects are optimistic. Semi-insulated and conductive silicon carbide substrates are widely used in the fields of new energy vehicles/photovoltaics/energy storage and 5G/radar/national defense, respectively. Since Tesla was the first to install SiC on the Model 3 in 2018, car companies such as NIO, BYD, Geely, SAIC, and Xiaopeng have followed suit. According to incomplete statistics from the GaN World Report, as of 2023H1, nearly 40 SiC models have entered mass production and delivery, and the delivery data showed a cumulative total of 1.187 million SiC models in the first half of the year. Combined with CleanTechnica statistics (over 1 million SiC models in January-May) and sales of major models in June, it is estimated that global SiC models sold more than 1.2 million units in the first half of the year, and high-pressure silicon carbide models are increasing.
Production capacity adjustments have been completed, and the company's performance is now at an inflection point. Along with the rapid growth in demand in the terminal market, the company's conductive substrate products have entered major companies such as Infineon and Bosch, and there are plenty of orders in hand. On the one hand, the company accelerated the construction of conductive substrate production capacity in Lingang, Shanghai, and on the other hand, actively adjusted the production capacity of semi-insulating substrates at the Jinan plant to the production capacity of conductive substrates. Although the company's revenue and profitability declined temporarily in 2022 due to production line and equipment adjustments, etc., as the company's Lingang production line climbed smoothly and the delivery capacity of conductive products increased, the company's sales volume has continued to grow for five consecutive quarters, reaching a record high of 825 million yuan in the first three quarters of 2023; net profit to the mother achieved a record high of 3.8 million yuan in a single quarter in 2023Q3.
Investment advice: The company is a domestic silicon carbide substrate leader, and its products have high technical barriers. Currently, the company is in a stage of technological breakthroughs and rapid growth in production capacity. Combined with downstream demand, the company signs cooperative orders with leading companies in the industry, and its market share is gradually expanding. We expect the company to achieve revenue of 1,248/21.50/36.92 billion in 2023-2025. Since the company's 2023-2025 revenue is expected to grow rapidly and profits are turning losses into profits, the corresponding PS is 22.63/13.14/7.65 times, covered for the first time, giving it an “increase in weight” rating.
Risk warning: Downstream industry demand falls short of expectations; capacity expansion falls short of expectations; technology research and development falls short of expectations.