occurrences
Incident: On January 14, Jiejie Microelectronics issued a “Price Adjustment Letter” to the customer, announcing a 5%-10% increase in the unit price of the company's Trench MOS product line starting January 15, 2024.
Key points of investment
Revenue increased in the first three quarters, and profitability was under pressure in the short term
The company achieved operating income of 525 million yuan in the third quarter of 2023, up 17.98% year on year, up 5.58% month on month, and achieved net profit of 46 million yuan, down 42.81% year on year and 27.73% month on month; gross sales margin was 32.86%, down 6.26 pcts year on year, down 3.29 pcts month on month; net sales margin was 7.75%, down 8.96 pcts year on year, down 5.09 pcts month on month. The company achieved operating income of 1,426 billion yuan in the first three quarters, up 10.97% year on year; realized net profit of 143 million yuan, down 51.19% year on year, gross sales margin was 34.56%, down 8.58 pcts year on year; net sales margin was 9.04%, down 13.38 pcts year on year. The main reason for the short-term pressure on performance is that the power semiconductor industry in which the company is located is in a low cycle range. The company continues to increase investment in advanced equipment and process research and development and macroeconomic factors in order to improve product quality and diversify product models.
Prices of MOSFET products have been raised, and profitability is expected to improve
The company is a power semiconductor device manufacturer and brand operator integrating power semiconductor devices, power integrated circuits, chip R&D and manufacturing of new components, device development and testing, chip and device sales and service. It mainly uses the IDM model. The main products include thyristor devices and chips, protective devices and chips, diode devices and chips, thick film components, transistor devices, MOSFET devices and chips, IGBT devices and components, silicon carbide devices, etc.
On January 14, the company issued a “Price Adjustment Letter” to the customer, announcing a 5%-10% increase in the unit price of the company's Trench MOS product line starting January 15, 2024. The company's MOSFET business achieved revenue of 576 million yuan in the first three quarters, an increase of 6.54% over the previous year, and a gross margin of 23.02%, accounting for 40.78% of total revenue. The current price increase and adjustment of MOSFET products indicates an improvement in the supply and demand relationship in the industry and a sign of a recovery in the power semiconductor market, fully demonstrating the company's confidence in the competitiveness of its products and the prospects of the industry. The semiconductor industry as a whole has been in a downward cycle in the past two years. While stabilizing the existing thyristor stock business, the company continued to invest in R&D and expand production against the trend, and MOSFET performance has steadily improved. The company's profitability is expected to improve significantly in the future.
Semiconductor projects are progressing steadily, and the high-end sector is expected to replace domestic production
The company has several semiconductor projects that are progressing steadily. The company's “High-end Power Semiconductor Device Industrialization Project” (Phase I) infrastructure and supporting construction has been completed, and part of the equipment in Phase II is being gradually invested. Currently, the project produces 6W films per month, and the total film output of the second phase of the project is expected to reach 8W film/month in the future. The company's “Power Semiconductor 6-inch Wafer and Device Packaging and Testing Production Line” project is undergoing equipment entry and commissioning. It plans to use deep trench etching and filling processes, high voltage and other flat terminal processes to serve the thyristor business, expand the production capacity of existing protective devices, and plan to produce higher-end diodes and IGBT small signal modules. The project was put into operation in the 3rd quarter of '23, and production capacity is on a climbing stage. Future production is expected to develop the industrialization capacity of 1 million 6-inch wafers per year and 10 billion power semiconductor encapsulation devices per year. The company also has a “vehicle grade” packaging and testing industrialization project for power semiconductors, which aims to lay out the R&D, production and sales of automotive-grade high-power devices. Currently, the plant has been capped, and infrastructure construction is being implemented. The project is expected to be completed by the end of '24. The project plans to build a production capacity of 1900kk vehicle-grade high-power device DFN series products, 120kk vehicle-grade high-power device TOLL series products, 90kk vehicle-grade high-power device LFPACK series products, and 60kkwCSP power device products. After delivery, the project is expected to form a sales scale of 2 billion yuan. In addition, the company's holding subsidiary is committed to the design and development of new power devices such as silicon-based IGBTs and wide bandgap to help localize power chips. We are currently developing products for two voltage platforms, 650 V and 1200 V, and have achieved small-batch sales. Revenue is expected to reach 10-20 million yuan in 2023. Later, it will enter the field of high-end products and gradually replace domestic products. Looking forward to the future, the contrarian layout of the company's multiple projects is expected to unleash profit elasticity for the company's performance during the upward cycle.
Profit forecasting
It is predicted that the company's revenue for 2023-2025 will be 20.27, 23.06 billion yuan, and 2.62 billion yuan, EPS will be 0.31, 0.41, and 0.56 yuan respectively. The current stock price is 53.5, 40.3, and 29.2 times PE, respectively. Considering that the downward cycle of power semiconductors bottomed out and the market is gradually picking up, the company's MOSFET product line accounts for a relatively large share and is steadily advancing various high-end power semiconductor projects, giving a “buy” investment rating.
Risk warning
The risk of increased competition in the industry; the risk of developing new products and technologies; management risks due to the expansion of the company's size; the risk of semiconductor project implementation falling short of expectations; the risk that downstream demand falls short of expectations.