Incident: The company released its 2023 performance forecast on January 30. It is expected to achieve operating income of 1,230 to 1,280 billion yuan in 2023, an increase of 194.94% to 206.93%; net profit due to mother -0.54 to -036 billion yuan, an increase of 69.30% to 79.53%; and expected to deduct non-net profit -1.35 to -96 billion yuan, an increase of 47.77% to 62.86% year on year.
Benefiting from the boom in the silicon carbide semiconductor circuit, Q4 is expected to achieve significant year-on-year losses: in 2023, Q4 is expected to achieve operating income of 405-455 million yuan, up 174.63% to 208.52% year on year, and 4.77% to 17.70% month on month; expected to achieve net profit of 0.14 to 0.2 billion yuan, significantly reversing losses year on year, increasing 274.86% to 748.26% month on month; it is expected to deduct non-net profit of -0.21 to 0.18 billion yuan. The company's performance in Q4 in 2023 is expected to reverse losses year on year. The main reason is that the overall market size of silicon carbide semiconductors continues to expand, benefiting from the penetrating application of silicon carbide in downstream applications such as new energy vehicles, photovoltaic power generation, and energy storage. According to Grand View Research's forecast, the global silicon carbide semiconductor equipment market size CAGR for 2022 to 2023 is 23.8%. The rapid growth of the silicon carbide semiconductor terminal equipment market has driven the rapid development of the upstream industry and brought great development opportunities to the company's silicon carbide materials business.
Continue to increase investment in R&D and maintain technological leadership: The company began preparing 8-inch products earlier.
At the beginning of 2022, the company unveiled a high-quality 8-inch substrate prepared by self-expansion. At the 2023 Semicon International Forum, the company used the liquid phase method to prepare 8-inch crystals with low defect density, a first in the industry. In order to continue to maintain its leading edge in global technology and product competition, the company continues to increase R&D investment in industrial research and development of 8-inch conductive products, research and development of forward-looking technologies such as liquid phase method, research and development of large-size semi-insulated products, and continues to strengthen its cutting-edge technology layout. At present, the company already has mass production capacity on 8-inch silicon carbide substrates, and will also rationally plan product production and marketing arrangements according to downstream customer needs.
The expansion of conductive substrate production capacity is progressing smoothly, and delivery capacity is gradually increasing: along with the rapid growth in global and domestic demand in terminal markets such as new energy vehicles, new energy power generation, and energy storage, the industry's demand for silicon carbide substrates continues to be strong. According to Canalys, global NEV sales are expected to increase 29% to 13.7 million units throughout 2023. Canalys expects the global NEV market to grow 27% to 17.5 million vehicles in 2024. The company's semiconductor products have clear and impressive market prospects in the field of new energy. In this context, the company is speeding up production capacity construction at the new plant in Lingang, Shanghai, and gradually increasing the production capacity of conductive substrates. The Shanghai Lingang Smart Factory, which was built in May 2023, began product delivery, and is currently in a phase where production continues to rise. Thanks to the company's sufficient order demand and extensive domestic and foreign customer base, the first phase of the Lingang factory's production target of 300,000 tablets will be achieved ahead of schedule. Furthermore, the company's conductive substrate products have entered major domestic and foreign companies, including well-known domestic and foreign companies in downstream power electronics and automotive electronics such as Infineon and Bosch, and are cooperating with the company.
Profit forecast downgraded to “gain weight” rating: The company insists on implementing a long-term development strategy, facing the explosive growth in demand for silicon carbide semiconductor materials in downstream application fields such as electric vehicles, new energy, and energy storage, completing customer order delivery with high-quality products, insisting on increasing investment in forward-looking technology, speeding up product production capacity and structural optimization, and laying the foundation for the company to enter a new stage of development. Considering that the semiconductor market is still under some pressure, and in line with the company's performance forecast, we raised the company's 2023 revenue forecast and lowered the company's 2023 profit forecast and 2024 and 2025 performance forecasts. We expect the company's net profit to be -45 million yuan, 87 million yuan, and 241 million yuan respectively; EPS is -0.10, 0.20, 0.56 yuan/share; and 2024-2025 PE is 253X and 91X, respectively.
Risk warning: downstream demand falls short of expectations; technology research and development falls short of expectations; SiC penetration falls short of expectations; capacity construction falls short of expectations.