Incident: On February 29, 2024, the company released the 2023 performance report. The company achieved operating income of 900 billion yuan in 2023, a year-on-year decrease of 1.59%; realized net profit of 1,480 billion yuan, a year-on-year decrease of 43.45%; and realized deduction of non-net profit of 1,246 billion yuan, a year-on-year decrease of 46.44%.
The 12-inch base project progressed smoothly, and net profit increased month-on-month in Q4: the company's revenue remained flat in 2023, mainly due to low market conditions and a slowdown in the growth rate of the company's various businesses. The company's net profit declined sharply year-on-year in 2023, mainly due to the company's increased investment in R&D, and new businesses at the two 12-inch lines and sealing and testing bases in Chongqing and Shenzhen are gradually being developed, and expenses increased during the company period. In Q4 2023, the company achieved operating income of 2,371 billion yuan, down 2.38% year on year and 5.18% month on month; realized net profit of 424 million yuan, down 24.31% year on year, up 52.30% month on month; realized deducted non-net profit of 286 million yuan, down 26.53% year on year and 52.34% month on month.
Capacity utilization remains high, and the 12-inch production line is expected to open up room for performance improvement: as of November 2023, the company's 6-inch production line has a monthly production capacity of over 230,000 pieces; the 8-inch production line has a monthly production capacity of more than 140,000 pieces; the first phase of the Chongqing 12-inch production line has a capacity plan of 3-35,000 pieces, and the product verification process and production capacity climbing are progressing according to plan; and the 12-inch production line in Shenzhen is expected to open up by the end of 2024. The release of 12-inch production capacity is expected to be a key point in improving the company's performance. Furthermore, in January 2024, benefiting from factors such as prominent BCD's characteristic process advantages, stable customer base, and IDM business model adjustment, the company's wafer manufacturing capacity utilization rate maintained a high level. Among them, the capacity utilization rate of the 8-inch production line reached more than 90%; the capacity utilization rate of the 6-inch production line reached more than 95%.
Benefiting from the boom in new energy vehicles, the vehicle regulation business is improving: According to Fortune BusinessInsights, the global electric vehicle market is expected to grow to US$1579.1 billion in 2030, and the CAGR of the global electric vehicle market is about 17.80% in 2023-2030. The company's automotive-grade products have clear and impressive market prospects in the field of new energy vehicles. As of December 2023, the company's silicon carbide products have been successfully introduced to leading domestic car companies; the company's SGT MOS, SJ MOS, IGBT, SiC MOS and other serialized vehicle grade products and module products have been supplied to leading automakers and auto parts Tier 1 suppliers; the company's silicon carbide JBS and silicon carbide MOS products have all been introduced into automotive electronics applications and shipped in batches to many benchmark customers in the industry. In the past two years, the company has applied more than 100 million products on a large scale in vehicles. The company's business is divided according to downstream terminal applications. In January 2024, the company's overall pan-renewable energy sector (vehicle and new energy) business accounted for 39%. Benefiting from the continued boom in the NEV industry, the overall demand in the automotive electronics market is becoming stronger, and the company's vehicle regulation business is expected to continue to grow.
Lowering profit forecasts and maintaining the “gain” rating: The company's main business includes the design, production and sales of power semiconductors, smart sensors and intelligent control products, as well as providing manufacturing services such as open wafer manufacturing and package testing. In 2023, the company's various automotive-grade products have been supplied to customers in batches. The scale of product sales has continued to expand, and the development trend of the vehicle regulation business is improving. As the penetration rate of new energy vehicles in China continues to increase, demand in the automotive electronics market is expected to grow rapidly, the company's vehicle regulation business is expected to continue to benefit, and the room for the company's performance growth is expected to open up further. Considering that the semiconductor market is still under some pressure, and in line with the company's performance forecast, we have lowered the company's profit forecast for 2023-2025. We expect the company's net profit to be 1.48 billion yuan, 1,576 billion yuan, and 1,702 billion yuan respectively, EPS of 1.12, 1.19, and 1.29 yuan/share, respectively, and PE of 37X, 35X, and 32X respectively.
Risk warning: demand for power semiconductors falls short of expectations; technology research and development falls short of expectations; product prices fall short of expectations; capacity expansion falls short of expectations.