23 The full-year results were slightly lower than expected, with large depreciation and R&D investment affecting profit performance. 23 Throughout the year, the company achieved revenue of 5.32 billion yuan, YoY +16%, net profit to mother - 1.96 billion yuan, YoY -80%; in 23Q4, the company achieved revenue of 1.49 billion yuan, YoY +3%, net profit to mother - 60 billion yuan, YoY -173%. 23H2 The poor performance of the new energy market led to a slightly lower than expected increase in the company's main business revenue. At the same time, since SiC production lines, 12-inch silicon-based wafer production lines, and module production lines are still climbing in production capacity, the company's high R&D investment and fixed asset depreciation amounts affect profit performance.

The downturn in the new energy market is dragging down the growth of silicon-based businesses, and we are optimistic about module packaging and analog IC emissions for a long time.

23 The automotive and industrial control sector contributed 76% of the company's main business revenue for the whole year. The new energy market experienced inventory adjustments in the second half of '23, which led to the company's 23H2 revenue +28% and -1% YoY (23H1 revenue +511%, +72% YoY). However, benefiting from the company's superior customer card positions covering the vast majority of NEV terminal customers and industrial control products covering over 80% of wind and solar storage terminal customers, the company's 8-inch foundry production line still had an average annual capacity utilization rate of over 80%; it has also completed the 12-inch design capacity construction to produce 10,000 pieces per month. Various platforms such as IGBT, SJ, HVIC, and BCD have all entered large-scale mass production and production is climbing. In 23 years, 8-inch silicon-based foundry, 12-inch silicon-based foundry, and module packaging achieved revenue of 40.5, 0.5, and 390 million yuan respectively. We are still optimistic about the company's module packaging and analog IC business volume in the long term.

SiC MOS is the number one domestic shipment, and the SiC business revenue is expected to exceed 1 billion yuan in '24. By the end of 23, the company's 6-inch SiC MOS production line had achieved a monthly output of more than 5,000 pieces, and the product quality, yield, and cost indicators are all in the first tier in the world. SiC partners have successively covered mainstream new energy vehicle companies such as Ideal, NIO, and Xiaopeng. The combination of production capacity and customer benefits is expected to drive the company's silicon carbide business to exceed 1 billion yuan in revenue in 24, stabilizing the leading position of domestic SiC devices.

Profit forecast and investment rating: The declining trend in the new energy market is dragging down the company's growth, and we are optimistic about the volume of its SiC and analog IC business for a long time. Based on this, we lowered our profit forecast for the company. The estimated revenue for 24-26 is 64.1/77.7/9.80 billion yuan (the previous 24-25 forecast value was 72.5/9.76 billion yuan), and the current market value corresponds to PS of 5.3/4.4/3.5 times, respectively, maintaining the “buy” rating.

Risk warning: the risk of downstream demand falling short of expectations; the risk of increasing production capacity and output falling short of expectations; the risk of increased market competition; potential risks caused by continued loss in the company's performance.