Matters:
The company announced its 2023 annual report. In 2023, the company achieved revenue of 3.663 billion yuan, an increase of 35.39% over the previous year; net profit attributable to shareholders of listed companies was 911 million yuan, an increase of 11.36% over the previous year. The company plans to distribute a cash dividend of 15.9784 yuan (tax included) to all shareholders for every 10 shares.
Ping An's point of view:
The 23Q4 single quarter's revenue and net profit reached record highs, and gross margin both rebounded year over year:
In 2023, the company achieved revenue of 3.663 billion yuan (+35.39% YoY), net profit attributable to mother of 911 million yuan (+11.36% YoY), and net profit of non-attributable net profit of 886 million yuan (+16.25% YoY). In 2023, the company's overall gross margin and net margin were 37.51% (-2.79pct YoY) and 25.14% (-5.20pct YoY), respectively, and the weighted average return on net assets was 15.07% (-0.23pctYOy). Mainly, the company continued to expand its market share and operating income continued to grow in various downstream industries. From the cost side, the company's expense ratio for the 2023 sales period was 9.19% (+2.19pctYOY), mainly due to a decrease in the company's interest income and continued increase in R&D investment in the current period. Among them, the sales expense ratio, management expense ratio, and R&D expense ratio were 1.04% (-0.10pct YoY), 2.20% (-0.44pct YoY), -1.90% (+1.86pct YoY), and 7.85% (+0.87pct YoY), respectively. In Q4 in a single quarter, the company achieved revenue of 1,044 billion yuan (+25.62% YoY, +12.20% QoQ), and achieved net profit of 255 million yuan (+10.92% YoY, +10.53% QoQ). Revenue and net profit in a single quarter reached record highs. 2023Q4, the company's gross margin and net margin were 40.47% (+1.91pct YoY, +3.88pct QoQ) and 24.44% (-3.04pct YoY, - 0.44pct QoQ), and gross margin both rebounded year over year.
Revenue has achieved steady growth in all industry segments, and IGBT modules are still the main force: in terms of product structure, the company continues to maintain a product structure dominated by IGBT modules. IGBT module revenue was 3.331 billion yuan, up 49.73% year on year, accounting for 91.55% of main business revenue, gross margin was 37.72%, down 1.93 pct year on year; revenue from other products was 307 million yuan, down 32.81% year on year, mainly due to a decline in demand for IGBT single-tube core downstream household photovoltaic inverters. Judging from the revenue structure, the company's main business revenue has achieved steady growth in all industry segments. By segment, the revenue of the industrial control and power supply industry was 1,279 million yuan (+15.64% YoY), accounting for 34.93%; the revenue of the new energy industry was 2.156 billion yuan (+48.09% YoY), accounting for 58.87% of revenue; and the revenue of inverter white goods and other industries was 203 million yuan (+69.48% YoY).
New energy vehicles are equipped with more than 2 million vehicles, and overseas markets continue to break through: In 2023, the company continued to release automotive-grade IGBT modules used in main motor controllers, with a total of more than 2 million sets of NEV main motor controllers. The company further increased its share of semiconductor devices for new energy vehicles such as vehicle air conditioners, charging piles, and electronic power steering. 750V automotive-grade IGBT modules based on seventh-generation micro-groove Trench Field Stop technology were loaded in large quantities, and the 1200V automotive-grade IGBT modules added main motor controller project targets for several 800V system models. In addition, the company's overseas business has developed rapidly. In 2023, the subsidiary Star Europe achieved revenue of 310.89 million yuan, an increase of 226.66% over the previous year, and maintained more than reversal growth for two consecutive years; Star's export business outside of Europe achieved operating income of 76.83 million yuan, an increase of 70.88% over the previous year. The company began mass delivery of automotive-grade IGBT modules in the European first-tier brand Tier1, and several new IGBT/SiC MOSFET main motor controller projects were added. The company further deepened cooperation with car companies, and established Chongqing Anda Semiconductor Co., Ltd. in a joint venture with Deep Blue Automobile to develop and produce high-performance, high-reliability automotive-grade IGBT modules and automotive-grade SiC MOSFET modules. It is expected that plant construction will be completed and production will begin in 2024. At the same time, in terms of the new energy wind and solar storage business, the company installs IGBT modules based on seventh-generation micro-groove Trench Field Stop technology in batches in ground-based photovoltaic power plants and large-scale energy storage plants, and in batches in North America and other overseas power plants.
Autonomous SiC MOSFET chips have been verified by a number of customers, and are also in a leading position in the third-generation semiconductor field: in 2023, the company loaded a large number of automotive-grade SiC MOSFET modules used in new energy vehicle main controllers, and also added a number of 800V system main motor controller projects using automotive-grade SiC MOSFET modules. It is worth noting that in 2023, the company's own automotive-grade SiC MOSFET chips passed vehicle verification by multiple customers on the company's multiple automotive power module packaging platforms and began batch shipment.
Investment advice: The company is the only leading domestic enterprise in the global IGBT module market. It has a first-mover advantage and is highly recognized by customers in terms of brand, technology, product quality, and reliability. The company seizes the opportunity of localization of core power devices in various downstream industries, accelerates the development of markets such as new energy vehicles and photovoltaic energy storage, breaks through leading overseas customers, and continuously increases its market share. Against the backdrop of the declining semiconductor industry cycle and intensifying competition in the power device market, the company's performance for the full year of 2023 is still relatively stable, demonstrating the resilience of the leading position in the industry. Based on the company's latest financial report and judgment on the company's strategic layout, we adjusted the company's profit forecast. The company's net profit for 2024-2026 is estimated to be RMB 1,142 billion (previous value was RMB 1,223 billion), RMB 1,448 billion (previous value was RMB 1,447 billion), and RMB 1,785 billion (new), and EPS was 6.68 yuan, 8.47 yuan and 10.44 yuan, respectively, corresponding to the closing price of April 8, PE at 22.0X, 17.3X and 14.1X, maintaining the company's “recommended” rating.
Risk warning: (1) Risk of declining industry sentiment: The company's performance is closely related to the sentiment of the semiconductor power discrete device industry, so it will be affected by macroeconomic fluctuations. If the macroeconomic downturn or downstream demand falls short of expectations, the company's revenue and profit growth may be adversely affected; (2) the risk of increased market competition:
MOSFETs and IGBTs are power semiconductor devices with a high technical threshold. They all require high R&D technology, product quality, and service. Once the company's technical level, the speed of product updates and iteration, and the quality of products and services are reduced, they may all be taken away by competitors; (3) Risk of fluctuations in the NEV market: Although the company's NEV module sales volume continues to grow rapidly, in the future, the NEV market will be affected by factors such as industrial policy changes, automotive supply chain device support, and customer recognition Large fluctuations in demand will adversely affect the company's profitability.