Key points of investment

Revenue grew steadily throughout the year and continued to improve month-on-month. The company seized the time window for domestic high-threshold industries and customers to actively introduce domestic chips, and achieved revenue of 9.34 billion yuan, +12.77% year over year; net profit to mother -0.36 billion yuan, mainly due to falling stock prices of Yuneng Technology and Anlu Technology held by the company, and changes in fair value generated net income of 450 million yuan after tax; annual gross profit margin 22.21%, -7.24% year over year; Q4 achieved revenue of 2.44 billion yuan, +0.66% month-on-month; net profit margin of 18.92% , -2.95% month-on-month.

Discrete devices are being introduced to emerging markets at an accelerated pace, and silicon carbide modules are being launched. The company's revenue for discrete device products in 2023 was 4.832 billion yuan, an increase of 8.18% over the previous year. Of these, IGBT's revenue reached 1.4 billion yuan, an increase of more than 140% over the previous year. The self-developed main motor drive modules for V-generation IGBT and FRD chips have been supplied in batches to many domestic and foreign customers such as BYD, Geely, and Zero Run, and are in the process of further expanding customers and continuous volume. In addition, mass production and delivery of the second-generation SiC-MOSFET main motor drive module based on the company's own development began in 24Q1, and annual sales are expected to reach 1 billion yuan.

The integrated circuit business continues to promote new products and enter the high-threshold market. In 2023, the company's integrated circuit revenue was 3.119 billion yuan, +14.88%, of which IPM module revenue was 1.983 billion yuan, with IPM module shipments exceeding 100 million units; MEMS sensor revenue was 286 million yuan, -6% year-on-year, mainly affected by the slowdown in downstream smartphone, tablet and other markets. Currently, the company is accelerating its expansion into white power, industrial, automotive and other fields. It is expected that shipments of MEMS sensor products will return to growth this year.

Investment advice:

We expect the company's 2024-2026 net profit to be 3.1/5.4/760 million yuan, maintaining a “buy” rating.

Risk warning:

The risk of fluctuations in the NEV market; the competitive landscape of the industry intensifies risks; product promotion falls short of expectations.