The company's net profit to mother increased 60.9% month-on-month in the fourth quarter of '23. The company is mainly engaged in the development and sale of power devices, achieving revenue of 1,477 million yuan (YoY -18.46%), net profit to mother of 323 million yuan (YoY -25.75%), net profit after deducting non-attributable net profit of 304 million yuan (YoY -26.08%), and a gross profit margin of 30.8% (YoY-6.18pct) in 23 years. As the industry gradually stabilized, in 4Q23, the company achieved revenue of 372 million yuan (YoY -23.05%, QoQ +7.7%), net profit to mother of 108 million yuan (YoY +11.03%, QoQ +60.9%), net profit excluding non-return to mother 102 million yuan (YoY +16.05%, QoQ +59.38%), and gross profit margin of 31.77% (YoY 2.14pct, QoQ+1.64pct) in a single quarter.

The number of automotive and data center products is expanding at an accelerated pace, PV is bottoming out of expectations, and gross margins are expected to be optimized. In '23, the company's industrial control revenue accounted for 35%, AI servers, communications and robotics accounted for 20%, light storage accounted for 17%, and automotive electronics accounted for 15%. The company's products have been expanded to all BYD models, and have been designated by Joint Electronics for more than 20 automotive electronics projects (24-29 years), and the products have been thoroughly applied in the driving range. In the field related to data centers, the company's products are stably supplied in the field of traditional servers. Products targeting AI computing power servers have been sold in batches to leading AI computing power customers, and the volume is expected to accelerate in 24 years. PV sales declined in '23 due to high overseas inventories, etc., and it is expected to gradually recover in '24 as inventory is removed.

SGT MOS applications broaden and optimize product structures, and Trench MOS and IGBT are expected to enter an improvement range.

In '23, the company's Trench MOS revenue was 454 million (YoY -9.3%, accounting for 30.8%), IGBT revenue of 266 million (YoY -33.9%, accounting for 18.1%), SGT MOS revenue of 546 million (YoY -19.8%, accounting for 37.1%); SJ MOS revenue was 184 million (YoY -13.5%, accounting for 12.5%). In '23, due to fluctuations in product prices, the company's revenue declined year-on-year in various categories, but the number of customers and application scenarios continued to expand: SGT MOS replaced the largest number of materials from international manufacturers as the main product, SJ MOS products were replaced from the 3rd to 4th generation, and the product structure was optimized in 24 years as revenue increased in the fields of AI servers, data centers, automobiles, and charging piles.

R&D added more than 600 new products, accounting for about 5.9% of R&D investment. The company's fourth-generation superjunction MOS (SJ MOS) platforms have been stably mass-produced in 8-inch and 12-inch SJ MOS platforms; the P-channel 150VSGT MOS platform has achieved industry-leading vehicle certification. N-channel 100V products are mainly aimed at 48V systems, AI servers, industrial control and other applications for hybrid new energy vehicles; the company's newly developed 1200V 23mOhm and 750V 26 mohm MOS SiC series products have begun to be sold on a small scale.

Investment advice: We are optimistic about the expansion opportunities of the company's SGT MOS and other products and the long-term layout of products such as power ICs, considering that there will be no impact of equity incentive fees after 24 years, lower the 24-25 cost rate, and increase net profit for 24-25 years. The company is expected to achieve net profit of 4.17/4.83/520 billion yuan (YoY +29%/+16%/+8%) (previous value: 380/433 million yuan in 24-25), corresponding to 24-26 PE 28/24/20, respectively Double, maintaining a “buy” rating.

Risk warning: downstream demand falls short of expectations, module progress falls short of expectations, etc.