Key points of investment:
Announcement: In 2023, the company achieved revenue of 5.410 billion yuan, YoY +0.12%; net profit to mother of 924 million yuan, YoY -12.85%; net profit after deducting non-attributable net profit of 704 million yuan, YoY -28.22%. 4Q23 The company's revenue was 1,369 million yuan, YoY +38.92%; net profit to mother was 306 million yuan, YoY +130.95%; net profit after deducting non-return to mother was 91 million yuan, YoY -26.02%. The performance was in line with expectations.
In 2018-2023, Yangjie Technology's net profit CAGR exceeded 35%. In 2023, the company's gross margin reached 30.26%, down 6.03pct year on year; net margin reached 17.03%, down 3.21pct year on year. Mainly, sales of the company's photovoltaic diodes, silicon carbide products, and IGBT products increased sharply year-on-year, but the gross margin of these products was lower than the company's average gross profit margin.
Short-term recovery: Overseas inventory removal is nearing its end, and growth is expected to resume in 2024. The company's small signal and MOSFET products are the main players overseas. We expect the growth rate of H2 series products to be expected as overseas markets pick up. As of 2023, there are 12 sales and technical service centers outside the company, including the United States, South Korea, Japan, India, and Singapore. In the medium to long term:
The product structure continues to be optimized, and there is strong certainty about growth in the NEV sector. The company's in-depth layout of automotive electronics has been recognized by many domestic and foreign auto parts companies.
Global layout to build international market capabilities. In 2023, the company's overseas revenue accounted for 22.5%. 1) The company implements a “dual brand” strategy. The “YJ” brand focuses on the Chinese and Asia-Pacific markets, and the “MCC” brand focuses on the European and American markets, targeting first-tier international companies such as Ansemi. 2) In 2023, the company invested in the establishment of its subsidiary Mei Weike (Vietnam) Co., Ltd. in Vietnam, and Vietnam will become the second manufacturing base to serve international customers.
New products continue to be released, and progress has been accelerated for three and a half generations. 1) According to the company's announcement, in 2023, the company released a total of 25 new products, including IGBT high-performance micro-groove single-tube products, new IGBT single-tube products for automotive PTC, 1200V 40mΩ silicon carbide MOSFETs, and new N40V SGT MOSFETs for automotive motor drives. 2) The company has developed and launched G1 and G2 series SiC MOS products. The models cover 650V/1200V/1700V 13mΩ-1000 mΩ, and batch shipments have been achieved. 3) The company's self-developed automotive silicon carbide module has been developed and sampled. Currently, it has received tests and cooperation intentions from many Tier 1 and terminal car companies, and plans to complete batch launch of nationally produced main-driven silicon carbide modules in 2025.
The profit forecast was lowered and the “buy” rating was maintained. Considering that the company was still affected by photovoltaics in the first quarter, gross margin was under pressure, the 24-25 net profit forecast was lowered to 9.9 billion yuan or 1.18 billion yuan (the original forecast was 1.08 billion yuan and 1.28 billion yuan), and the net profit forecast for the additional 26 years was 1.39 billion yuan. The current stock price is 20, 17, and 14x for 24-26 PE, respectively, maintaining a “buy” rating.
Risk warning: 1. Market competition risk; 2. Technical risk; 3. M&A risk.