Matters:
On April 25, 2024, the company released the 2023 Annual Report and the First Quarter 2024 Report:
1) 2023: Operating income of 99.01 billion yuan, -1.59%; gross profit margin of 32.22%, -4.49pct; net profit to mother/net profit after deduction of 14.79/1,127 billion yuan, -43.48%/-49.97% YoY.
2) 2024Q1: Operating revenue of 2.116 billion yuan, -9.82%/-10.75%; gross profit margin of 26.48%, year-over-month -8.33pct/-1.95pct; net profit to mother of 0.33 million yuan, -91.27%/-92.15%; net profit without deducted net income of 58 million yuan, -82.83%/-72.06% yoy.
Commentary:
The product structure continues to be optimized, and the company's “IDM+ OEM” two-wheel drive is expected to achieve steady growth in performance. The company's product and solution business achieved revenue of 4.670 billion yuan in 2023, -5.62% year-on-year, gross profit margin of 26.62%, year-on-year -9.51pct; the company comprehensively expanded the automotive electronics market, and products entered key car companies such as BYD, Geely, FAW, Changan, Wuling, etc., and automotive-grade product reserves were steadily advanced, and third-generation semiconductor SiC products won the lead from well-known car companies, and the business is expected to return to growth in the future. The company's manufacturing and service business achieved revenue of 5.08 billion yuan in 2023, +2.66% year-on-year, gross profit margin of 37.42%, year-on-year -0.19pct; the company continues to improve its wafer process and packaging capabilities, and the future business is expected to remain relatively stable.
The company increased investment in R&D, and the sales scale of high-end products and new energy sources increased significantly. The company continues to increase investment in R&D, continues to break through the high-end product line, and continues to increase the sales scale of IGBT products and third-generation semiconductors. The company's IGBT process platform and corresponding module and system application solutions are leading in the country. It continues to launch high-power module products. At the same time, product applications are constantly being upgraded, and the sales share of the industrial control and automotive electronics markets continues to increase. In terms of third-generation semiconductors, the company accelerated product technology iteration, and SiC and GaN power devices continued to be promoted to high-end applications. Sales revenue of SiC and GaN power devices increased 135% year-on-year in 2023. The company's high-end product line is expected to continue to expand in the future, and there is sufficient momentum for long-term development.
New businesses such as two 12-inch lines+sealing and testing bases are gradually being developed, and sufficient production capacity supports the company's long-term development. The company actively lays out major projects, and new businesses such as two 12-inch lines and sealing and testing bases are gradually being developed. Among them, the 12-inch production line in Chongqing continues to rise and the construction of the 12-inch production line in Shenzhen continues to advance. In terms of product structure, the company accelerates the serialization of 8-inch IGBT products and production capacity, and promotes the development and production of third-generation semiconductors. With the release of production capacity on the 12-inch platform, the company's share of high-voltage superjunction MOSFET sales will further increase. With the steady expansion of production capacity and superposition of product structure upgrades, the company is expected to further consolidate its leading position in domestic power semiconductors.
Investment advice: The revenue of “IDM+ OEM” two-wheel drive companies continues to grow, and continuous breakthroughs in IGBT and other products drive product structure improvements. As a leading domestic power semiconductor manufacturer, the company's performance is expected to maintain steady growth. Considering the short-term pressure on industry sentiment, we lowered the company's net profit forecast for 2024-2025 from 1,744/2,099 billion yuan to 1,088/1,321 billion yuan, and added the 2026 net profit forecast to 1,512 billion yuan, corresponding EPS of 0.82/1.00/1.14 yuan, maintaining a “strong” rating.
Risk warning: Changes in the external trade environment may cause uncertainty; downstream demand falls short of expectations; expansion of new products and new fields falls short of expectations; and industry competition intensifies.