Event Overview: Company Releases 2024 Quarterly Report

The company released its 2024 quarterly report: revenue for the quarter was 2,465 billion yuan, up 19%; net profit to mother was -0.15 billion yuan, year-on-year loss, 23Q1 was 214 million yuan, and 24Q4 was 153 million yuan; the company's 24Q1 non-operating profit and loss was -148 million yuan, mainly due to changes in the fair value of financial assets held, leading to a profit and loss of -177 million yuan (mainly falling stock prices of Yuneng Technology and Anlu Technology), which dragged down the company's apparent net profit to negative profit and loss; deducted the company's apparent net profit and loss from mother profit to negative; Net profit of 133 million yuan to mother The year-on-year increase was 17%, the month-on-month loss was -125 million yuan in 23Q4; the gross profit margin was 22.10%, down 4.07pcts, and 3.19pcts.

Overall downstream power has picked up, and the profitability of IDM leaders has increased

The overall downstream power boom in 24Q1 picked up from 23Q1. Shipments of products such as IPM intelligent power modules, automotive-grade PIM power modules, AC-DC circuits, 32-bit MCU circuits, IGBT devices, SiC-MOS devices, MEDPMOS devices, and light-emitting diode devices increased significantly year-on-year. As a power IDM model, the company's operating rate increased, which led to an increase in profitability. 24Q1 gross margin increased by 3.19 pcts year on year to 22.10%, and deducted non-net profit to 133 million yuan, reversing losses month-on-month and increasing 17% year over year.

High-end markets and high-end customers continue to break through

In '23, the company's products such as superjunction MOSFETs, IGBT devices, and IGBT high-power modules (PIM) grew rapidly, and progress was made in the development of IGBT and SiC products. Automobiles: 1) Electric vehicle main motor drive modules based on V-generation IGBT and FRD chips independently developed by the company have been supplied in batches to many domestic and foreign customers. 2) On the SiC side, the company has completed the development of the third-generation plane-grid SiC-MOSFET technology; the electric vehicle main motor drive module produced based on the second-generation SiC-MOSFET chip independently developed by the company has passed some customer tests and began mass production and delivery in 24Q1. It is estimated that sales of silicon carbide PIM modules used in automobile main drives will reach 1 billion yuan throughout the year; at the same time, the company has launched a hybrid parallel drive scheme for SiC and IGBT. Photovoltaic/energy storage: MCU products continue to make progress in fields such as photovoltaic inverters, and MOSFET/IGBT products are also opening up space in the photovoltaic market. Home appliances/industry: IPM modules continue to penetrate various inverter products from home appliances/industrial customers. In 23 years, many mainstream domestic white electric machine manufacturers used more than 100 million Silan IPM modules for inverter air conditioners, etc., an increase of 38% over the same period last year.

Multiple production lines go hand in hand, product structure continues to be upgraded

5/6/8 inch chips: In 23 years, the company produced a total of 2,217 million 5/6 inch chips (Silan integrated), YoY -6.9%, 8-inch chips (Shilan Jixin) 678,000 chips (56,000 pieces per month), YoY +4.3%. Epitaxial films: Chengdu Silan 5/6/8 inch epitaxial films are running steadily. The company increased investment in 12-inch epitaxial films in '23. By the end of 23, it had completed an investment of 110 million yuan, and the project progress was 38%.

Packaging (Chengdu Jijia): The company already has packaging capacity for products such as an annual output of 210 million power modules, 1.2 billion power devices, and an annual output of 18 million automotive LED bulbs. In 2024, Chengdu Jijia will further increase investment in IPM power module packaging lines and expand its production capacity.

12-inch cable (Silan Jike): In 2023, Silan Jike's 12-inch line produced a total of 464,000 chips, a decrease of 1.3% over the same period last year. In 2012, Silanji Technology will accelerate the release of production capacity for automotive-grade IGBTs, MOSFETs, etc., and increase investment in the construction of automotive-grade analog integrated circuit chip process platforms to improve profit levels.

Compound semiconductors: 23Q4 has developed a monthly production capacity of 6000 6-inch SiC MOS chips, and is expected to produce 12000 6-inch SiC MOS chips per month by the end of '24.

Investment advice

We maintain our forecast of the company's 2024/25/26 net profit of 31/5.2/690 million yuan unchanged, corresponding PE of 103/62/46 times. In 2024, the company's shipments in high-threshold markets such as automobiles, new energy, industry, communications, and large white power supplies will continue to increase, and the profitability of the company's IDM model is expected to increase as the operating rate increases. Maintain a “buy” rating.

Risk warning

Industry sentiment fell short of expectations, R&D progress fell short of expectations, and customer development fell short of expectations.