Event Overview: Company Releases 2024 Quarterly Report
Revenue for the quarter was $426 million, up 121% year over month; net profit to mother was 0.46 million yuan, reversing loss year on year; 23Q1 was -0.28 billion yuan, up 105% month on month; net profit after deducting non-return mother was 44 million yuan, reversing loss year on year; 23Q1 was -46 million yuan, up 3343% month on month; gross margin was 21.92%, up 9.85% year on month and 4.08% year on year.
Increased order and delivery capacity led to a continuous explosion in 24Q1 revenue - orders: In '23, the company signed long-term orders with Infineon and Bosch, and the company's 6-inch substrates accounted for the double-digit level of Infineon's demand;
——Delivery: The Lingang Plant began delivery in mid-'23, and the climbing progress exceeded expectations, strongly supporting revenue. The company's market share of conductive silicon carbide substrates gradually increased in '23, surpassing Gaoyi and ranking second in the world.
The rise in orders and deliveries led 24Q1 revenue to continue the high growth trend in 2023.
Demand: The advent of the 800V era catalyzes the explosion of silicon carbide
The advent of the 800V era: As of November 23, at least 60 800V models were on the market, and 35 car companies launched more than 50 800V models at the Guangzhou Auto Show in November 23;
Silicon carbide is the “perfect match” for 800V: silicon carbide has better resistance to high pressure and conduction loss than IGBT, is the first choice for 800V platforms; silicon carbide models accounted for 15%/18%/29%/35%/39%/45% of 800V models from June to November 2023, respectively (according to the NE era), and the penetration rate continued to increase;
Wind and solar storage is expected to become the second driving force for silicon carbide demand outside of automobiles. Furthermore, the RF market continues to grow steadily, and the two major fields continue to expand the long-term space for silicon carbide.
Supply: The second phase of production expansion+8 inch upgrade takes a two-pronged approach, laying the foundation for high growth. Delivery of the second phase of the Lingang plant began in May 23, and the annual production capacity of the first phase of 300,000 tablets is expected to be achieved ahead of schedule. The second phase plans to expand the entire Lingang production capacity to 960,000 pieces/year on the basis of the first phase of 300,000 pieces/year.
8 inch upgrade: Silicon carbide substrates already have mass production capacity, leading the country in terms of quality and batch supply capacity, and actively promoting the transformation of leading customers to 8 inches.
Investment advice
We kept our forecast of the company's 2024-25 revenue of 2,41/3.45 billion yuan unchanged, and added a 2026 revenue forecast of 5.0 billion yuan, which is 10/7/5 times the corresponding PS. We maintain a “buy” rating for the company. The Tianyue Advanced Lingang Plant has been successfully launched, and demand from downstream customers is strong. At the same time, increased product yield has led to increased profitability. The company is facing continuous improvements in both revenue and net profit. Maintain a “buy” rating.
Risk warning
The downstream NEV boom fell short of expectations, R&D progress fell short of expectations, and production capacity climbed short of expectations.