It belongs to China Resources Group, and Big Fund is the second shareholder. China Resources Micro is a high-tech enterprise responsible for microelectronics business investment, development and operation management under China Resources Group. It has successively integrated Chinese semiconductor companies such as Huake Electronics, China Huajing, and Shanghua Technology. As of 1Q24, China Resources Group (Microelectronics) Co., Ltd., the majority shareholder of the company, held 66.41% of the shares, and the National Integrated Circuit Industry Investment Fund, the second shareholder, held 4.45% of the shares.
With heavy research and development, the share of new energy+ vehicle applications increased to 39%. 1) The company's R&D investment increased from 450 million yuan in 2018 to 1,154 million yuan in 2023, and the R&D cost rate increased from 7.2% to 11.7%. Among them, groove SBD design and process technology, optical coupling and sensing series chip design and manufacturing technology, and BCD process technology are internationally leading. 2) In 2023, the company will increase customer development efforts in the pan-energy sector. According to the announcement, the share of pan-new energy (vehicles+new energy) in the downstream application structure of the company's product and solution sector increased from 35% in 2022 to 39%. The products entered customers such as Sunshine Power, Deye Co., Ltd., Huichuan, BYD, Geely, FAW, Changan, and Wuling.
The MOSFET scale is the largest in China, and SiC is actively deployed. 1) China Resources Micro is a company that can provide a full range of low, medium and high voltage MOSFET products in the -100V-1500V range. 2) In 2024, the company's wide bandgap semiconductor revenue dispute doubled.
According to the 2023 annual report, the company's revenue for silicon carbide and gallium nitride power devices increased 135% year-on-year, and SiC MOS increased its share of SiC products to more than 60%, achieving batch shipments in various fields such as OBC for new energy vehicles, photovoltaic energy storage, and industrial power supplies. 3) The company has the first 6-inch SiC production line in China, with a current production capacity of 2,500 pieces/month. The 6/8-inch GaN platforms are also being developed simultaneously.
Focus on promoting the “8+12 inch” characteristic process. 1) The characteristic process does not fully rely on line width reduction. A semiconductor wafer manufacturing process that emphasizes unique IP customization capabilities and diverse technology categories. 2) The 12-inch production line is a future growth point. As of 2023, China Resources Micro has a 6-inch production capacity of 230,000 pieces/month, 8-inch tablets per month, and is building a 12-inch production line in Shenzhen with a monthly output of 40,000 tablets (expected to be completed by the end of 2024). Chongqing's 12 inch is in the climbing phase.
First coverage, giving a “buy” rating. We forecast the company's revenue for 2024-2026 to be 114, 131 billion yuan, 15.5 billion yuan, and net profit to mother of 1.24, 14.5 billion yuan, and 17.1 billion yuan. Referring to the average PB valuation of comparable companies in 2024 and giving China Resources Wei 2.6XPB, we expect the company's net assets to reach 24.85 billion yuan in 2024, corresponding to a market value of 64.21 billion yuan. Compared with the current market value, there is room for growth of 28%, giving the company a “buy” rating.
Risk warning: risk of product development and technology iteration; risk of scale expansion and loss of core technical personnel; risk of supply chain risk; risk that the company announced the “Regulatory Work Letter on China Resources Microelectronics Co., Ltd.” on March 26, 2024, but the details of the letter were not announced.