Xinjieneng is the company with the most complete MOS category in China. It expands IGBT products, lays out third-generation semiconductors and power ICs, and supplies leading international customer manufacturers in the field of AI computing power in downstream applications. New Clean Energy released its 2024 semi-annual report. Combined with the announcement information, the comments are as follows:

The company's 24H1 revenue increased year over year, and gross margin in a single quarter increased for four consecutive quarters.

24H1: Revenue of 0.873 billion yuan, +15.16% year on year, net profit of 0.218 billion yuan, +47.45% year on year, gross profit margin 35.78%, +5.24pcts year on year, net profit margin 24.72%, +5.56 pcts year on year. 24Q2:

Revenue of 0.502 billion yuan, +30.4% YoY, +35.01% month-on-month, mainly driven by sales of SGT-MOS and other products, net profit of 0.118 billion yuan, +42.25% /month-on-month +17.5% month-on-month. The month-on-month profit growth rate was lower than the revenue growth rate mainly due to factors such as Q2 fee-side growth. The gross profit margin was 36.53%, +6.85pcts/month-on-month +1.77pcts. The gross margin has increased for 4 consecutive quarters since 23Q2. The improvement is mainly due to the optimization of the company's revenue structure. Some product platform upgrades have led to cost optimization, and some product areas with relatively high demand have adopted a more aggressive pricing strategy. The net profit margin was 23.34%, +2.15 pcts/month-on-month.

The revenue of the three major MOS categories all increased year over year, and IGBT declined year over year due to slowing demand and fierce competition. By product type: 1) IGBT: 24H1 revenue 0.141 billion yuan, -22.64% year over year, continued to be affected by the removal of inventory by customers in the photovoltaic energy storage industry. The sales share fell 7.87 pcts to 16.2% year on year. It is expected that 24H2 PV IGBTs will pick up. At the same time, the increase in new high-current IGBT single tube volume will drive month-on-month sales growth; 2) SGT-MOS: 24H1 revenue of 0.36 billion yuan, +40.29% year over year. H1 sales share increased significantly to 41.44%. Currently, some SGT-MOS is in short supply. At the same time, many products in AI computing power servers are SGT series, and H2 SGT sales are expected to continue to increase; 3) SJ-MOS: 24H1 revenue 0.102 billion yuan, +8.49% year over year, sales share fell to 11.78%; 4) Groove MOS: 24H1 revenue 0.255 billion yuan, compared to +19.64% year over year, mainly benefiting from the recovery of some markets such as industrial control, pan-consumer, and automotive electronics after the Spring Festival The share of sales increased to 29.3%.

The overall share of industrial automation has increased, and the field of AI computing power and communication has entered leading international customers. Looking downstream: 24H1 industrial automation, pan-consumer, photovoltaic energy storage, automotive electronics, AI computing power and communications, and intelligent short transportation accounted for 42%, 18%, 14%, 13%, 9%, and 4% respectively. Compared with 2023, the share of industrial automation mainly increased to more than 40%. The share of AI computing power and communications increased slightly, and the share of revenue in several other fields declined. The company increased the number of products supplied by 24H1 in the automotive electronics sector by more than 50% over the same period last year, and took the initiative to remove some IGBTs from inventory in the photovoltaic energy storage market. The photovoltaic industry as a whole is in a recovery period, and the company will continue to pay attention and strength. The company's related products have finally been used by leading overseas customers in the GPU field and sold in large quantities, and more material numbers have been verified.

Investment advice. Xinjieneng is an established local MOSFET power device manufacturer. Currently, IGBT products are gradually being rolled out, cooperating with major customers in the fields of AI computing power, automotive electronics, and photovoltaic energy storage. At the same time, the company independently lays out packaging and testing production lines to expand new products such as third-generation semiconductors and power ICs. The company's revenue for 24-26 is estimated to be 1.87/2.27/2.68 billion yuan, the corresponding net profit to mother is 0.459/0.547/0.636 billion yuan, the corresponding EPS is 1.11/1.32/1.53 yuan, and the corresponding PE is 27.4/23/19.8 times, maintaining the “increase in holdings” investment rating.

Risk warning: Risk of declining industry sentiment, risk of downstream demand falling short of expectations, risk of falling short of expectations in production line construction and capacity expansion, risk of increased competition in the industry.