Incident Overview: Company Releases 24-Year Semi-Annual Report

[24H1] The company's revenue was 5.274 billion yuan, +17.83% year-on-year; net profit to mother was 0.025 billion yuan, and losses narrowed, and 23H1 was -0.

4.1 billion yuan; net profit without return to mother 0.126 billion yuan, YoY -22.39%; gross profit margin 19.90%, -4.30pcts yoy; net profit margin -0.47%, +0.44pcts yoy.

The decline in gross margin is mainly due to increased competition in the downstream electric vehicle and new energy markets, leading to a rapid decline in the price of some products and a decrease in product gross margin.

The net profit loss attributable to the mother was mainly due to a drop in the stock prices of Yuneng Technology and Anlu Technology among other illiquid financial assets held by the company, resulting in net income after tax of -0.162 billion yuan due to changes in fair value.

[24Q2] The company's revenue was 2.809 billion yuan, +16.57%, +13.95% month-on-month; net profit to mother -0.01 billion yuan, the year-on-month loss narrowed, 24Q1 was -0.015 billion yuan, 23Q2 was -0.255 billion yuan; net profit after deducting non-return mother net profit was -0.007 billion yuan, year-on-year loss, 24Q1 was 0.133 billion yuan, 23Q2 was 0.049 billion yuan; gross profit margin 17.96%, -4.55pcts, -4.14pcts month-on-month; net profit margin -0.36%, +10.23pcts yoy, +0.25pcts month-on-month.

The integrated circuit business is developing rapidly, and IPM modules are performing well

24H1's integrated circuit business revenue was 2.035 billion yuan, up 29.13% year on year, with a gross profit margin of 31.12%, up 0.42pcts. Revenue growth was mainly due to a marked acceleration in shipments of products such as IPM modules, AC-DC circuits, 32-bit MCU circuits, and fast charging circuits.

1) IPM module: Revenue of 1.413 billion yuan, a year-on-year increase of 50%. Many mainstream domestic white electric machine manufacturers used more than 83 million IPM modules in white electric appliances such as inverter air conditioners, an increase of about 56% over the same period last year.

2) MEMS sensors: Revenue was 0.115 billion yuan, and shipments increased by about 8% over the same period last year, but due to the decline in sensor product prices, their revenue still declined by a certain margin compared to the same period last year. In addition to continuing to increase supply in consumer sectors such as smartphones and wearable devices, the company's MEMS sensor products will also accelerate expansion into white electricity, industry, automobiles, etc. It is expected that the company's MEMS sensor product shipments will grow rapidly in the future.

3) MCU: Revenue increased by about 28% over the same period last year. The company launched a general-purpose high-performance controller product with a larger capacity Flash and more pins based on the M0 core to meet the needs of high-performance control in various fields such as smart home appliances, servo frequency conversion, industrial automation, and photovoltaic inverters.

Power devices are entering automotive and other application fields at an accelerated pace, and SiC production lines are being implemented quickly

24H1's power device revenue was 2.399 billion yuan, up 3.97%; gross profit margin was 14.51%, down 9.42pcts. In addition to speeding up expansion in large-scale white power and industrial control markets, the company's power devices have begun to accelerate their entry into markets such as electric vehicles, new energy, computing power, and communications, and are expected to quickly contribute to revenue.

Electric vehicle main motor drive modules based on V-generation IGBT and FRD chips independently developed by the company have been delivered in batches to many domestic and foreign customers such as BYD, Geely, Zero Run, GAC, Huichuan, Dongfeng, Changan, etc.; the company's IGBT single tubes and MOSFET single tubes for automobiles have been shipped in large quantities. At the same time, the company's IGBT and FRD chips used in automotive main drives have been sold in batches at many module packaging plants at home and abroad, and are in the process of further expanding customers and continuing to release them.

SiC production capacity has been implemented rapidly, and new product development has been successfully introduced: The “Silamine Gallium SiC Power Device Chip Production Line” project is progressing at an accelerated pace. Up to now, Silamine Gallium has formed a monthly production capacity of 6000 6-inch SiC MOS chips. The production capacity is expected to reach 9,000 pieces/month by the end of the third quarter, and production capacity is expected to reach 12000 pieces/month by the end of 2024. The main motor drive module for electric vehicles produced by the company's second-generation SiCMOSFET chip has been verified by customers such as Geely and Huichuan, and mass production and delivery have begun. The company has initially completed the development of the third-generation plane-grid SiC MOSFET technology, and the performance indicators have reached the advanced level of similar device structures in the industry.

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

1) Silantech: 24H1 produced 0.2246 million 12-inch chips (0.037 million chips per month), a year-on-year decrease of about 5%, achieving revenue of 1.121 billion yuan, an increase of 6% over the same period. Silan Jike's capacity utilization rate is already at a high level (close to full production). Currently, Silanji Technology is speeding up the construction of automotive-grade BCD circuit chip production capacity, and the additional circuit production capacity is expected to be released in 25Q1.

2) Silan Jixin: The 24H1 production capacity utilization rate remained stable, with a total output of 0.332 million 8-inch and 12-inch chips (0.055 million pieces per month), a year-on-year decrease of about 4%. Product structure adjustments continued in the first half of the year, and shipments of high-value-added BCD circuits, high-voltage superjunction MOS tubes, and high-power IGBTs increased rapidly. Currently, Silan Jixin's production capacity is running at full capacity. Silan Jixin is speeding up the improvement of MEMS sensor chip manufacturing capabilities and speeding up the construction of an 8-inch silicon-based GaN power device chip mass production line.

3) Silan integration: 24H1 produced 1.0496 million 5- and 6-inch chips (0.175 million per month), a decrease of about 1% over the same period last year. 24H1's revenue was basically the same as in the same period last year, and the production line is currently operating at full capacity.

4) Chengdu Silan: 24H1 epitaxial chip output and PIM module packaging output both increased rapidly compared to the same period last year, with revenue growth of about 29%. In the second half of the year, Chengdu Silan further expanded its packaging capabilities for automotive-grade and industrial-grade power modules.

5) Chengdu Jijia: 24H1 revenue increased by about 18%, and profitability increased dramatically. In the second half of the year, Chengdu Jijia will accelerate the implementation of the third phase of the project to further expand the production capacity of the IPM power module packaging line.

6) Silamine Gallium: 24H1's revenue was 0.364 billion yuan, an increase of about 81%. Mainly due to the recovery in demand for LED color displays, the company increased its market development. In the second half of the year, Silanming Gallium will continue to expand its expansion efforts in high-end applications such as plant lighting, automotive LEDs, infrared optocouplers, and security monitoring, further launch high-value-added products, and accelerate the rise in SiC power device chip production line production line production and improve profit levels.

Investment advice

Considering factors such as the company's net profit being greatly affected by changes in fair value and the decline in gross margin of the discrete device business, we updated our 2024-26 profit forecast to 0.18/0.43/0.69 billion yuan (the original forecast was 0.31/0.52/0.69 billion yuan), and the corresponding PE was 175/71/44 times. As the company's shipments continue to increase in high-threshold markets such as automobiles, new energy, industry, communications, and large-scale white electricity, the profitability of the company's IDM model is expected to increase as the operating rate increases. Maintain a “buy” rating.

Risk warning

The industry boom fell short of expectations, R&D progress fell short of expectations, and customer development fell short of expectations.