Key points of investment

On October 22, 2024, the company released its report for the third quarter of 2024.

24Q3 revenue reached a record high and continued to deepen the global layout of the “MCC+YJ” dual brand

With the rapid transformation of the global automotive industry to electrification and intelligence, the company's automotive electronics business ushered in growth opportunities. Revenue increased 60% year-on-year in the first three quarters; at the same time, with the gradual recovery of consumer electronics and industrial market demand, consumer electronics and industrial product revenue increased by more than 20% year-on-year in the first three quarters of 2024.

24Q3 achieved revenue of 1.558 billion yuan, a year-on-year increase of 10.06% and a month-on-month increase of 1.38%, reaching a new high in revenue in a single quarter. Net profit to mother was 0.244 billion yuan, up 17.91% year on year, and was basically the same. Among them, financial expenses increased from -0.034 billion yuan in 24Q2 to 0.011 billion yuan; net profit after deducting non-return to mother was 0.231 billion yuan, up 13.74% year on year, down 1.30% month on month; gross profit margin was 33.59%, up 1.31 percentage points year on year, up 2.27 percentage points from month to month; the increase in gross margin was mainly due to the company adhering to a cost-leading strategy and continuing to push forward the decline This increase in efficiency has achieved remarkable results. Furthermore, the company continues to develop new products with high technical content, unique performance and specific market needs, forming a differentiated competitive advantage, effectively increasing the added value of products, and further improving product gross profit.

The company implemented the business model of “double brand” + “double cycle” and brand product differentiation, and achieved global market channel coverage for dual brand products. “YJ” brand products focus on domestic and Asia-Pacific markets, and have reached strategic partnerships with top customers in various industries. “MCC” brand products focus on the European and American markets and target international first-tier companies such as Ansemi. At the same time, the company invested in the establishment of an additional subsidiary, Mei Weike (Vietnam) Co., Ltd. in Vietnam to further build overseas supply capacity and actively expand international business. Currently, the company is speeding up the construction of factories in Vietnam and the layout of overseas outlets, and speeding up the construction of innovative platforms and carriers such as overseas R&D centers. According to the August 2024 investor survey minutes, the Vietnam plant is expected to be put into operation by the end of '24 and the beginning of '25.

On October 15, 2024, the company stated that the current overall production and sales situation and operating conditions are good, and there are sufficient orders in progress.

Build a one-stop supply for a full range of semiconductor power devices and firmly promote the strategic layout of automotive electronics

The company focuses on application fields such as AI, industrial control, photovoltaic inverters, and new energy vehicles. The company's market share in IGBT modules has increased rapidly, and it has gradually become an important player in integrated chip design and module packaging. The company's NEV PTC uses the 1200V series single tube to be delivered in large quantities to car enterprise customers. The 1200V/160A, 650V/400A, 650V/450A, and 950V/600A three-level IGBT modules developed for the photovoltaic field were successfully put on the market. For NEV controller applications, we focused on solving key technologies such as low inductance packaging, multi-chip current sharing, copper wire interconnection, and silver sintering, and developed 750V/820A IGBT modules and 1200V/2MΩ three-phase bridge SiC modules.

The company continues to increase investment in the third-generation semiconductor chip industry to create a one-stop supply of a full range of semiconductor power device products. The company's 650V/1200V/1700V SiC SBD products have completed the development of a full range of 2A-60A, and the SiC SBD market share continues to increase. Self-developed automotive silicon carbide modules have been developed and sampled. Currently, they have received tests and cooperation intentions from a number of Tier 1 and terminal car companies, and it is planned to complete batch launch of nationally produced main-drive silicon carbide modules in 2025.

The company firmly promotes the strategic layout of automotive electronics. Based on the 8/12 inch platform based on the Fabless model, the N40V series products have completed the 0.48mR~7mR series layout, successfully passed automotive-level reliability verification, gradually passed multiple major customer tests, and entered the batch stage. The N60V/N100V/N150V/P100V has completed the serial development of automotive-grade chips, and various products have been mass-produced.

Investment advice: In view of the current uncertainty in the PV market demand, we have adjusted the company's original performance forecast. From 2024 to 2026, the company's revenue is expected to be 6.048/7.258/8.419 billion yuan (previous value was 6.524/8.012/9.117 billion yuan), with growth rates of 11.8%/20.0%/16.0%, respectively; net profit to mother of 0.946/1.151/1.365 billion yuan (previous value was 1.046/1.308/1.573 billion yuan), respectively, with growth rates of 2.3%/21.8%/ 18.6%; PE was 27.9/22.9/19.3, respectively. The company's three major sectors of semiconductor silicon materials, wafers and power devices are developing collaboratively, continuing to deepen dual-brand operations and overseas strategic layout, and continue to expand high-margin products. Continued recommendation, maintaining a “buy-A” rating.

Risk warning: Downstream terminal market demand falls short of expectations; risk that new technologies, new processes, and new products cannot be industrialized as scheduled; risk of exchange rate fluctuations brought about by overseas business; risk of increased market competition; systemic risks, etc.