Investment highlights: 2025E semiconductor RF power products are expected to start growing rapidly.

The leader in industrial power supplies. Yingjie Electric mainly focuses on the application of power electronics technology in various fields of industry, and is engaged in R&D, production and sales of industrial power supply equipment represented by power control power supplies, special power supplies, and charging piles/stations for new energy vehicles. After more than 20 years of innovation and development, it has successfully developed the first all-digital single-crystal furnace heating DC power supply with corresponding technical parameters in China, the world's first 36-pole polysilicon reduction furnace power supply, and a major domestic nuclear power controller supplier, etc., creating many “first” and “only” projects in the field of industrial power supplies, and has become a strong brand supplier of power control power supplies and special industrial power equipment in China.

A critical period for the transformation of old and new kinetic energy for the company's growth. In the first three quarters of 2024, the company's orders were about 1.4 billion yuan, a year-on-year decline. The main reason was that orders in the photovoltaic industry fell significantly, down more than 50% year on year; orders from the semiconductor electronic materials industry were 0.328 billion yuan, up more than 10% year on year; orders from other industries (including energy storage and charging piles) were 0.448 billion yuan, which was basically the same as last year. We believe that the company's next development priorities include, but are not limited to: ①, overseas exports of photovoltaic equipment power supplies, and overseas factory construction for downstream customers in the photovoltaic industry. If new equipment is invested, there is a demand for new orders; ②, the continuous expansion of the sales scale of power supply products for semiconductor electronic materials, including equipment for integrated circuits; ③, the growth of the new energy charging pile business.

We are optimistic about the company's localization replacement process in the field of RF power supplies, and 2025E is expected to achieve accelerated growth.

On March 21, 2024, the shares of Sichuan Yingjie Chenhui Technology Co., Ltd. changed. Jiaxing Shengwei Investment Management Partnership (Limited Partnership) and Zhongwei Semiconductor Equipment (Shanghai) Co., Ltd. became new shareholders of the company, holding 4% and 16% of the company's shares respectively. We believe that along with Zhongwei Semiconductor Equipment (Shanghai) Co., Ltd.'s investment in Chengdu Yingjie Chenhui Technology Co., Ltd., the cooperation between the two sides will help promote the process of localizing RF power supplies; the two sides will choose methods more conducive to the company's development and increase the scope of use of domestic RF power supplies as soon as possible, which is also in line with the strategic direction of increasing the localization rate of the semiconductor industry.

Profit forecasting and valuation recommendations. We expect Yingjie Electric's 2024E-2026E revenue to be 2.222 billion yuan, 2.608 billion yuan, and 2.916 billion yuan, respectively, up 25.56%, 17.35%, and 11.84% year on year; net profit to mother will be 0.55 billion yuan, 0.67 billion yuan, and 0.806 billion yuan, respectively, up 27.45%, 21.82%, and 20.36% year on year. Combined with comparable company valuations, we gave Yingjie Electric PE (2024E) 30x to 35x, with a reasonable market value range of 16.496 billion yuan to -19.245 billion yuan, and a reasonable value range of 74.45 yuan/share - 86.86 yuan/share per share. For the first time, coverage gave it an “superior to the market” rating.

Risk warning: The continued downturn in the photovoltaic industry has led to a marked decline in new orders, the domestic substitution process in the semiconductor sector is slower than expected, price downward pressure has increased due to increased market purification, new product development progress has slowed due to the departure of core technicians, and technological breakthroughs brought about by the extreme difficulty of developing high-end RF power products are uncertain.