Event Overview:
The company released its 2022 annual report: it achieved annual revenue of 1.81 billion yuan, YoY +20.0%, net profit of 440 million yuan, YoY +4.5%, net profit of 40 million yuan after deducting non-return to the mother, and YoY +1.0%. Stock payments had a great impact on the company's net profit. Net profit after deducting the impact of share payments was 500 million yuan, YoY +20.5%.
According to estimates, the company's 22Q4 revenue was 480 million yuan, YoY +20.8%, QoQ +3.9%. Net profit attributable to the mother during the same period was 100 million yuan, YoY -2.5%, QoQ -5.8%, net profit after deducting non-return to the mother was 90 million yuan, YoY -9.1%, and QoQ -12.9%.
Structural upgrades have led to 22 years of steady growth
The downstream semiconductor boom in 2022 was divided, consumer electronics demand declined, and demand for optical storage/new energy vehicles was strong. Aiming at opportunities, the company focuses on developing the optical storage and automotive electronics markets. 1) Optical storage: The company's IGBT supplies a large number of domestic top 10 photovoltaic companies and has become the largest domestic supplier of single-tube IGBTs for many leading customers. 2) Automotive electronics: The company has increased cooperation with BYD to achieve mass supply of nearly 30 parts numbers. At the same time, the scale of shipments to more than 10 car companies has steadily increased. The overall delivery number has exceeded 60 models and continues to increase. Under the strong impetus of the company, IGBT, the core product of optical storage, increased 398% in 22, the revenue growth rate of the automotive electronics business exceeded 700%, and the share of revenue in the optical storage+ automotive sector increased from 31% in 22H1 to 48% in 22H2.
The company promoted new energy, effectively mitigated the adverse effects of the decline in consumer demand, and achieved a relatively rapid increase in performance throughout the year.
Recovering of the boom and the release of IGBT modules, optimistic outlook for 23H2
The semiconductor boom began a downward cycle from 21Q4 to 23H1 close to the bottom range. We judge that the industry boom is expected to recover in 23H2, which will drive a recovery in the revenue and profitability of new clean energy. In addition, IGBT modules are expected to become new growth highlights for the company: 1) 650V and 1200V modules have been successfully developed and applied to photovoltaics and energy storage. Samples are expected to be sent to customers in April 23, and mass production is expected in 23Q3; 2) the purchase and construction of the first IGBT module sealing and testing line of subsidiary Jinlan Semiconductor in '22 was completed, laying the foundation for production capacity for business expansion in '23; 3) the company actively develops new FRD chip foundry resources, which is expected to ensure complete delivery of IGBT modules.
Entering silicon carbide and automotive ICs to create a second growth pole
1) Upstream and downstream silicon carbide collaborative layout: In '22, the company developed OBC and SiC MOS for optical storage, the product entered trial production in small batches, and successfully developed silicon carbide chip foundries and engineering batches; in addition, the company participated in Zhenjing Semiconductor and got involved in SiC liquid-phase long-crystal technology. 2) Automotive IC samples are expected to be sent in 23: The company controls China Silicon Integration. The latter's related products have already been applied in large quantities by leading customers in the fields of photovoltaics & energy storage, industrial control, battery chemistry, power tools, etc., and verification of 18 250V and 700V half-bridge driver chips was completed in '22, which is expected to be mass-produced and sold in 23Q2. China Silicon is actively promoting research and development of automotive isolated driver ICs and SmartMOS products, which are expected to be sampled by the end of 23 — there is huge room for domestic substitution for related products, and it is expected to become a new growth point in performance.
Investment advice
Since we expect the industry to enter an upward cycle in 23H2-2024, we adjusted the company's forecast of the company's net profit to the parent for 2023/24/25 to be 608/817/1,078 million yuan (the original forecast for 2023-24 net profit was 6.0/770 million yuan), and the corresponding PE was 28/21/16 times. As one of the leading IGBT/MOSFET companies in China, the company's economic recovery is compounded by the logic of developing new products, and growth is remarkable. We maintain the company's “buy” rating.
Risk warning
Industry sentiment fell short of expectations, R&D progress fell short of expectations, and new business expansion fell short of expectations.