Revenue fell 11% in 2023, putting pressure on gross margins. Affected by the overall economic environment and the downturn cycle of the semiconductor market, the company achieved revenue of 3.190 billion yuan (YoY -11.39%), net profit of 187 million yuan (YoY -42.61%), net profit after deducting non-return to mother net profit of 166 million yuan (YoY -244%); gross margin decreased by 6.3 pct to 16.46% due to reduced capacity utilization, R&D expenses increased 5% to 222 million yuan, and R&D expenses increased by 1.1 pct to 6.96%. Among them, 4Q23 had revenue of 800 million yuan (YoY -20.3%, QoQ -2.0%), net profit to mother of 26 million yuan, net profit after deducting non-return to mother of 103 million yuan, and gross profit margin of 9.42% (YoY -14.2pct, QoQ -5.7pct).
The production capacity of 300mm semiconductor silicon wafers reached 450,000 wafers per month, and full production and delivery was achieved in December. The subsidiary Shanghai Xinsheng added a 300mm semiconductor silicon wafer production capacity of 150,000 wafers/month in 2023. The total production capacity has reached 450,000 wafers/month, and reached full production and shipment in December 2023. It is expected to achieve the construction target of 600,000 wafers per month by the end of 2024. The company has shipped nearly 10 million pieces in history, and has achieved full coverage of applications such as logic, storage, and image sensors. In 2023, it achieved revenue of 1,379 billion yuan (YoY -6.55%), accounting for 43%, and gross margin decreased by 1.90 pcts to 10.45%. In addition, Shanghai Xinsheng has signed a cooperation agreement with the Taiyuan Municipal People's Government and the Taiyuan Zhongbei High-tech Industrial Development Zone Management Committee to jointly invest with other investors in the construction of a “300mm semiconductor silicon wafer drawing and cutting and polishing production base” in Taiyuan, with a total investment of 9.1 billion yuan. The construction of the pilot line is expected to be completed in 2024.
Production of 200mm specialty silicon wafers has been expanded, and a 300mm high-end silicon-based material test line of about 60,000 wafers per year has been built.
For semiconductor silicon wafers of 200mm and below, the company achieved revenue of 1,452 billion yuan (YoY -12.62%) in 2023, accounting for 45%, and gross margin decreased by 9.22pct to 17.23%. The subsidiary Xinao Technology and Okmetic have a total production capacity of over 500,000 wafers and epitaxial wafers of 200mm and below, and the total production capacity of SOI silicon wafers exceeds 65,000 wafers/month. In terms of new projects, Okmetic is promoting a 200mm semiconductor specialty silicon wafer production expansion project to consolidate its market position in high-end segments such as advanced sensors, power devices, RF filters, and integrated passive devices. Xinao Technology continues to promote the 300mm high-end silicon-based material research and development pilot project, and has now built a 300mm high-end silicon-based material test line with a production capacity of about 60,000 wafers per year.
Investment advice: High-end production line construction continues to advance, maintaining the “increase” rating. Due to the short-term impact of new production capacity and falling utilization rates, we slightly lowered the company's net profit to the mother in 2024-2025 to 3.02/3.98 (previous value: 3.39/434 million yuan). The estimated net profit to mother in 2026 is 489 million yuan. PE corresponding to the stock price on April 12, 2024 is 116/88/72x, and PS is 8.3/6.8/5.8x, respectively. The company's high-end production line construction continues to advance, maintaining the “gain” rating.
Risk warning: demand falls short of expectations, capacity release falls short of expectations, customer introduction falls short of expectations.