The company's 2Q23 revenue increased 136.55% year-on-year. 1H23 achieved revenue of 760 million yuan (YoY +129.7%), net profit of 63 million yuan (YoY +93.9%), net profit of non-attributable net profit of 58 million yuan (YoY +121%), and a gross profit margin of 21.28% (YoY+0.38pCT). 2Q23 achieved revenue of 433 million yuan (YoY +124.72%, QoQ +30.8%) in a single quarter, net profit of 32 million yuan (YoY +57.97%, QoQ +2.41%), net profit of 31 million yuan (YoY +96.35%, QoQ +13.73%), gross profit margin of 22.68% (yoY +0.53pct, QoQ +3.23pct).

The proportion of photovoltaic modules has increased, gross margin has been optimized, and many advances have been made in product technology. The increase in the share of the company's 1H23 photovoltaic modules led to a marked improvement in gross margin over the previous month. At present, the company's 400A/650V three-level customized module for photovoltaics has been developed smoothly, and stable mass production and batch delivery have begun; the automotive 800A/750V double-sided cooling module has passed relevant reliability and system tests and achieved small-batch delivery; the automotive 750V 12-inch IGBT chip has been successfully developed and rapidly upgraded in the vehicle scale; the 12-inch 1700V high-performance reflux tube and 1700VIGBT chip have been developed and verified. It is expected that in the future, with product structure optimization, the company's gross margin will gradually increase. In addition, the company and the Changzhou Science and Technology Innovation Fund have jointly established the “Core Kinetic Semiconductor” company, which focuses on the development of advanced module packaging technology, and is expected to accelerate growth in fields such as silicon carbide modules in the future.

Production capacity guarantee agreements are signed with major customers, and the certainty of growth is enhanced. On August 21, the company announced the signing of a capacity guarantee agreement with customer A for a period of about three years, which stipulated a capacity supply agreement of not more than 200,000 units/month. Currently, the company's production capacity is 100,000 units/month. From September 23 to July 26, the supply volume will be adjusted every year according to the company's actual production capacity. The corresponding time points are September 23, July 24, and July 25. If the company's production capacity is released steadily, revenue from this business is expected to double. Competition in the industry is currently heating up. In this context, the company has obtained stable supply demand, and the module business can be expected to increase.

Packaging production capacity is gradually being released, and automotive modules are expected to gradually grow. According to the company's previous announcement, in '22, the company ordered 281,100 yuan of car-grade modules (excluding intended orders). It is expected that 23 will deliver car-grade module products including 700,000 to 800,000 yuan in hand orders and intended orders. Customers include representative companies such as BYD, Zhenqu Technology, and Huichuan Technology. In 23-25, with the gradual release of the company's car-grade module production capacity of 2.4 million units/year, new energy vehicles will become one of the company's main growth poles. It is expected that in the second half of '23, the company's automotive products will gradually increase with the launch of 12-inch IGBT chips.

Investment suggestions: We are optimistic about the company's technical capabilities in chip and module design and process implementation and growth space in the field of new energy applications. We expect the company to achieve gross net profit of 1.6/211/291 million yuan (YoY +103% /32%/38%) in 23-25, corresponding to 22-24 PE of 48/36/26 times, respectively, maintaining the “buy” rating.

Risk warning: demand for new energy generation and automobiles falls short of expectations, module production line construction falls short of expectations, etc.