Incident: On April 21, Yangjie Technology released its 2023 annual report. In 2023, the company achieved revenue of 5.410 billion yuan, an increase of 0.12% over the previous year, and realized net profit of 924 million yuan, a year-on-year decrease of 12.85%.
Q4 Revenue achieved positive year-on-year growth, and the product structure continued to be optimized. Q4 The company achieved revenue of 1,369 billion yuan in a single quarter, an increase of 38.92% year on year and a decrease of 3.30% month on month. The power semiconductor market was sluggish in 2023. The company's revenue declined year-on-year in the first three quarters, while the company's Q4 revenue changed from negative to positive year over year. We believe that products such as photovoltaic diodes, IGBTs, and silicon carbide progressed smoothly, mainly due to the company's product structure optimization; however, since the gross margin of new products was lower than the company's average gross margin level, the overall gross margin of Q4 declined.
Furthermore, since the company indirectly holds shares in Ruineng Semiconductor by holding a Beijing Guangmeng partnership share, the fair value of this investment changed to 204 million yuan in 2023. Under the influence of the above combined factors, the company achieved net profit of 306 million yuan in Q4, an increase of 130.95% year on year and 47.71% month on month.
Focus on new energy and boost the IGBT and SiC markets. In terms of IGBT, in 2023, the company completed a full range of 10A-200A development work based on the Fabless model 8-inch and 12-inch Trench 1200V IGBT chips, and also successfully developed various IGBT chips for use in the fields of inverters, optical storage, and power supplies for G2 and G3 platforms. In terms of third-generation semiconductors, the company signed an agreement with Southeast University to build a joint R&D center to increase research and development of third-generation semiconductor products such as SiC and GaN power devices. The company has developed and launched G1 and G2 series SiC MOS products. The models cover 650V/1200V/1700V 13mΩ-1000 mΩ, and batch shipments have been achieved. Among them, the specific on-resistance (RSP) of the 1200V SiC MOS platform can meet international standards.
Various products have been widely used in fields such as new energy vehicles, photovoltaics, charging piles, energy storage, industrial power supplies, etc. In terms of automotive modules, the company's 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 mainly driven silicon carbide modules nationwide in 2025.
“MCC+YJ” dual brand operation, overseas layout continues to be deepened. The company continues to expand its international strategic layout, build packaging production lines and R&D centers overseas, and further build overseas supply chain capabilities. In 2023, the company invested in the establishment of an additional subsidiary, Mei Weike (Vietnam) Co., Ltd. in Vietnam to serve MCC brand products and international customers and build overseas supply capacity. In 2024, the company will further strengthen the construction of overseas R&D centers such as Japan, lay out and build R&D centers in Europe and the US, expand the scale and product line coverage of overseas R&D personnel, and deepen the business model of “double brand” + “double cycle” and brand product differentiation to seize global development opportunities.
Investment advice: We continue to be optimistic about Yang Jie's customer ability and cost control ability as an established IDM leading enterprise. Currently, industry sentiment is gradually recovering, the company's operations have reached an inflection point, and new products are progressing smoothly. The company's net profit for 2024-2026 is estimated to be 1,035/12.16/1,556 billion yuan, and the current market value corresponds to PE of 19/16/13 times, maintaining the “recommended” rating.
Risk warning: risk of production capacity release falling short of expectations; risk of revenue growth of new products falling short of expectations; risk of changes in industry sentiment.