Event Overview: Company Releases 23 Annual Report and 24Q1 Quarterly Report

【2023】

Revenue was 1.05 billion yuan, up 62%; net profit to mother was 116 million yuan, up 48%; net profit after deducting non-return to mother was 101 million yuan, up 67%; and gross profit margin was 22.18%, up 1.28 pcts.

[23Q4]

Revenue of 369 million yuan, up 19% from the same period; net profit to mother increased by 75% and 33%; net profit from non-return to mother was 0.18 million yuan, up 53% and 26%; gross profit margin was 24.59%, up 5.41 pcts from the same period and 2.94 pcts.

[24Q1]

Revenue of 246 million yuan, a decrease of 26% and a decrease of 33%; net profit due to mother of -0.02 million yuan, a loss of 31 million yuan in 23Q1 and 23Q4; deducted non-net profit of -0.05 billion yuan, compared with 27 million yuan in 23Q1 and 18 million yuan in 23Q4; gross profit margin of 15.88%, a decrease of 3.57 pcts and 8.71 pcts.

The high energy boom established 23 years of high growth, and economic shocks affected 24Q1 performance 1) The downstream economy was divided in 2023: demand for ordinary electricity consumption was weak; demand related to automobiles and new energy sources was strong, and domestic substitution accelerated.

2) The company's new energy business grew rapidly and industrial control grew steadily: in 2023, the company generated 550 million yuan in revenue in the photovoltaic sector, an increase of 106%; revenue in the tram sector was 330 million yuan, up 150%; and sales in the industrial control sector were 590 million yuan, up 15%. Specific split growth factors: A. The number of large customers led to a high increase in the company's performance in 23 years. In the field of photovoltaics, the company strengthened partnerships with core customers, focused on key technologies and products, and orders increased dramatically. B. Vehicle standard IGBTs are delivered in large quantities. The 750V M7i IGBT chip and the associated free-flowing FRD chip were successfully developed and delivered on a large scale; 400-800A/750V double-sided cooling modules used in new energy vehicles entered the mass production stage.

3) Economic shocks dragged down 24Q1 performance. In 24Q1, due to the downturn in the economy, the company's revenue also declined by 26%. The weak net profit losses for the quarter were mainly due to A. The company's revenue volume and gross margin declined to varying degrees; B. In 2023, the company expanded, sales-related expenses increased, and the number of management personnel gradually increased, leading to a year-on-year increase of nearly 4 million yuan and 8 million yuan in 24Q1 sales and management expenses, respectively; C. 2024 share payment expenses brought about 12.36 million yuan due to equity incentives in 2022, which also had an impact on 24Q1 net profit.

IGBT+ silicon carbide two-wheel drive, high-end products continue to break through

1) Vehicle regulations: large-scale delivery of 750V M7i IGBT chips and supporting free-flowing FRD chips; 400-800A/750V double-sided cooling modules have entered mass production to support the growth of main drive inverter modules in 24 years; 2) Industrial Control & Photovoltaics: 12-inch 1200V M7i chips for industrial control and photovoltaics are gradually being increased in cooperation with major customers; 400A/650V three-level customized modules for photovoltaics have begun to be delivered in batches;

3) Silicon carbide: Self-developed silicon carbide SBD chips have been sent to key customers; three-level SiC hybrid modules customized for UPS have been developed, and batch introduction to clients has begun.

Actively promote fund-raising projects, and the core kinetic energy molding module is expected to release the company's current production capacity plan: 1. Huashan Plant (old factory area): planned production capacity of 4.5 million units/year, and production capacity utilization rate continues to increase; Hsinchu Plant Phase II (automotive grade power semiconductor discrete device production and development project): The overall plan is over 10 million units/year (including 7.2 million kinetic energy per year); 3. Subsidiary Kinetic Energy Semiconductor: 23. Coke plastic packaging module, planned annual production capacity of 7.2 million units, double The surface and single side heat dissipation molding modules have been thoroughly laid out. Tens of thousands of main drive molding modules have been delivered in 23 years, and more than 1 million are expected to be shipped in 24 years.

Extend mergers and acquisitions upstream to enhance supply chain collaboration: In 23 years, the company invested 20 million yuan of its own capital in Changzhou Energy Ark New Materials Co., Ltd. to guarantee the company's silicon carbide substrate supply; in the same year, it indirectly invested in an automation equipment supplier to ensure the autonomy and control of the core process of production line construction; in the same year, it acquired 100% of Changzhou Jinchuang Electronic Technology Co., Ltd.'s shares with 91.9 million yuan of its own capital to increase fixed assets.

Investment advice

In view of the impact of industry sentiment shocks on the company's performance exceeding expectations, we adjusted the company's 2024-26 net profit forecast to be 1.5/2.1/260 million yuan (previously the 2024-25 net profit forecast was 25/410 million yuan), and the corresponding PE was 25/18/15X.

Maintain a “buy” rating.

Risk warning

The company's product verification has fallen short of expectations, demand for new energy has fallen short of expectations, and there is a risk of oversupply of domestic IGBTs.