Downstream demand gradually picked up, and 24Q2 revenue and profit increased sharply. Xinjie Energy 24H1 achieved operating income of 0.87 billion yuan, +15.2% YoY, net profit of 0.22 billion yuan, YoY +47.5%, gross margin of 35.8%, +3.2pcts; 24Q2 achieved revenue of 0.5 billion yuan in a single quarter, +30.4% YoY, +35.0% month-on-month, net profit 0.12 billion yuan, +42.3% YoY, +17.5% month-on-month, gross margin of 36.5% YoY, +6.9pcts Compared to +1.8pcts, the increase in the company's performance was mainly due to the gradual recovery of the downstream market, a significant increase in demand in emerging application areas, accelerated digestion of the company's inventory, and shortages of supply and even continued increase in orders for some products.
SGT-MOSFET supply is in short supply, and revenue is growing rapidly. Looking at the product structure, 24H1 IGBT revenue was 0.14 billion yuan, -22.64%, or 16.2%, year-on-year -7.9pcts; SGT-MOSFET revenue was 0.36 billion yuan, +40.3% year over year, accounting for 41.4%, +7.5 pcts year on year; SJ-MOSFET revenue was 0.1 billion yuan, +8.5% year on year, accounting for 11.8%, -0.7 pcts year on year; trench-MOSFET revenue 0.26 billion yuan, +19.6% year on year, accounting for 29.3%, +1.2pcts year on year. Among them, some SGT-MOSFETs are already in short supply. In AI computing power server applications, many products are SGT series, and sales of SGT products are expected to continue to increase in the second half of the year; batch delivery of fourth-generation SJ-MOSFETs has begun, and promotion in the fields of home appliances, AI servers, and automotive OBC will be further increased in the second half of the year.
Inventory is being removed at an accelerated pace, and the product structure is being upgraded. Since 2024, demand in the downstream market has picked up, and demand in emerging fields has continued to rise. As a result, the company's inventory removal has accelerated. At the end of 24H1, the company's inventory was 0.33 billion yuan, down 0.052 billion yuan from the end of 24Q1. The company responds positively to customer needs and introduces high-end products in application scenarios such as new energy vehicles, optical storage, data centers, etc., to drive further optimization of the product structure. We believe that the upward trend in the company's gross margin is expected to continue in 2024Q3.
Automobiles and AI are progressing smoothly and are expected to become new driving forces for growth. According to the downstream share, industrial control automation is 42%, photovoltaic energy storage 14%, new energy vehicles 13%, AI computing power and communication 9%, pan-consumption 18%, and intelligent transportation 4%. Among them, the company's automotive electronics progressed smoothly. At the end of 2023, the company's cooperation with BYD switched to direct supply. The number of products supplied increased by more than 50% in the first half of 2024, and various models were used in important three-electric power modules such as OBC and DC conversion; the photovoltaic energy storage market achieved significant recovery in the first half of 2024; in the AI field, AI server-related products have finally been used by leading overseas customers in the GPU field and achieved mass sales, and more materials have been verified and will grow even more rapidly in the future.
Profit forecast and investment advice: We expect the company to achieve revenue of 1.92/2.4/3.03 billion yuan in 2024/2025/2026, yoy +30.03%/25.00%/26.29%, achieve net profit to mother of 0.45/0.54/0.7 billion yuan, yoy +39.22%/19.66%/30.05%, and maintain the “Highly Recommended” rating.
Risk warning: downstream demand falls short of expectations, new product development falls short of expectations, and market competition intensifies.