Event: Company releases 2024 semi-annual report

[24H1]

The company achieved revenue of 0.637 billion yuan, a decrease of 16.72%; net profit due to mother of 0.003 billion yuan, a decrease of 95.98%; net profit without return to mother of 0.003 billion yuan, a year-on-year loss of 0.058 billion yuan; gross profit margin of 15.72%, a decrease of 5.46 pcts; net interest rate of 0.47%, a decrease of 7.78 pcts.

[24Q2]

Revenue of 0.39 billion yuan, down 9.94% and up 58.34%; net profit to mother of 0.004 billion yuan, down 86.63% from month to month, reversal of loss from month to month, 24Q1 was -0.002 billion yuan; after deducting non-net profit of 0.002 billion yuan, same decrease of 93.55% and loss from month to month, 24Q1 was -0.005 billion yuan; gross profit margin was 15.62%, down 7.06 pcts and 0.26 pcts; net profit margin was 1.03%, same decrease 6.36pcts, ring increase 1.84pcts.

The net interest rate is low: 1) The gross margin was affected by the boom and was at a low level; 2) The company's expenses during the period were more rigid. The expenses for the 24Q2 and 24Q1 periods were 0.056/0.054 billion yuan, respectively, and the cost ratio for the period was 14.23%/22.02%. In a situation where overall revenue and gross margin have not fully recovered, more rigid period expenses have a big impact on net profit.

24H1's business performance is under pressure in the short term. 24H2 is expected to achieve steady growth in the 24H1 domestic semiconductor market. Among them, downstream market demand in artificial intelligence, XR, consumer electronics and other fields picked up significantly, and demand in downstream markets such as new energy vehicles and new energy power generation showed an inflection point. However, competition in the domestic power semiconductor industry intensified, and the pressure to remove inventory was strong, suppressing shipments and average sales prices in the short term, leading to a short-term decline in the company's operating performance.

24H2, along with the recovery of the industry boom, the company will focus on key areas and customers, reduce costs and increase efficiency, and is expected to achieve steady growth in performance.

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

1) Vehicle regulation: 1) Vehicle grade 280A-820A/750V encapsulation module: For different application scenarios on the main drive inverter side and power generation side of new energy vehicles, the company has successfully developed encapsulation modules with different transmission capabilities, all of which have passed AQG324 and other relevant vehicle certification, and entered the mass production stage; 2) Vehicle grade 400-800A/750V double/single-sided heat dissipation molding modules have been mass-produced, and production capacity has been doubled and upgraded based on market demand; 3) Vehicle grade 1200V SiC self-developed modules are in progress In development, the corresponding silver sintering process has been verified for reliability.

2) Industrial Control & Photovoltaics: The 1000V M7U chip for photovoltaic applications has been developed and certified, and mass produced. At the same time, the corresponding FRD chip has also passed the new terminal design and passed the HV-H3TRB reliability test to meet the requirements for moisture resistance in the field of wind and solar storage; 2) 1700V series products: Various products have been developed and used in various fields such as high voltage inverters, wind power converters, and SVG, and the products have passed client certification and can be supplied to the market in batches.

3) Silicon carbide: 1) The company's first 1200V 40mohm SiC MOSFET chip has been successfully developed and has passed reliability verification; the automotive-grade 1200V 13mohm SiC MOSFET chip is being actively developed; 2) The self-developed SiC SBD chip has passed multiple end customer reliability verification and system-level verification, and has passed corresponding reliability and board-level performance tests on key clients. Some products have been shipped in small batches.

Actively promote fund-raising projects, the core kinetic energy molding module is expected to expand the company's current production capacity plan: 1. Huashan Plant (old factory area): planned production capacity of 4.5 million blocks/year, in a state of full production; 2. Hsinchu Plant Phase I: planned production capacity 4.8 million blocks/year, and capacity utilization continues to increase; Hsinchu Plant Phase II (automotive grade power semiconductor discrete device production project): The overall plan is over 10 million blocks/year (including 7.2 million block of core kinetic energy per year); 3. Subsidiary core kinetic energy semiconductor 23:23 The annual line is focused on plastic packaging modules. The plan is to build an annual production capacity of 7.2 million units, in-depth layout of double-sided and single-sided heat-dissipating molding modules, delivery of tens of thousands of main drive molding modules in 23 years, and the expected shipment of more than one million in 24 years.

Extend mergers and acquisitions upstream to enhance supply chain collaboration: In '23, the company 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 91.91 million yuan of its own capital to increase fixed assets. Jinchuang Technology is mainly engaged in R&D, manufacturing and sales of electronic components, LCD screens, and optoelectronic devices.

Investment advice:

In view of the impact of industry turbulence on the company's performance exceeding expectations, we adjusted the forecast for the company's net profit return to mother for 2024-26 to 1.

0.1/0.15/0.2 billion yuan (previously predicted 2024-26 net profit of 0.15/0.21/0.26 billion yuan), corresponding PE was 24/18/13X. Maintain a “buy” rating.

Risk warning:

The company's product verification falls short of expectations, demand for new energy sources falls short of expectations, and the risk of oversupply of domestic IGBTs.