Securities Star News, April 29, 2024 Times Electric (688187) announced that the company will hold an analyst meeting on April 26, 2024, GF Securities, Tianfeng Securities, China Merchants Securities, Northeast Securities, China Securities, Guosen Securities, CITIC Lyon, JPMorgan Chase Securities, Goldman Sachs Securities, UBS Asset Management, RAYS Capital Partners Limited, CITIC Securities, Point72, Wells Fargo Fund, Galaxy Fund, E Fund, Bank of China Fund, China Asset Management, Boshi Fund, Penghua Fund, China Merchants Fund, China Universal Fund, Yangtze River Securities, Invesco Great Wall Fund, Minsheng Bank Fund, China Credit Fund, Credit Fund zhongtai Securities, Minsheng Securities, Everbright Securities, Haitong Securities, Shenwan Hongyuan Securities, Societe Generale Securities to participate.

The details are as follows:

q: why did the growth rate of rail transit in the first quarter? What is the proportion of revenue from motor cars and locomotives?

A: The delivery of national railway orders at the end of 2023 was mainly due to the increase in the delivery of new orders and maintenance orders for bullet trains, with national railway revenue higher than urban rail revenue in the first quarter.

Q: How many advanced revisions are there in Times Electric? How does the value of advanced repairs compare with the value of new ones?

a: the maintenance business of the national railway is mainly the original factory repair. we will also strive for some cross-platform maintenance business. in 2023, the company's maintenance revenue is close to 2 billion, with a year-on-year growth of slightly higher than 50%. the maintenance revenue in the first quarter also has a good growth compared with the same period last year.

Q: Gross profit margin improved by 2 percentage points in the first quarter, and the profit margin outlook for the whole year?

a: the change in revenue structure is the main reason for the improvement in gross profit in the first quarter. the gross profit margin of rail transit equipment business increased slightly compared with that of 2023, while the gross profit margin of emerging equipment business decreased slightly compared with that of 2023. each business segment remained relatively stable.

Q: About the progress of IGBT and silicon carbide capacity construction?

a: similar to the progress disclosed in the annual report, Yixing factory began to enter the equipment one after another and started trial production in the second half of the year. The annual output of 25000 pieces of 6-inch silicon carbide production line was officially put into operation. Zhuzhou Phase III production line construction is also being actively promoted.

q: according to the pace of trial production of Yixing production line, semiconductor production capacity may not increase as much as last year, and shipments to automobiles and photovoltaic products are increasing. how can we coordinate the distribution of production capacity from this perspective to make the semiconductor side have a better profit level?

A: The construction of the Yixing production line is advancing at full speed. The grid IGBT and rail-to-rail IGBT markets have grown rapidly compared to the previous ones, and our high-voltage IGBT capacity is fully adequate. In terms of low-voltage IGBT production capacity, Yixing production line is fully promoted to be put into production. Zhuzhou's existing production line still has some improvement in production capacity by further improving bottleneck processes and improving yield. In 2024, low-voltage IGBT is mainly aimed at the two fields of new energy vehicles and photovoltaics, which have not yet come to the forefront.

Q: The profitability of new energy electric drive is poor and the competition is fierce. How do you see this piece of loss reduction and its positive contribution to the company?

A: The new energy electric drive business has been in the process of reducing losses in recent years. Profitability in 9 billion revenue size, according to United Dynamics. We hope to gradually bring the new energy electric drive business into a benign state through the development of product-type spectrum, customer development and capacity adjustment.

Q: What is the growth trend of rail transit business and emerging equipment business in 2024?

a: the rail transit business in the first quarter of 2024 is due to the growth caused by the order of 55 EMUs at the end of 2023. so far, the railway general manager has not given very clear guidance on the new orders in 2024. At present, we have not seen the bidding of new orders. Based on the current situation, we have given slightly increased guidelines for the entire rail equipment business sector in 2024. For the emerging equipment business sector, 2024 will outperform the industry growth rate, of which power semiconductors will have some growth rate in the power grid business and outperform the industry growth rate in new energy power generation and new energy vehicles. The sensor business also outperformed the industry growth rate. Industrial converter and offshore equipment will have a better growth compared with 2023.

q: competitive pressure of new energy vehicle owner-driven module and its price outlook in 2024?

A: According to the state of the industry, everyone is under some pressure, and the company can perform better in the competition. Also ready to deal with the impact of the industry.

Q: Why did sensor revenue decline in the first quarter? Will there be a recovery in the second quarter?

A: the demand for photovoltaic sensors has declined somewhat, and the company has also seen some minor defects in the connection of new energy vehicles, which will recover in the second quarter.

Q: What are the orders in hand for industrial variable flow businesses?

A: PV inverter in hand orders close to 20GW. The total contract order in hand is about 10GW. In the first quarter, the winning capacity of photovoltaic inverters was 1.5GW.

Q: Where is the locomotive renewal policy going?

A: Regarding the renewal of locomotive equipment, the National Railway Group has not made very clear progress, and so far there has been no bidding for new vehicles.

Q: Can the company anticipate when the equipment renewal policy will come out?

A: Equipment renewal is a new policy, and there is no way to make a very clear estimate of the landing of the new policy. According to the practice in previous years, the new orders made by the national railway will generally have the first tender from the end of the first quarter to the beginning of the second quarter, with an additional tender in the third quarter, and new orders for bullet trains will continue to be made in the fourth quarter. As for how to implement the new policy, we can only see that some policies will come out one after another in various industries. We are also actively watching the further clarification of the equipment renewal policy of the National Railway Group.

Q: Is the gross profit margin of power grid IGBT better than that of new energy vehicle IGBT?

A: The gross profit margin of high-voltage IGBT is slightly higher than that of low-voltage IGBT.

Q: The proportion of maintenance in revenue in the first quarter? Last year it was 15%.

A: It may not reach this ratio, and the new revenue will be higher.

Q: In terms of new energy vehicle electric drive business, the growth rate of electric drive slowed down in the first quarter. What is the main reason for this?

A: The first quarter of 2023 is also slightly below average due to seasonal factors. The guidance for electric drives for new energy vehicles in 2024 is to outperform the industry's growth rate.

Q: United Power reaches a profit point in 9 billion revenue.

Answer: It is difficult to explain this matter through the amount of value. We will continue to improve while ensuring the market position.

Q: The revenue of rail transit equipment business grew rapidly in the first quarter. Is it possible that the revenue of rail transit equipment business in 2024 will grow faster than that in 2023? At present, according to the situation of orders and bidding, is it possible that the revenue growth rate will reach double digits?

A: We have not yet seen a clear landing of the equipment replacement policy, and we have given the rail transit equipment business a slight increase in guidance throughout the year, based on the current situation and insurance expectations. We hope to see a clear landing of the equipment replacement policy to add new momentum to this year's revenue.

Q: Are there any new developments for overseas customers of IGBT business besides Renault? Overseas layout of PV inverter?

a: more than 100,000 sets of IGBT modules for new energy vehicles will be delivered overseas in 2023, and more will be delivered in 2024. the final delivery depends on the climbing speed of Yixing production line. The company has been making continuous efforts to expand new overseas customers, and hopes to report some new situations to you this year.

the revenue of photovoltaic inverters in 2023 is also slightly smaller by tens of millions, which is generated by overseas orders. we will complete the verification and promote the products in Europe and the United States one after another.

Q: How many GW will PV inverter orders be delivered in 2023?

A: The revenue volume is around 1.8 billion.

q: communication signal won the bid for 5 lines in 2023, more than 1 billion, delivery confirmation rhythm?

A: The first quarter of 2024 communications signal business revenue 0.143 billion, including two pieces of the entire railway vehicle equipment, urban rail business. Urban rail products have a past delivery cycle of 1.5-2 years, and orders harvested in 2023 are expected to be delivered in 2025.

q: is it expected that the communication signal business will receive orders from 2024 to 2025?

a: the industry position jumped one level in 2023. the company will expand this business in order to maintain the industry position in the future.

Q: How do you view the future development of the rail construction machinery business?

a: in terms of national railway and urban rail, rail construction machinery actually presents the business characteristics of small batch, multi-variety and need to tap the detailed needs of customers. China has the longest line mileage, hope follow-up orders can have some outbreak.

q: the Chinese car got the 14.7 billion advanced repair order. will we release it gradually in the second and third quarters according to the rhythm?

a: it is even more difficult for the national railway group to predict the maintenance progress. Maintenance is to maintain the original repair logic, business progress and order signing is not necessarily completely linked. This question is difficult.

Q: SASAC market value management assessment indicators?

a: we have announced the 2024 action plan of "improving quality, increasing efficiency and re-reporting", including some work done last year and this year, increasing holdings, purchasing and increasing dividends. the company has completed the cancellation of about 4.7 million hong kong shares purchased by the company. This year's profit distribution accounted for 35.45 of the company's 2023 consolidated statement of net profit attributable to shareholders of listed companies, and cash dividends per share increased by 41.82 compared with the previous year.

Q: The overseas delivery volume of IGBT products depends on the release of Yixing's production capacity? Is it tight in the first half of the year? How is the production capacity of sub-sectors roughly distributed?

A: Semiconductor companies have accumulated rich experience in capacity adjustment. IGBT module product type spectrum covers Senior high school low-voltage and full-voltage levels. 2022-2023 production capacity is very tight, with a veryScientific methods to do production line adjustment, Yixing factory capacity out, mixed line situation will be reduced, efficiency will be improved.

q: the shipment scale of IGBT modules for new energy vehicles will be 1 million in 2023. is there any shipment guide in 2024?

A: Outperform industry growth.

Q: There is price pressure on semiconductor products. Do we have a strategy for how to balance net margin and price?

a: enterprises need to adjust their position according to the market. for example, the company has to face the pressure of product price reduction every year. in the past 10 years, the company's gross profit margin has remained at about 35%. The company believes that in the process of market changes, the head enterprises have more advantages.

Q: How does the company see the cooperation intention of downstream car companies in silicon carbide now when the price of silicon carbide upstream substrate is reduced? When is the expected time point for large-scale increase?

A: Through the efforts of the previous few years, the company has continued to improve the performance of silicon carbide products, and has now reached the level of the first echelon. The company is stepping up discussions to further increase production capacity, and is also paying close attention to changes in industry demand and actively striving for some fixed-point projects.

Q: Is there any competitive relationship between the traction converter and the company? How do you see this competitive situation?

A: The Academy of Railway Sciences is a very important player in the industry and has both competition and cooperation with the company. Proper competition is conducive to promoting the progress of the industry. Time Electric has a solid position in the field of rail transit and has accumulated more than 60 years in this field.

Times Electric (688187) main business: rail transit equipment product research and development, design, manufacturing, sales and provide related services.

Times Electric's first quarter report for 2024 shows that the company's main revenue is 3.925 billion yuan, up 27.2 year on year. Net profit attributable to parent was 0.568 billion yuan, up 30.44 year on year. Non-net profit was 0.461 billion yuan, up 44.85 year on year. Debt ratio 30.62, investment income 7.6854 million yuan, financial expenses -49.173 million yuan, gross profit margin 34.06.

the stock has been rated by 14 institutions in the last 90 days, with 13 buying ratings and 1 overweight rating; the average institutional target price in the past 90 days is 56.02.

The following is detailed earnings forecast information:

Margin trading data show that the net outflow of financing of the stock in the past three months is 0.119 billion, and the financing balance is reduced; the net outflow of securities is 34.5981 million, and the balance of securities is reduced.

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