Event: The company released the third quarter report of 2024, and in the first three quarters of 2024, the company achieved revenue of 1.281 billion yuan, a year-on-year increase of 55.34%; The net profit attributable to the parent company was 143 million yuan, a significant year-on-year turnaround. In Q3 alone, in 2024Q3, the company achieved revenue of 369 million yuan, down 4.60% year-on-year and 24.10% month-on-month; The net profit attributable to the parent company was 41 million yuan, a year-on-year increase of 982.08% and a month-on-month decrease of 26.25%.

Revenue hit a record high, and profitability is on the upward trend. From the perspective of the first three quarters, thanks to the continuous growth of the company's large-size conductive products and the acceleration of high-quality conductive silicon carbide substrate products, the company's operating income achieved rapid growth year-on-year, and the net profit turned into a profit compared with the same period last year while the revenue hit a record high. In Q3 alone, the company's goods issued at the end of the year increased year-on-year, and the revenue has not yet been recognized, resulting in a year-on-year decline of 4.6% in Q3 revenue, but the gross profit margin has an obvious upward trend quarter by quarter. In 2024Q3, the gross profit margin was 32.63%, an increase of 13.94 pcts year-on-year and 8.39 pcts month-on-month, and the profitability increased significantly.

The cost control is excellent, and the initial cost of R&D results is reduced. In the first three quarters of 2024, the company incurred a total of 226 million yuan in period expenses, with an expense ratio of 17.61% during the period, a year-on-year decrease of 10.32 pcts, and the operating efficiency continued to improve. Among them, R&D expenses were 95 million yuan, and the R&D rate was 7.42%, a year-on-year decrease of 7.52 pcts, mainly due to the company's higher net R&D expenses for new products in the same period last year.

Downstream multi-field applications have helped the rapid development of third-generation semiconductors, with a high degree of internationalization and obvious competitive advantages. In recent years, the development trend of global energy electrification and low-carbon has promoted the third-generation semiconductor industry to continue to show growth momentum. At present, the field of electric vehicles is still the largest application field of silicon carbide, and silicon carbide technology has also shown a prominent development trend in the fields of wind and solar new energy, power grid, data computing center, and low-altitude flight. The company is one of the most comprehensive and international silicon carbide substrate manufacturers in China, and its high-quality conductive silicon carbide substrate products have accelerated their "going overseas". At present, the company has not only realized the localization of 8-inch silicon carbide substrates, but also the company's 8-inch silicon carbide substrates have taken the lead in realizing batch sales to overseas customers, and have obtained cooperation from internationally renowned enterprises in the fields of downstream power electronics and automotive electronics such as Infineon and Bosch. Up to now, more than 50% of the world's top ten power semiconductor companies have become the company's customers. With the construction of 8-inch wafer factories of international first-line manufacturers has entered the stage of successive production, the demand for 8-inch silicon carbide substrates will maintain a growth trend in the future. With the advancement of the 8-inch silicon carbide substrate expansion plan of the second phase of the company's Shanghai Lingang plant, the follow-up performance is expected to further continue to improve.



Profit forecast We expect the company to achieve revenue of 16.90, 23.58, and 3.059 billion yuan in 2024-26, and net profit attributable to the parent company of 204, 358, and 533 million yuan, corresponding to PE of 13.815, 78.70, and 5.289 billion yuan, which is covered for the first time and given a "buy" rating.

Risk warning: the risk that downstream demand is less than expected; the risk of ramp-up of new production capacity; Risks of intensifying competition in the industry