Summary of SICC Co Ltd Conference Call Company and Industry Overview - **Company**: SICC Co Ltd (688234.SS) - **Industry**: Greater China Technology Semiconductors Key Points and Arguments 1. **SiC Substrate Pricing Trends**: - 6-inch SiC substrate prices have increased by approximately 15% to Rmb2,100 (~US$300) due to vendors bundling with higher margin products to improve profitability [2] - In contrast, pricing for 8-inch substrates continues to decline, reaching around Rmb4,500 (~US$640) [2] 2. **Profitability Outlook for SICC**: - SICC's profitability is expected to improve as 6-inch pricing rebounds and the company benefits from technological advancements and economies of scale [3] - The share price of SICC rose 26% year-to-date to Rmb111.19 as of January 16, 2026, outperforming the Shanghai Composite Index, which gained 2% in the same period [3] 3. **Market Reaction**: - The market's reaction to SICC's share price increase is viewed as an overreaction, suggesting potential volatility in investor sentiment [3] 4. **Growth Opportunities**: - The total addressable market (TAM) opportunities for augmented reality (AR) glass and AI data centers have been previously assessed, indicating potential growth areas [3] - However, for newer growth drivers like interposers and heat sinks, it is considered too early to evaluate their impact [3] Financial Metrics - **Current Share Price**: Rmb111.19 - **Market Capitalization**: Rmb47,779.6 million - **52-Week Range**: Rmb49.09 - Rmb111.19 - **Projected Revenue**: - 2025: Rmb1,764 million - 2026: Rmb2,119 million - 2027: Rmb2,442 million [5] Valuation and Risks - **Valuation Methodology**: Utilizes a P/B ratio of 5.4x based on historical averages since the company's listing in January 2022, reflecting the industry's volatility [9] - **Upside Risks**: - Lower-than-expected erosion in SiC substrate pricing - More long-term agreements with global integrated device manufacturers (IDMs) - Faster market share gains compared to peers [10] - **Downside Risks**: - Higher-than-expected erosion in SiC substrate pricing - Fewer long-term agreements with IDMs - Slower market share gains compared to peers [10] Additional Insights - **Analyst Ratings**: The stock is rated as "Equal-weight" with a price target of Rmb67.10, indicating a potential downside of 40% from the current price [5] - **Earnings Projections**: - EPS for 2025 is projected at Rmb0.06, with a gradual increase expected in subsequent years [5] This summary encapsulates the critical insights from the conference call regarding SICC Co Ltd, highlighting the company's current market position, pricing trends in the SiC substrate market, and future growth opportunities along with associated risks.

Summary of SICC (688234.SS) Conference Call Company Overview - **Company**: SICC (688234.SS) - **Industry**: Silicon Carbide (SiC) substrate manufacturing Key Points Industry Dynamics - The downward trend in SiC substrate pricing is expected to broaden its application across various sectors, including electric vehicles (EVs), AI data centers, and AI glasses, leading to a stronger penetration rate and healthier competition in the market [1][2] - The adoption of SiC technology is anticipated to accelerate industry consolidation, enhancing competitive dynamics [1] Company Performance and Strategy - Management expressed a positive outlook for 2026 and beyond, supported by strong R&D efforts aimed at improving yield rates and profitability, despite the declining prices of SiC substrates [1] - SICC is actively reducing prices for 8-inch SiC substrates to capture more market share while aiming to lower costs faster than the price reductions to maintain profitability [2] - The company holds a leading position in the semi-insulating SiC substrate market, being the first to deliver 12-inch SiC substrates and innovating in liquid phase growth (LPG) techniques [2] Product Applications - Key applications for SiC include: - **Electric Vehicles (EVs)**: Enabling fast charging capabilities - **AI Data Centers**: Enhancing power efficiency through the use of SiC in 800V HVDC, PSU, and BBU, which improves energy conversion efficiency and cooling [1] - **AI Glasses**: Improving performance and reducing weight [1] Financial Projections - Expected revenue growth of SICC is projected at a compound annual growth rate (CAGR) of +53% from 2025 to 2028, with 8-inch SiC substrate revenues contributing over 80% by 2026 [1] - Gross margin (GM) is anticipated to recover to 34% by 2026 [1] Risks and Valuation - The 12-month target price for SICC is set at Rmb115, based on a P/E ratio of 30.9x for 2029E [3] - Identified downside risks include: - Slower-than-expected capacity expansion and shipment ramp-up of 6-inch substrates - Slower penetration into high-power supply applications [3][6] Additional Insights - SICC's superior product quality allows for higher average selling prices (ASP) in the industry, and clients using their substrates achieve better yield rates in SiC device production [2] - The company is focused on continuous enhancements in SiC ingot thickness and production efficiency, which are critical for maintaining its competitive edge [2] This summary encapsulates the essential insights from the conference call regarding SICC's strategic direction, market dynamics, financial outlook, and associated risks.

Group 1 - Tianyue Advanced experienced a decline of 5.58% on January 19, with a stock price of 104.99 yuan per share, a trading volume of 1.01 billion yuan, a turnover rate of 2.17%, and a total market capitalization of 50.88 billion yuan [1] - The company, Shandong Tianyue Advanced Technology Co., Ltd., was established on November 2, 2010, and listed on January 12, 2022. Its main business involves the research, production, and sales of silicon carbide substrates, with revenue composition of 82.83% from silicon carbide semiconductor materials and 17.17% from other sources [1] Group 2 - Guolian Fund has one fund heavily invested in Tianyue Advanced. The Guolian Core Growth Fund (004671) reduced its holdings by 8,326 shares in the third quarter, holding a total of 40,600 shares, which represents 4.41% of the fund's net value, ranking as the seventh largest holding. The estimated floating loss today is approximately 251,700 yuan [2] - The Guolian Core Growth Fund (004671) was established on September 29, 2017, with a latest scale of 75.64 million yuan. Year-to-date returns are 8.25%, ranking 1,837 out of 9,009 in its category; the one-year return is 62.25%, ranking 1,256 out of 8,164; and since inception, the return is 194.91% [2]

Group 1 - A-share market trading volume has returned to over 30 trillion yuan, with the Shanghai Composite Index closing at 4101.91 points, down 0.26% [1] - The semiconductor industry chain remains active, with stocks like Tianyue Advanced and Yongxi Electronics hitting the daily limit of 20% [1] - The electric grid equipment sector saw significant gains, with multiple stocks including Electric Power Research Institute and Senyuan Electric reaching their daily limit [1][2] Group 2 - The electric grid equipment sector is driven by supply-demand dynamics, with the State Grid Corporation announcing a planned investment of 4 trillion yuan during the 14th Five-Year Plan, a 40% increase from the previous plan [2] - The overseas market for electric grid investments is expected to accelerate, with supply shortages leading to extended delivery times for transformers and high-voltage cables [2] - The storage chip sector is experiencing strong performance, with companies like Baiwei Storage and Jibang Long hitting daily limits, driven by increased demand from AI and server capacity [4] Group 3 - Research indicates that the storage market is surpassing historical highs, with prices expected to rise by 40% to 50% in Q1 2026 and an additional 20% in Q2 [4] - The A-share market is anticipated to maintain a steady upward trend, supported by factors such as improved profitability and capital market reforms [5] - Investment strategies for 2026 suggest a balanced approach, focusing on high-yield opportunities, technology growth driven by AI, and cyclical recovery investments [6]

Core Viewpoint - The A-share market experienced moderate fluctuations with a total trading volume returning to over 3 trillion yuan, indicating a shift in capital from popular sectors like AI applications and communications to storage chips, automotive chips, and robotics actuators [1][4][6]. Market Performance - The Shanghai Composite Index fell by 0.26% to 4101.91 points, while the ChiNext Index decreased by 0.2% to 3361.02 points, and the Shenzhen Component Index dropped by 0.18% [6]. - The total trading volume across the three markets reached 3.06 trillion yuan, with margin trading balances increasing to 2.72 trillion yuan as of January 15 [6][16]. Sector Performance - The storage chip sector rose by 5.54%, third-generation semiconductors by 3.88%, automotive chips by 4.94%, and robotics actuators by 4.26% [8]. - In contrast, sectors such as media and computing saw significant declines, with media down by 4.84% and computing by 2.23% [9]. Capital Flow and Investment Strategy - Capital is being reallocated due to regulatory measures aimed at risk prevention and monetary policies supporting liquidity, leading to a diversified market structure [4][16]. - Investment strategies should focus on policy guidance, performance support, and valuation matching, particularly in sectors benefiting from domestic substitution and global chip technology breakthroughs [4][22]. Future Market Outlook - The market is expected to continue its oscillation around the 4100-point mark, with potential for structural opportunities in policy-supported sectors and high-performing stocks [19][20]. - Analysts suggest maintaining a neutral position while avoiding high-volatility stocks and focusing on sectors with strong fundamentals [19][22].

Group 1 - Tianyue Advanced (688234) closed at 111.19 yuan on January 16, with a daily limit increase of 15%, a turnover rate of 4.97%, and a trading range of 15.46%, resulting in a transaction volume of 2.253 billion yuan [1] - The stock was listed on the daily trading list due to its closing price increase of 15% [1] - The top five trading departments accounted for a total transaction volume of 659 million yuan, with a net buying amount of 169 million yuan [1] Group 2 - The main capital inflow for the stock was 117 million yuan throughout the day [2] - The top buying departments included the Shanghai-Hong Kong Stock Connect with a purchase amount of 139.43 million yuan and an institutional special seat with a purchase amount of 46.97 million yuan [2] - The top selling departments included the Shanghai-Hong Kong Stock Connect with a selling amount of 61.78 million yuan and an institutional special seat with a selling amount of 54.71 million yuan [2]

Group 1 - The core transaction on January 16 involved a block trade of 38,700 shares of Tianyue Advanced, with a transaction value of 3.0271 million yuan, at a price of 78.20 yuan, representing a discount of 29.67% compared to the closing price of the day [2][4] - In the last three months, Tianyue Advanced has recorded a total of 19 block trades, with a cumulative transaction value of 163 million yuan [3] - The closing price of Tianyue Advanced on the day of the report was 111.19 yuan, reflecting a 20.00% increase, with a turnover rate of 4.97% and a total transaction volume of 2.253 billion yuan [3] Group 2 - The latest margin financing balance for Tianyue Advanced is 1.093 billion yuan, which has increased by 75.9485 million yuan over the past five days, marking a growth rate of 7.47% [4] - Tianyue Advanced Technology Co., Ltd. was established on November 2, 2010, with a registered capital of 484.618544 million yuan [4]

Strong Stocks - As of January 16, the Shanghai Composite Index fell by 0.26% to 4101.91 points, the Shenzhen Component Index decreased by 0.18% to 14281.08 points, and the ChiNext Index dropped by 0.2% to 3361.02 points. A total of 67 stocks in the A-share market hit the daily limit up [1] - The top three strong stocks based on current consecutive limit up counts and daily trading data are: Wulian Development (600058), Kangqiang Electronics (002119), and Datang Telecom (600198) [1] - Detailed data for the top 10 strong stocks includes: - Wulian Development (600058): 2 consecutive limit ups, turnover rate of 0.39%, and a closing price of 5872 - Kangqiang Electronics (002119): 2 consecutive limit ups, turnover rate of 19.25%, and a closing price of 15.4 - Datang Telecom (600198): 2 limit ups in 3 days, turnover rate of 9.39%, and a closing price of 13.9 [1] Strong Concept Sectors - The top three concept sectors with the highest increase in A-shares are: Storage Chips, National Big Fund Holdings, and Advanced Packaging, each with a rise of 4.07% [2] - The detailed performance of the top 10 concept sectors includes: - Storage Chips: 4.07% increase - National Big Fund Holdings: 4.07% increase - Advanced Packaging: 3.53% increase - Other notable sectors include: SMIC International Concept (3.44%), Lithography Machines (3.28%), and Third Generation Semiconductors (3.23%) [3]

Core Viewpoint - The semiconductor sector is experiencing significant growth, driven by TSMC's increased capital expenditure and the domestic expansion of wafer fabs in response to a growing demand for advanced manufacturing capabilities [1] Group 1: Market Performance - On January 16, the three major indices initially surged but then retreated, with the Shanghai Composite Index falling by 0.26% to 4101.91 points [1] - Semiconductor concept stocks saw a dramatic rise, with Kede Quartz increasing over 20%, and several other stocks like Tianyue Advanced and Yongxi Electronics hitting the daily limit [1] Group 2: TSMC's Capital Expenditure - TSMC disclosed that its capital expenditure for 2026 is expected to reach between $52 billion and $56 billion, significantly exceeding market expectations [1] - The increase in equipment investment indicates a further expansion of global production capacity over the next two years [1] Group 3: Industry Outlook - CITIC Securities noted that TSMC's record performance in 2025 and the substantial increase in 2026 capital expenditure highlight the ongoing benefits from AI computing power and advanced processes [1] - The domestic wafer fabs are entering a phase of expansion to address a million-piece-level capacity gap, which is expected to create a $100 billion opportunity in the equipment market [1] - There is potential for domestic production rates to double, and CITIC Securities is optimistic about investment opportunities in semiconductor equipment, particularly recommending leading companies with platform capabilities and high-elasticity niche leaders [1]

Core Viewpoint - The A-share market is experiencing a slight decline, with the Shanghai Composite Index at 4104.22 points, down 0.20% and trading below the five-day moving average, while the total trading volume is 25,230.04 billion yuan [1]. Group 1: Market Performance - As of 1:59 PM, the Shanghai Composite Index is at 4104.22 points, reflecting a decrease of 0.20% [1]. - The total trading volume in the A-share market is reported at 25,230.04 billion yuan [1]. Group 2: Stocks Exceeding Five-Day Moving Average - A total of 778 A-shares have surpassed the five-day moving average today [1]. - Notable stocks with significant deviation rates include: - Tianyue Advanced (乖离率 15.31%) with a price increase of 20.00% [1]. - Fusa Technology (乖离率 15.11%) also increased by 20.00% [1]. - Huning Co. (乖离率 15.00%) with a 20.00% rise [1]. - Other stocks with smaller deviation rates include: - Weibohydraulic, Jinyinhe, and Ecovacs, which have just crossed the five-day moving average [1].