SICC CO.(SH:688234) Shanghai Securities·2024-07-01 00:00Investment Rating - The report assigns a "Buy" rating for the company, marking its first coverage [6][7]. Core Insights - The company is positioned at a critical node in the silicon carbide (SiC) industry chain, leveraging its core competencies to achieve significant growth. SiC is recognized as a third-generation semiconductor material, with applications in electric vehicles, photovoltaics, and power grids, among others. The company has successfully transitioned to the production of conductive SiC substrates, achieving a year-on-year sales increase of 254.70% in 2023, with total sales reaching approximately 230,000 pieces [6][19][24]. - The company has established long-term partnerships with leading power manufacturers, enhancing its market presence. It is projected that the global market for SiC power devices will reach $7.741 billion by 2028, with a compound annual growth rate of 33.25% from 2022 to 2028 [6][19][30]. Summary by Sections 1. Company Overview - The company has been focusing on technology upgrades and capacity expansion, becoming a globally influential player in the SiC substrate market. It has successfully completed the certification of both semi-insulating and conductive SiC substrates [15][19]. - The company has a stable shareholding structure, with the actual controller holding 30.09% of the shares, ensuring a concentrated and stable ownership [17]. 2. Market Position and Performance - The company achieved a revenue of 1.251 billion yuan in 2023, representing a year-on-year growth of 199.90%. The core business of SiC substrates contributed approximately 1.086 billion yuan, with a year-on-year growth of 233.05% [19][22]. - The gross margin improved to 15.81% in 2023, reflecting a year-on-year increase of 21.56 percentage points [19][22]. 3. Industry Dynamics - The SiC industry is experiencing rapid growth, driven by the increasing demand for high-quality conductive SiC substrates. The company has positioned itself to capitalize on this trend, achieving a global market share of 2nd in conductive SiC substrates in 2023 [30][49]. - The report highlights the importance of substrate preparation as a core aspect of the SiC industry, with the company focusing on enhancing its production capabilities and technological advancements [37][42]. 4. Future Outlook - The company is expected to continue its growth trajectory, with projected net profits of 156 million yuan, 344 million yuan, and 556 million yuan for 2024, 2025, and 2026, respectively [8][9]. - The ongoing expansion of production capacity and the focus on cost reduction are seen as key drivers for the company's future success in the SiC market [44][49].