CRM(SH:688396)2024-10-17 10:30Investment Rating - The report maintains a "Buy" rating for China Resources Microelectronics (688396.CH) with a target price of RMB 56.4, indicating a potential upside of 16% from the current price of RMB 48.6 [2][3]. Core Views - China Resources Microelectronics is recovering from the bottom of the power semiconductor cycle, with capacity utilization expected to remain at full capacity starting June 2024. Although IGBT prices remain unstable, MOS product prices have stabilized. Revenue is expected to grow in the second half of the year, driven by a recovery in the new energy sector and sustained growth in the automotive sector [2][3]. - The company's business drivers for the upcoming year are anticipated to come from three main areas: 1) Increased volume of MOS products, including medium and low voltage products, 2) Rapid growth in five categories of products: MOS, IGBT, TMBS, IPM, and SiC modules, and 3) Growth in power ICs due to domestic trends and new production lines [2][3]. - The report expresses optimism about the continuous improvement of the company's fundamentals, with three main product categories expected to drive performance growth [2][3]. Financial Summary - Revenue projections for 2024 are set at RMB 10,208 million, reflecting a 3% year-on-year growth, while net profit is expected to decline by 38% to RMB 921 million. The gross margin is projected to decrease to 26.7% in 2024, with a slight recovery to 27.1% in 2025 and 27.3% in 2026 [3][9]. - The company’s capacity expansion includes a 12-inch line in Chongqing, which is expected to increase from 20,000 wafers per month to 35,000 by the end of the year, and a new 12-inch line in Shenzhen, which will primarily produce power IC products with a planned capacity of 40,000 wafers per month [2][3]. - The report uses a DCF valuation method with a WACC of 11.1% and a long-term growth rate of 3%, leading to a target price adjustment to RMB 56.4 [2][3]. Market Performance - The stock has a 52-week price range of RMB 33.1 to 65.0, with a market capitalization of RMB 66,308 million and an average trading volume of RMB 151 million over the past 90 days [3][4].