Core Viewpoint - The silicon carbide (SiC) power device sector is experiencing a boom driven by the growth of the electric vehicle and renewable energy industries, as evidenced by the IPO plans of Shenzhen Basic Semiconductor Co., Ltd. [2] Company Overview - Shenzhen Basic Semiconductor, founded by a team of top PhDs and backed by prominent investors like Bosch and Wingtech Technology, is characterized by high growth alongside ongoing losses [3][4]. - The company has raised over 1 billion RMB through multiple financing rounds, achieving a valuation of 5.16 billion RMB after its D round in August [4]. Shareholding Structure - The founder, Wang Zhihan, holds 45.98% of the shares, making him the controlling shareholder, while Wingtech Technology, Bosch Venture Capital, and GAC Capital hold 3.67%, 2.18%, and 1.5% respectively [5]. Market Position and Product Offering - Basic Semiconductor is one of the few IDM companies in China that has achieved full-process independent production of SiC chips, including design, wafer manufacturing, module packaging, and driver design [6]. - The product line includes SiC discrete devices, automotive-grade and industrial-grade SiC power modules, and gate drivers, with applications in high-growth sectors such as electric vehicles and renewable energy [6][8]. - The company has successfully entered the supply chains of over 10 automotive manufacturers, with shipments of over 110,000 units for electric vehicle products expected by June 2025 [8]. Industry Growth and Financial Performance - The global SiC power device market is projected to grow from 4.5 billion RMB in 2020 to 22.7 billion RMB by 2024, with a compound annual growth rate (CAGR) of 49.8% [9]. - The domestic market is expected to reach 42.8 billion RMB by 2029, with a CAGR of 47.1% from 2025 to 2029 [9]. - Despite revenue growth from 117 million RMB in 2022 to 299 million RMB in 2024, the company has faced significant losses, totaling over 800 million RMB from 2022 to 2024, with a net loss of 177 million RMB in the first half of 2025 [10]. Profitability Challenges - The company has struggled with profitability, with a gross loss margin of 40.8% for SiC power modules in the first half of 2025, primarily due to high raw material costs and increased market competition [11][12]. - Although the overall gross loss margin improved from 48.5% in 2022 to 9.7% in 2024, it rose again to 28.8% in the first half of 2025, indicating volatility in profitability [12]. Customer Retention and Revenue Concentration - Customer retention rates have shown significant fluctuations, particularly in the renewable energy and industrial application sectors, with retention rates of 53.7% and 71.1% respectively in the first half of 2025 [13]. - The top five customers contributed 58% of the company's revenue in the first half of 2025, indicating a high concentration of revenue sources and associated operational risks [14]. Conclusion - Basic Semiconductor has established a strong position in the domestic SiC market with its IDM capabilities and technical expertise, supported by significant investments from industry leaders [14]. - However, the company faces critical challenges in achieving profitability amidst rising competition and fluctuating customer retention, which will be crucial for its upcoming IPO and future growth [14].

Core Viewpoint - The company reported a significant increase in total revenue for 2024, but faced a decline in net profit, indicating a mixed financial performance driven by growth in specific sectors like automotive electronics and energy [1][3]. Financial Performance - In 2024, the company achieved total revenue of 1.96 billion yuan, a year-on-year increase of 49.53% [1]. - The net profit attributable to shareholders was -403 million yuan, a decrease of 31.95% year-on-year [1]. - In Q4 2024, the company recorded revenue of 594 million yuan, reflecting a year-on-year growth of 91.64% and a quarter-on-quarter increase of 14.93% [2]. Sector Performance - Revenue from the automotive sector accounted for approximately 36.88% of total revenue, with a year-on-year increase of 5.93 percentage points [3]. - The energy sector contributed 49.49% to total revenue, experiencing a year-on-year decline of 10.03% [3]. - The consumer electronics segment represented 13.63% of total revenue, with a year-on-year increase of 4.12% [3]. R&D and M&A Activities - In 2024, the company invested 540 million yuan in R&D, with a research expense ratio of 27.55% [4]. - The company completed the acquisition of Maiguan, enhancing its core competitiveness in magnetic sensors [4]. - The company now offers over 3,300 product SKUs, including more than 1,000 from Maiguan [4]. Future Outlook - The company anticipates limited downward price pressure on products, coupled with ongoing cost optimization, which may lead to gradual recovery in gross margins [3]. - Despite short-term performance challenges, the company is expected to achieve long-term growth driven by new product launches in automotive and energy sectors [5]. - Projected net profits for 2025, 2026, and 2027 are estimated at -92 million yuan, 148 million yuan, and 417 million yuan, respectively [5].

Investment Rating - The investment rating for the company is "Buy" and is maintained [9]. Core Views - The company achieved total revenue of 1.96 billion yuan in 2024, representing a year-on-year growth of 49.53%. However, the net profit attributable to the parent company was -403 million yuan, a decrease of 31.95% year-on-year. In Q4 2024, the company reported revenue of 594 million yuan, with a year-on-year increase of 91.64% and a quarter-on-quarter increase of 14.93%, indicating continuous revenue growth [2][6][11]. - The company is focusing on the automotive and energy sectors, with revenue contributions from automotive, energy, and consumer electronics accounting for approximately 36.88%, 49.49%, and 13.63% respectively. The automotive sector has shown significant growth due to strong market demand and product diversification [11]. - Research and development, along with acquisitions, are key drivers for the company's stable growth. In 2024, R&D expenses amounted to 540 million yuan, representing 27.55% of total revenue. The company has expanded its product offerings significantly, with over 3,300 products available for sale [11]. Summary by Sections Financial Performance - In 2024, the company reported total revenue of 1.96 billion yuan, with a gross profit of 641 million yuan, resulting in a gross margin of 33%. The company expects revenue to grow to 3.06 billion yuan in 2025 and further to 5.06 billion yuan by 2027 [16]. - The net profit is projected to improve from -92 million yuan in 2025 to 417 million yuan in 2027, indicating a recovery in profitability [16]. Market Focus - The company is strategically focusing on the automotive and energy sectors, which are expected to drive future growth. The automotive sector's revenue has increased significantly, supported by a robust demand for various products [11]. R&D and Acquisitions - The company invested heavily in R&D, with a focus on sensor technology, power management, and signal chain products. The acquisition of Maiguan has strengthened its core competencies in magnetic sensors [11].