StarPower(SH:603290)2025-08-29 02:19Summary of StarPower Earnings Call Company Overview - Company: StarPower (603290.SS) - Industry: Semiconductor, specifically focusing on SiC (Silicon Carbide) and IGBT (Insulated Gate Bipolar Transistor) technologies for automotive, home appliances, and photovoltaic (PV) applications Key Financial Highlights - 2Q25 Net Income: Rmb172 million, up +53% YoY and +66% QoQ, exceeding expectations by 8% compared to Goldman Sachs estimates and 23% compared to consensus [1][2] - Revenue: Rmb1 billion, reflecting a +40% YoY growth and +11% QoQ, aligning closely with consensus estimates [2][3] - Gross Margin: Decreased to 29.2% from 30.4% in the previous quarter, attributed to pricing pressures in automotive markets [1][2][3] - Operating Expenses: Lower than expected at Rmb139 million, down 23% QoQ, as R&D expenses normalized after new product launches [2] Future Outlook - 3Q25 Expectations: Anticipated revenue growth of 41% YoY and a slight increase in gross margin to 30.4% as in-house SiC production ramps up [1] - Long-term Projections: Despite a cautious outlook on pricing pressures and competition, net income is expected to grow by 40%/30%/26% YoY from 2025 to 2027 [9] Market Dynamics - SiC Adoption: Management noted an increase in the adoption of SiC in vehicles, driven by mass production of new car models [4][8] - Server Market Opportunities: Management sees potential in the server power supply market, although current revenue contributions are minimal [13] - PV Market: Significant growth in PV revenues in 1H25, but a pull-forward of orders may impact demand in 2H25 [13] Risks and Challenges - Pricing Pressure: Ongoing pricing pressures in automotive and industrial control markets could affect margins [1][19] - Competition: Increased competition from matured nodes capacity expansion in China and among automotive OEMs [19][22] - Operational Risks: Risks associated with the pace of new design wins and product development [22][24] Valuation and Rating - Current Stock Valuation: Trading at 21x 2026E PE, close to the target PE multiple of 27x [1] - Target Price: Raised to Rmb105.9 from Rmb92.5, based on a revised 27.4x target P/E multiple for 2026E EPS [12][23] - Investment Rating: Maintained at Neutral due to the balance of growth potential and risks [1][19] Conclusion - StarPower is positioned for growth in the SiC and IGBT markets, particularly in automotive and clean energy applications. However, the company faces challenges from pricing pressures and competition, necessitating a cautious investment approach.