2026-01-19 02:29Summary 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.