On Tuesday, Goldman Sachs reiterated its Buy rating on SICC Co Ltd (688234:CH), maintaining a price target of RMB71.20. The firm's analyst highlighted SICC's leading position in the silicon carbide (SiC) substrate market, which is increasingly important for electric vehicles (EVs) due to its role in enabling fast charging.
SICC is expected to navigate the competitive landscape and pricing pressures better than its peers, thanks to its strategy of continuously upgrading its product mix. The company's ramp-up of its 6" conduction SiC substrate in 2022-23 is anticipated to turn gross margin (GM) positive in the second half of the year. Furthermore, the introduction of an 8" conduction SiC substrate in 2024 is projected to account for 20% of the company’s revenues within the first nine months of the year.
The firm also noted SICC's showcase of a 12" SiC substrate at Semicon Europe in November 2024, which is expected to improve chipset production volume, reduce unit costs, and enhance economic efficiency. The larger substrate size is likely to lead to a higher average selling price (ASP), supporting the company's revenue growth.
Goldman Sachs forecasts a significant 63% year-over-year revenue growth for SICC in 2025, with the 8" SiC substrate representing 37% of total revenues. This growth projection is based on the company's strategic advancements and the growing market for EVs, which continues to drive demand for SiC substrate technology.
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