Incident: The company released its 2023 semi-annual report. 2023H1 achieved operating income of 27.850 billion yuan, an increase of 17.91% over the previous year, and achieved net profit of 1,904 million yuan, an increase of 13.70% over the previous year; 2023Q2 achieved net profit of 702 million yuan, a year-on-year decrease of 36.26%, and a year-on-year decrease of 58.40%.

The low-voltage electrical appliance business is growing steadily, and household photovoltaics continue to grow rapidly.

(1) 2023H1 achieved revenue of 11.053 billion yuan in low-voltage electrical product sales, an increase of 7.08% over the previous year. The company continued to optimize the channel network layout in the domestic market, developed 1,600 new distributors in strong regions, increased local and municipal channel coverage to 85%, and continued to carry out dealer empowerment training and support work in disadvantaged regions; in overseas markets, with the Belt and Road Initiative as an extension to accelerate global production capacity layout, Zhengtai International's revenue increased 29.14% year-on-year to 2,319 billion yuan, with impressive growth rates in Europe and North America.

(2) Zhengtaian, a subsidiary of 2023H1 Company focusing on household photovoltaics, was able to achieve operating income of 13.705 billion yuan, a year-on-year increase of 273.54%, and net profit of 1,202 billion yuan, an increase of 63.45% over the previous year. The cumulative installed capacity of Zhengtai Aneng household photovoltaics has exceeded 20 GW, and its market share has maintained the highest market share in the industry for many years. 826 new agents have been added. The 2023H1 has achieved a development and grid-connected capacity of over 5.3 GW. The revenue from selling power plants to central state-owned enterprises exceeds 10 billion yuan, and the rolling development business model is running smoothly.

Sales revenue from energy storage and inverters is growing rapidly, and domestic and overseas market development is beginning to bear fruit.

2023H1's energy storage and inverter sales business achieved revenue of 589 million yuan, an increase of 46.58% over the previous year.

The company's energy storage and inverter business sales entity, Zhengtai Power, has achieved breakthroughs in domestic and foreign markets. In terms of international business, it has had the highest share in the industrial and commercial market in North America for many years, and has continuously ranked first in the Korean inverter market. In Europe, it has signed new agents and received large orders from Spain, Austria, Bulgaria and other countries; in domestic business, it has signed 10 new central state-owned enterprise customers such as China Power Construction and China Power Investment, completing the Zhanjiang Baosteel 12.5MW phase II photovoltaic project, Fuzhou, Jiangxi, 91 MW and 15 MWH energy storage and fishing complementary projects, 40 MWH in Qingtan, Gansu Energy projects.

Maintaining the “buy” rating: The inclusion of Zhengtai Power in Tongrun Equipment's scope is beneficial for it to focus on its own field and achieve faster development. We slightly raised the company's profit forecast. We expect the company to achieve net profit of 53.16/5917/64.15 billion yuan in 23-25 (basically flat/ 3% increase/4% increase), corresponding to EPS 2.47/2.75/2.98 yuan. The current stock price corresponds to 23-25 PE of 10/9/8 times. The photovoltaic industry continues to be booming, the market share of the company's household photovoltaic business is expected to further increase, the inverter and energy storage business is expected to contribute new performance increases, and the new energy (mainly new energy vehicles) and power equipment (mainly State Grid and related power groups) sectors among downstream customers of low-voltage appliances will also maintain rapid growth in the context of “carbon neutrality” and maintain “buy” ratings.

Risk warning: The new installed capacity of photovoltaics falls short of expectations; grid investment falls short of expectations; overseas business operation risks.