Description of the event
The company released its 2023 annual report. In the first half of the year, it achieved revenue of 27.9 billion yuan, an increase of 18% over the previous year, and net attributable profit of 1.9 billion yuan, an increase of 14% over the previous year.
Incident comments
In terms of smart appliances, 23H1 achieved revenue of 11.5 billion yuan, an increase of 7% over the previous year. We believe that against the backdrop of a weak overall boom in the low-voltage appliances industry, the company's 7% growth highlights its leading competitive advantage. Specifically, the company's 23H1 overseas low-pressure business performed brilliantly, with revenue of 2.3 billion yuan, an increase of 29% over the previous year. It mainly benefited from the continuous improvement of overseas channels, adding 40+ first-class dealers, 5+ large wholesaler groups, and 15 KA; in terms of low-pressure domestic business, 23H1 revenue was about 9.2 billion yuan, an increase of 3% over the previous year. The company continued to develop 1,600 new distributors in the channel and industry dimensions. The coverage rate increased from 81% to 85%. It continued to carry out dealer empowerment training and support work in disadvantaged regions. Performance space; the industry implemented 69 new product plans, completed 40 product development projects, and achieved new product performance contributions.
In terms of green energy, 23H1 achieved revenue of 16.6 billion yuan, an increase of 26% over the previous year. By business:
1) Household photovoltaics is the core contribution. 23H1 added more than 5.3 GW of household installed capacity, nearly doubled year-on-year, market share was about 25%, and remained number one in the industry for many years. The company continued to expand its advantages in the number of channels. In the first half of the year, it added 826 agents, 4 new provinces, 1 autonomous region and 3 municipalities directly under the Central Government, covering 294 districts and counties, laying the foundation for business growth.
In the first half of the year, Zhengtai Energy achieved revenue of 13.7 billion yuan, an increase of 274% over the previous year; net profit of 1.2 billion yuan, an increase of 63% over the previous year.
2) In terms of inverters/energy storage, Zhengtai Power is included in Tongrun Equipment (002150.SZ) and the scope of the report to further expand financing channels. The company's inverters ranked first in the US industrial and commercial markets and the Korean market, signed new agents in many European countries and obtained large orders; deepened and consolidated domestic cooperation with central state-owned enterprises, and signed 10 new central state-owned enterprise customers.
3) In terms of centralized/industrial and commercial power plants, the company held about 1.3 and 0.5 GW of centralized and industrial and commercial power plants respectively at the end of 23H1, achieving electricity bill revenue of 640 million yuan, a year-on-year decrease. This was mainly due to industry factors such as a decrease in the scale of ownership due to rolling development of power plants and a decrease in the number of hours of power generation in 23H1.
4) In terms of EPC, the company obtained development indicators as a consortium with domestic and central state-owned enterprises, and established a joint venture EPC company with partners abroad to undertake European EPC business, with more than 1 GW of contracts signed.
On the profit side, 23H1 gross margin was 22.3%, an increase of 0.3 pct over the previous year. In terms of expenses, the cost rate for the 23H1 period was 10.9%, down 1.6 pct from the previous year. Ultimately, 23H1's net return interest rate was 6.8%, down 0.4 pct from the previous year.
It is emphasized once again that the company has formed a household+low voltage two-wheel drive, which is supported by continuous and rapid growth. The company's net profit is expected to reach 4.4 billion yuan in '23, corresponding to 12 times the valuation. Continue to maintain the “buy” rating.
Risk warning
1. The risk of a sharp increase in the price of raw materials;
2. The development of the household industry fell short of expectations.