Q3 Performance affected by revenue recognition rhythm

The company realized revenue of RMB 1.134 billion yuan in 23Q3, with the same/month-on-month +75.90/-27.18%; realized net profit of RMB 73 million yuan, with the same/month-on-month +226.58/-25.67%. The month-on-month decline of performance was mainly affected by the rhythm of revenue recognition. Considering that the company is still in the investment period, we raise the assumption of expense ratio during the period and reduce the forecast value of net profit for 23-25 years to 3.52/5.95/8.75 (previous value 4.04/6.86/9.40) million yuan. Compared with the company's 24-year Wind consistent expectation average PE 11 times, considering the company's significant cost advantage, energy storage business is expected to rapidly increase volume, product spectrum accelerated expansion, give the company 24-year target PE21 times, target price 34.86 yuan (considering the equity change corresponding to the previous value of 42.70 yuan), maintain the "buy" rating.

Gross net profit rate month-on-month increase, scale effect appears

The company realized revenue of RMB 3.311 billion yuan in Q1-3, year-on-year +210.59%; net profit of parent company was RMB 208 million yuan, year-on-year +359.04%. 23Q3 realized revenue of 1.134 billion yuan, same/month-on-month +75.90/-27.18%; realized net profit of 73 million yuan, same/month-on-month +226.58/-25.67%. 2023Q3 realized gross/net profit margin of 23.64/6.47%, month-on-month increase of +6.99/+0.13pct, gross net profit margin month-on-month increase. The sales/management/finance/R & D expense ratio of the company in Q1-3 of 23 was 5.75/1.45/-0.24/4.72%, respectively, with year-on-year change of +0.96/-0.90/-0.35/-1.92pct, and the total rate change was-2.21pct. The scale effect was significantly reflected with the sales volume.

PCS head enterprise, energy storage integration begins to increase volume

According to Zhongguancun Energy Storage Industry Technology Alliance, the company ranked first in PCS shipments of energy storage in the domestic market for two consecutive years. In the first half of 2023, the company's energy storage business realized revenue of 818 million yuan, year-on-year +2048.15%, gross profit margin of 11.82%, we expect that the proportion of integrated income of energy storage system of H1 company will increase significantly in 2023. The scale effect of the company's energy storage business gradually appeared, and the integrated business began to increase in volume. We expect that the installed capacity of domestic new energy storage in 23/24 is expected to reach 45.1/83.3GWh,+184%/85% year-on-year. As the head enterprise of domestic large storage PCS supplier, the company's performance is expected to achieve rapid growth along with the domestic large storage industry.

Breakthrough in overseas markets, orderly expansion of production capacity

Since the beginning of this year, the company has gained a lot in overseas markets: in May, the company signed an inverter equipment supply agreement for Saudi Arabia's 700MW Ar Rass photovoltaic project; in June, the company's centralized inverter was certified by CSA in North America market, and the company signed a strategic cooperation agreement with European new energy giant ib vogt; in August, Shangneng Electric signed a supply agreement for Albania 140MW project with Voltalia of France. Subsequently, the company signed a 250kW series inverter supply agreement with FiberX, a well-known Brazilian distributor, which became an important breakthrough for the company to deepen its business layout in South America. On September 3, the integrated R & D and industrialization project of 15GW energy storage converter and energy storage system of Shangneng Electric Co., Ltd. was started. The company is expected to be completed by the end of 2024, gradually release the production capacity in 2025 and achieve full production capacity in 2029. The production capacity is expanding orderly as planned.

Risk hint: the development of the industry is not as expected, the market competition is intensified, and the upstream raw materials are rising faster than expected.