Description of the event

Goodway released its three-quarter report for 2023. The first three quarters of 2023 achieved revenue of 5.65 billion yuan, an increase of 94% over the previous year; net profit of 893 million yuan, an increase of 224% over the previous year; of these, 2023Q3 achieved revenue of 1,836 billion yuan, an increase of 25% over the previous year, a decrease of 12% over the previous year; and net profit of 152 million yuan, a year-on-year decrease of 31%.

Incident comments

In the 2023Q3 inverter business, we expect the company's Q3 grid-connected inverter shipments to drop slightly month-on-month, and household storage to drop a lot month-on-month. The core reason is still the high inventory level of European household storage channels at the industry level, which has a great impact on the order demand of inverter companies. At the same time, the company's industrial and commercial products are gradually being released, and the power for industrial and commercial use is increasing compared to household use scenarios, driving an increase in the average power of grid-connected inverters, which is expected to drive a significant increase in unit prices. In terms of profitability, the company's product prices are stable, and the overall gross margin of inverters is stable at a good level.

According to financial data, the company's expense ratio during Q3 was 18.5%, a significant increase from month to month. First, revenue declined month-on-month due to the downturn in the inverter business, and expenses were not diluted; second, Q3 exchange earnings decreased significantly compared to Q2. At the end of 2023Q3, the company's inventory was 1.73 billion, down 2% from the previous month; the contract debt was 350 million, stable from month to month.

Looking ahead, European channel inventories are being removed, and an inflection point in corporate demand is gradually becoming apparent. Recently, the company's orders have improved, and in particular, the German market has shown outstanding performance. We expect that the company's channel inventory will be eliminated by the end of the fourth quarter, and the pace is faster than the industry average. In terms of price and profit, household savings gross margin is expected to decline steadily in 2024, but overall it remains at a high level. Considering the decline in the company's expense ratio, profitability is still good. Combined with the increase in the company's industrial and commercial energy storage, energy storage batteries, and household distribution businesses, the company's performance is expected to return to relatively good growth.

We expect the company to achieve net profit of 1.17 billion to 1.17 billion dollars in 2023 and 2024, corresponding to PE 18 or 12 times, and maintain the “buy” rating.

Risk warning

1. The competitive pattern deteriorated;

2. PV installation falls short of expectations.