Introduction to this report:
Under the influence of European inventories, the company's 23Q3 revenue was under pressure, and exchange losses plus equity incentive expenses caused the company's period expenses to increase significantly. Looking ahead to 23Q4 and 24, the company will continue to expand incremental markets such as Asia, Africa, and Latin America, and shipments are expected to improve.
Key points of investment:
Maintain an increase in holdings rating. Considering the high inventory level of solar storage inverters for household use in Europe, which affects the company's shipping level, we lowered the EPS for 23-25 to 2.68 (-2.12) yuan, 3.79 (-3.40) yuan, and 5.01 (-4.39) yuan. Referring to comparable company valuations and considering the company's leading position, the company was given 22 times PE in 2024, corresponding to the target price of 83.38 (-61.54) yuan, maintaining an increase in holdings rating.
The company's short-term shipments are under pressure due to overseas inventories, and improvements are expected in the future. Affected by European inventories, the company's overseas market inverter shipments were under short-term pressure. In 23Q3, the company achieved operating income of 1.39 billion yuan, -19.42% year-on-year and -13.13% month-on-month. Q3 inverter shipments are expected to decline month-on-month. Looking ahead to 23Q4 and 24, we expect the company's subsequent shipments to improve. The reasons are as follows: 1) As European inventories continue to be removed, the growth rate of exports in the European region is expected to gradually resume; 2) the company's domestic market revenue share continues to increase, 23H1 reaches 53.12%, yoy +50%. At the same time, the company is actively expanding incremental markets such as Asia, Africa, and Latin America, and is expected to reduce its dependence on the European market in 24; 3) By the end of 23Q3, the company's contract debt reached 82 million yuan, +12.33% at the end of 2023H1, reflecting sufficient company orders to some extent. Shipments are expected to improve in 23Q4.
Exchange losses plus equity incentives led to a significant increase in company expenses during the period. In 23Q3, the company achieved net profit of 124 million yuan, or -59.34% year-on-year and -59.08% month-on-month. 23Q3 The decline in the company's performance was greater than the decline in revenue. In addition to revenue-side factors, the main reasons were: 1) exchange losses caused the financial rate to +7.74pcts month-on-month; 2) equity incentive expenses made the management fee rate +2.88pcts month-on-month.
Catalysts: Shipments in Asia, Africa and Latin America have exceeded expectations, and the removal of energy storage inverters has accelerated.
Risk warning: Industry inventories are high, and market competition is intensifying.