Core views

The company released the 2023 performance forecast. Revenue and performance achieved significant year-on-year growth, but there is a certain gap compared to our previous predictions. It is presumed that this is due to the confirmed pace of acceptance of some projects at the end of the year. 2023 is a major year for domestic photovoltaics and energy storage installations. The new installations all broke through record highs. The company maintained a leading market share in domestic centralized photovoltaic inverters and centralized energy storage PCS. Looking ahead to 2024, the company's photovoltaic and energy storage business is expected to continue to expand and gain a certain market share in the US and European markets. The company emphasizes research and development, product iteration is rapid, and profitability is expected to be maintained.

occurrences

The company released its 2023 performance forecast, with 2023 revenue of 45-50 billion yuan, a year-on-year increase of 92.43%-113.81%; a return to mother of 250-310 million, a year-on-year increase of 206.5%-280.1%; deducted non-performance of 243.9%-329.9% year-on-year. If the median value is taken, revenue of 4.75 billion yuan in Q4, +13% year over month, +27% month over month; median 23 year performance was 280 million, Q4 performance was 72 million, +97.5% year over month, and -2.5% month on month.

Brief review

Domestic PV installations are strong, and the company maintains a leading market share

According to the Energy Administration's power industry statistics for December, the annual installed capacity of new photovoltaics reached 216.88GW, an increase of 148% over the previous year. According to statistics from Solbi Photovoltaic Network, the company won the bid capacity of 14.7 GW in domestic PV inverter tenders in 2023, ranking fourth. Shipments of Shangneng PV inverters to India successfully surpassed 10GW by the end of 2023. Currently, the market competition trend of photovoltaic inverter manufacturers has formed a stable pattern with Huawei, Sunshine Power, Shangneng Electric, and Zhuzhou Converter as the first tier.

Domestic large storage has achieved explosive growth. The company is the leading supplier of centralized PCS. On January 25, the National Energy Administration announced at the first quarter press conference that by the end of 2023, the cumulative installed capacity of new energy storage projects completed and put into operation nationwide reached 31.39 GW/66.87 GWh, and the new installed capacity in 2023 was about 22.6 GW/48.7 GWh, an increase of more than 260% over the end of 2022. According to statistics from CNESA's China Energy Storage Industry White Paper 2023, in 2022, the company ranked third in the 2022 global market energy storage PCS shipment ranking of Chinese energy storage PCS providers, and ranked first in the domestic market shipment list.

Revenue and performance are slightly lower than previous expectations, which may be related to the pace of confirmation of acceptance of some energy storage projects at the end of the year

Previously, we expected the company to have revenue of 5.356 billion in 2023 and a performance of 358 million, which is higher than the upper limit of this forecast. We speculate that it may be related to the delivery of integrated energy storage projects late in the year. Due to the large size of energy storage integration projects, the pace of approval of individual projects has a great impact on the company's annual revenue and performance.

Investment recommendations and performance forecasts

The company is a leading domestic centralized photovoltaic inverter and energy storage PCS. The company has entered the European terrestrial photovoltaic market and the US large storage market, and is expected to continue to create good performance in the context of continuous growth in domestic and overseas photovoltaics and energy storage. The company's net profit for 2023, 2024, and 2025 is estimated to be $288, 535, and 784 million, respectively.

Risk analysis

1) Demand side: The growth rate of installed domestic energy storage fell short of expectations, and the growth rate of new energy investment declined; overseas energy storage demand fell short of expectations, and overseas carbon neutrality progress was slowing down.

2) Supply side: The supply of power electronic devices such as IGBTs is tight, and the progress of localization falls short of expectations; prices and processing costs of raw materials such as copper, aluminum, and steel have risen.

3) Policy aspects: Support policies related to energy storage fell short of expectations; compensation standards for capacity electricity prices fell short of expectations; electricity spot market progress fell short of expectations; electricity peak and valley price differences fell short of expectations.

4) In terms of the international situation: international trade barriers have deepened, exports have been blocked; local production requirements have increased and costs have risen; international conflicts have led to rising shipping costs and extended delivery times.

5) Market side: Increased competition has led to lower gross profit margins and profitability of energy storage batteries, integrators, and PCS manufacturers than expected; the company's market competition strategy is wrong.