Brief performance review
On April 22, 2024, the company released its annual report and quarterly report. In 2023, it achieved revenue of 72.251 billion yuan, an increase of 79.5% over the previous year; net profit to mother was 9.440 billion yuan, an increase of 162.7% over the previous year. 1Q24 achieved revenue of 12.614 billion yuan, up 0.3% year on year; net profit to mother was 2,096 billion yuan, up 39.1% year on year, exceeding expectations.
Management analysis
The inverter business volume has increased rapidly, and high-power inverters have significant advantages: the company's inverter revenue in 2023 was 27.65 billion yuan, up 61% year on year, gross profit margin 37.93%, up 5.51 pct year on year. The annual shipment volume of inverters was 130 GW, an increase of 68.8% over the previous year. Among them, “1+X” modular inverters were widely recognized for their flexible design and higher power generation efficiency. Global shipments exceeded 30 GW, and the cumulative number of orders exceeded 45 GW.
The profitability of energy storage systems continues to increase, and overseas markets are flourishing: energy storage system revenue was 17.8 billion yuan, up 75.8% year on year, gross profit margin 37.47%, up 14.23 pct year on year; shipment volume was 10.5 GWh, up 35% year on year. The company's energy storage systems are widely used in mature electricity markets such as the US, Britain, and Germany, and there has not been a single safety incident in any of the participating energy storage projects. Excellent product strength has driven the company to continue to break through overseas orders, win major orders in various energy storage markets such as South Australia, the United Kingdom, South Africa, and Southeast Asia, and the global business has blossomed.
The Vietnam project accrued 775 million yuan of impairment to optimize assets and move forward lightly: The company calculated asset impairment reserves of 920 million yuan in Q4, mainly for inventory depreciation losses and contract performance cost impairment losses. Among them, the Vietnam power plant project accrued 775 million yuan of impairment based on prudential principles to further optimize the quality of the company's power plant assets.
1Q24's profitability increased significantly, with the expense ratio increasing by 3.89pcts year on year: 1Q24 gross profit margin was 36.67%, the year-on-year increase was 6.14pct, the net interest rate was 16.71%, and the year-on-year increase was 4.55pct.
Sales/management/R&D/finance expenses were 8.87%/1.80%/5.20%/0.99%, compared to +1.72/+0.29/+1.77/+0.11pct, respectively. It is expected that as revenue scale increases, the company's expense ratio is expected to improve quarterly.
Profit Forecasts, Valuations, and Ratings
According to the company's annual report, the 2024-2025 net profit forecast was fine-tuned to 122.77 billion yuan and 16.249 billion yuan. The net profit for 2026 is estimated to be 19.387 billion yuan, corresponding to PE of 11, 9, and 7 times, maintaining the “buy” rating.
Risk warning
International trade policy risk; risk of exchange rate fluctuations; risk of increased competition.