Brief performance review

On April 22, the company disclosed its 2023 annual report. In 2023, it achieved revenue of 1.42 billion yuan, a year-on-year increase of 6.11%; realized net profit to mother of 220 million yuan, a year-on-year decrease of 38.92%. Among them, Q4 achieved revenue of 452 million yuan, an increase of 10.01% year on year, and realized net profit of 40 million yuan, a year-on-year decrease of 63.01%.

Management analysis

Under pressure from marginal revenue and profit, industrial and commercial energy storage contributed to new growth: Affected by phased overcapacity and high inventories in the photovoltaic industry, the company's micro inverters achieved revenue of 941 million yuan in 2023, down 11.61% year on year, gross profit margin 36.13%, down 2.15 pct year on year. The industrial and commercial energy storage business has achieved revenue of 165 million yuan, contributing to new growth. Currently, there are more than 10 industrial and commercial user-side projects with a single reserve of more than 50 MWh, with a cumulative installed capacity of not less than 500 MWh, laying a solid foundation for strengthening technical advantages in the field of optical storage and deepening market development at home and abroad.

Global business layout, rapid domestic revenue growth: The company actively develops a global business layout, improves the construction of a global marketing network, and achieves localized management through the establishment of subsidiary companies in the United States, the Netherlands, France, etc. On the premise of continuing to maintain the market advantages already formed in the European and American markets, the company increased its efforts to develop the domestic market. In 2023, the company achieved domestic business revenue of 216 million yuan, an increase of 740.55% over the previous year, and a gross profit margin of 23.94%, an increase of 0.73 pct over the previous year.

Strengthen investment in self-propelled optical storage projects and open up a third growth line: the company has begun investment and construction of two additional fund-raising projects for photovoltaic power plants and energy storage power plants. Through the construction of new power plant projects, it has entered the power plant operation circuit, driving the shipment of the company's optical storage products, which is expected to drive the rapid growth of the company's performance.

R&D investment continues to advance, and innovation promotes product optimization and upgrading: in 2023, the company's R&D rate was 7.37%, an increase of 3.27pct over the previous year. The company has increased investment in R&D and market, actively introduced R&D personnel and market developers, and formed three major optical storage industry ecosystems with miniature inverters as the core: DIY micro optical storage, household small to medium optical storage, and large industrial optical storage to meet application needs in different scenarios.

Profit Forecasts, Valuations, and Ratings

According to the company's annual report and our latest judgment on the industry, the company's 2024-2025E net profit was adjusted to 3.51 (-30%) and 5.02 (-24%) billion yuan, respectively. Net profit due to mother is estimated to be 688 million yuan in 2026, corresponding to PE valuations of 21, 15, and 11 times, maintaining the “buy” rating.

Risk warning

International trade policy risk; risk of exchange rate fluctuations; increased risk of market competition.