Incident: On April 22, the company released its annual report for the year 23 and the quarter for the year 24. In 2023, we achieved revenue of 72.251 billion yuan, +79.5% year on year, net profit of 9.44 billion yuan, +162.7% year-on-year, after deducting non-net profit of 9.216 billion yuan, +172.2% year-on-year, and EPS 6.36 yuan. 23Q4/24Q1 achieved revenue of 25.84 billion yuan/12.61 billion, +43.2%, +0.3%/-51.2%, net profit attributable to mother of 2.22 billion/210 million, +44.6%/-22.7%, +39.1%/-5.4%, after deducting non-net profit of 2.14 billion/ 2.08 billion, +44.3%/-23.3%, +42.8%/-6.0%. The high increase in performance was in line with expectations.
The rapid rise in inverter+power plant+energy storage business contributed the most. We estimate that PV inverters/power plants/energy storage accounted for 35%/34%/25% of revenue in '23, which directly led to high performance growth with a year-on-year growth rate of 63%/113%/76%. Looking at business by business in '23, the company's inverter shipments of 130 GW increased by 69%, and the gross margin increased by 6pcts to 39% due to lower freight and raw materials and higher exchange rates; energy storage shipments were 10.5GW, which mainly took into account domestic and overseas high-price markets, and the gross margin increased by 14.3 pcts to 38%; the gross margin increased by 14.3 pcts to 38%; in the second half of the year, power plant emissions also benefited from a decrease in component and construction costs, and the gross margin increased by 5 pcts to 16%. Strong profit continued in 24Q1. Despite a slight increase in off-season revenue, overall gross margin continued to rise to 36.7% in a single quarter, +8.7pcts/+8.0 pcts month-on-month, a record high. Combined with contract debt of 8.18 billion yuan at the end of 24Q1, the company has plenty of orders in hand. The company has plenty of orders and is expected to ship about 160 GW/20+GW of inverters/energy storage. Strong performance support is expected to achieve another good result.
The scale effect is evident, and market+R&D continues to gain strength. Benefiting from the continued growth in business scale, the company's four-rate rate dropped 0.6 pcts to 11.8% in '23. Quarterly outlook: The company continues to increase market investment. The 24Q1 sales rate averaged +1.8pcts to 8.9% year-on-month. It has formed a global marketing, channel and service network system, and has established a clear first-mover advantage in channel markets such as Europe, America, and Australia.
At the same time, the company insisted on technological innovation. The 24Q1 R&D rate was +2.5pcts to 5.2% month-on-month. The company's DC 2000V high voltage inverter was successfully connected to the grid. Last year, the world's first 10MWh fully liquid-cooled energy storage system, PowerTitan 2.0, was released. With technical support, the company continues to accumulate brand power. Sales+R&D boosted the 24Q1 four rate by 5.8pcts to 17% month-on-month.
Profits are still impressive after deductions have been applied. In '23, the company accrued assets/credit impairment losses of 1.30 billion/ $73 billion, of which the 23Q4 accrued 90,000,000/$520 million, mainly due to power plants in Vietnam falling short of expectations. Currently, the risk has been fully reflected, and the probability of significant future impairment is low. Overall, net sales margin was 13.3% in '23, +4.1pcts year on year; 24Q1 net sales margin was 16.7%, +4.6pcts/+8.0pcts month-on-month.
Investment advice: As a global leader in photovoltaic inverters, the company is making concerted efforts in the optical storage business, and is actively deploying new energy vehicle drive systems, intelligent operation and maintenance, hydrogen energy, etc. The company has obvious brand advantages, strong R&D and innovation capabilities, leading global marketing, channel and service network layout, and has formed a scale advantage. The company's revenue for 2024-2026 is estimated to be 97.427 billion yuan, 120,999 billion yuan, 142.114 billion yuan, net profit due to mother of 11.924 billion yuan, 14.416 billion yuan, 16.562 billion yuan, EPS of 803 yuan, 9.71 yuan, and 11.15 yuan. PE corresponding to the current stock price is 12.08 times, 9.99 times, and 8.7 times, maintaining the “recommended” rating.
Risk warning: Risk of declining profits due to increased competition; risk of deterioration of overseas policy environment, etc.