Incident: On April 22, the company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 72.251 billion yuan, +79.47% year over year; net profit to mother of 9.44 billion yuan, +162.69% year over year; net profit after deducting non-return to mother of 9.216 billion yuan, +172.18% year on year. 24Q1 achieved revenue of 12.614 billion yuan in a single quarter, +0.26% year-on-year, and -51.18% month-on-month; net profit to mother was 2,096 billion yuan, +39.05% year-on-year, and -5.43% month-on-month.
The shipment of photovoltaic inverters is leading, and the overseas layout creates high profits. In 2023, global shipments of photovoltaic inverters were 130 GW, an increase of over 69% over the previous year, achieving revenue of 27.653 billion yuan, an increase of 60.97% over the previous year. The company increased its layout in the European, American, Australian and Chinese channel markets, benefiting from leading overseas market positions and brand strength, and steadily improving profitability. The gross margin of the power electronic conversion equipment business such as photovoltaic inverters in '23 was 37.93%, an increase of 5.51 pct over the previous year. In terms of products, the company's 1+X modular inverters had accumulated more than 45 GW of global orders by the end of December 2023. The world's first 2000V inverter was successfully connected to the grid to generate electricity in the “Mengjiawan PV Project” in Yulin, Shaanxi, further promoting inverter cost reduction and efficiency.
The energy storage business volume is rising rapidly, and the global order signing performance is impressive. In 2023, the company delivered 10.5 GWh of energy storage systems globally, ranking first among Chinese companies for eight consecutive years, achieving revenue of 17.802 billion yuan, an increase of 75.79% over the previous year. The company has been deeply involved overseas for many years. It has signed several orders in Australia, the United Kingdom, South Africa, Southeast Asia and other regions in 23, such as signing the UK's 825MWh energy storage order, signing a strategic agreement with Hive, an independent Australian energy storage project, and providing a 3GWh large-scale liquid-cooled energy storage system over the next 3 years. Domestically, the company helped the first phase of the “Guangxi Chongzuo Banchong 200MW/400MWh Energy Storage Project”, the largest energy storage power station within China's Southern Grid, be successfully connected to the grid; bringing the world's first offshore grid energy storage project, the “Weizhou 5MW/10MWh Energy Storage Project”.
Q1 Profitability has increased again, and we are optimistic about large-scale optical storage opportunities in '24. The 24Q1 company's gross margin/net margin was 36.67%/16.71% respectively, +8.67pct/+4.55pct year-on-year, and +8.04pct/+7.90pct month-on-month, respectively. The high profit trend in the inverter and energy storage business continued. Looking ahead to 2024, large-scale power plant projects that have been postponed in the US market are expected to resume one after another. The European market is coming to an end. The growth rate of large storage is impressive, and overall demand in the high-end market is strong. The company has a stable position as a leader in the photovoltaic inverter and energy storage system industry. I am optimistic that the company will seize large-scale optical storage and emission opportunities in the high-end market and continue to explore emerging markets to achieve quantitative and profitable growth.
Investment advice: The company is expected to achieve revenue of 87.105 billion yuan, 104.265 billion yuan and 123.554 billion yuan respectively in 2024-2026, and realized net profit of 10.416 billion yuan, 12.678 billion yuan and 14.233 billion yuan respectively, up 10.3%, 21.7%, and 12.3% year-on-year. The corresponding EPS is 7.01, 8.54, and 9.58, respectively, and the PE multiples corresponding to the current stock price are 13.4X, 11X, and 9.8X, respectively, maintaining the “gain” rating.
Risk warning: project progress falls short of expectations; industry competition intensifies; downstream demand falls short of expectations; risk of raw material price fluctuations, etc.