Key points of investment
The optical storage business accelerated. Net profit from 2024Q1 increased 39.05% year on year. In 2023, the company achieved total operating income of 72.251 billion yuan, up 79.47% year on year; net profit to mother of 9.440 billion yuan, up 162.69% year on year; net profit after deducting non-return to mother was 9.216 billion yuan, up 172.18% year on year. The gross profit margin was 30.36%, up 5.81 pct year on year; the net sales margin was 13.30%, up 4.12 pct year on year. With 2024Q1, the company achieved total revenue of 12.614 billion yuan, up 0.26% year on year; net profit to mother of 2,096 billion yuan, up 39.05% year on year; net profit after deducting non-return to mother of 2,083 billion yuan, up 42.84% year on year; gross sales margin of 36.67%, up 8.67 pct year on year; net sales margin 16.71%, up 4.55 pct year on year.
Shipments of photovoltaic inverters increased rapidly, with significant global brand and channel advantages. In 2023, the company shipped 130 GW of photovoltaic inverters worldwide; photovoltaic inverters and other power electronic conversion equipment achieved operating revenue of 27.653 billion yuan, an increase of 60.97% year on year; gross profit margin of 37.93%, up 5.51 pct year on year. The company's overseas production base in India and factory in Thailand have reached 25 GW of production capacity. At present, the company has built more than 20 subsidiaries overseas, six major service regions around the world, 490+ service outlets and hundreds of important channel partners. The products have been sold in batches to more than 170+ countries and regions around the world. At the end of 2023, the company had 1,423 overseas employees, a year-on-year increase of 58.1%. In 2023, the company's high-power string inverters SG320HX and 1+X modular inverters were widely and thoroughly used in various scenarios around the world. Among them, the cumulative number of orders for 1+X modular inverters worldwide had exceeded 45 GW by the end of December 2023. Facing household storage needs, the company launched the “1+∞ Whole House Green Electricity Solution”, which is the first in the industry to achieve a full-stack self-developed “Optical Storage and Charging Excellent Cloud” system-level product portfolio. A 2GW distribution agreement was signed with European Menlo, and a 500MW distribution agreement was signed with Sol+Distribuidora in Brazil.
The energy storage business created the second growth pole. Large storage+household storage two-wheel drive in 2023, the company delivered 10.5 GWh of energy storage systems globally, ranking first among Chinese companies for eight consecutive years. The energy storage system achieved operating revenue of 17.802 billion yuan, an increase of 75.79% year on year; gross profit margin was 37.47%, up 14.23 pct year on year. The company launched the “three-electric fusion” PowerTitan 2.0 liquid-cooled energy storage system for large-scale overseas ground application scenarios. It uses 314Ah high-capacity batteries and is equipped with embedded PCS to achieve AC/DC integration. The standard 20-foot container has a capacity of 2.5 mW/5 MWh; at the same time, it is equipped with stem cell grid technology to make the system more efficient, safer and more friendly. Currently, the company's energy storage systems are widely used in mature electricity markets such as the US, the UK, and Germany, continuously strengthening the deep integration of wind and solar storage. Facing the Chinese industrial and commercial energy storage market, the company innovatively proposed a “three-electricity integrated intelligent storage” PowerStack energy storage system solution to help industrial and commercial energy storage continue to develop with high quality through a “one-stop information resource platform” and perfect marketing service layout.
Profit forecasting and valuation
Raise profit forecasts and maintain a “buy” rating. The company is a global leader in optical storage. Considering that the profitability of the photovoltaic inverter and energy storage business exceeded expectations, we raised the 2024-2025 profit forecast and added the 2026 profit forecast. The company's net profit for 2024-2026 is estimated to be RMB 111.02, 132.23, and 15.119 billion yuan, respectively, with year-on-year growth rates of 17.61%, 19.11%, and 14.34%; corresponding EPS is 7.48, 8.90, and 10.18 yuan/share, respectively; PE is 13, 11, and 10 times, respectively.
Risk warning
Demand for PV installations fell short of expectations; raw material prices fluctuated greatly; and competition in the industry intensified.