Core views:
The company released its 23 annual report and 24Q1 quarterly report, and the performance was in line with expectations. In '23, we achieved revenue of 7.480 billion yuan, +25.59% year on year; net profit of 1,791 billion yuan, +18.03% year on year; net profit after deducting non-return to mother of 1,853 billion yuan, +20.72% year on year; gross profit margin of 40.41%, +2.38pct year on year; net profit margin 23.94%, -1.64pct year on year, mainly due to the expansion of the energy storage battery pack business. 24Q1 achieved revenue of 1,884 billion yuan, -9.64% year on year; net profit of 433 million yuan, down 26.48% year on year; net profit without return to mother of 425 million yuan, -19.04% year on year; gross profit margin 36.33%, -6.73 pct year on year; net profit margin 22.98%, -5.26 pct year on year, mainly due to European households storing inventory.
The inverter business has penetrated overseas markets with remarkable profitability. Deye has set up after-sales service points in important sales areas to expand into surrounding markets. In 23 years, the company's inverters have been sold to markets such as South Africa, Germany, Brazil, and India. The cost advantage of Deye products is remarkable, and sales volume quickly increased. The company sold a total of 889 million inverters in 23 years, including 408,700 energy storage inverters, 206,700 string inverters, and 273,500 micro grid-connected inverters. Thanks to the cost advantages and scale effects brought about by technological upgrades, the company's inverter gross margin reached 52.33% in '23, +4.15pct compared to the previous year.
Demand for optical storage is prominent in emerging markets, and volumes are expected in Asia, Africa, and Latin America. In 2023, energy storage battery products achieved revenue of 884 million yuan, +965.43% year-on-year, accounting for 11.82%, and a gross profit margin of 33.87%.
The company actively uses energy storage inverter channels to develop downstream energy storage battery pack business to achieve collaborative development between the two. According to EESA data, the world added 16.1 GWh of installed household storage capacity in 2023, an increase of about 100% over the previous year. The electricity grid in Asia, Africa, and Latin America is weak, and household storage products are expected to expand in the future.
Profit forecasting and investment advice. The company's 2024-2026 EPS is expected to be 4.77/6.27/7.56 yuan/share. Referring to comparable companies, a PE valuation of 20 times the 2024 performance, corresponding to a reasonable value of 95.36 yuan/share, will continue to be given a “buy” rating.
Risk warning. The global PV installed growth rate fell short of expectations, large exchange rate fluctuations, and the risk of large price fluctuations in the industrial chain.