Inventory+off-season affects Q1 performance, which is expected to improve quarterly in the future
The company's revenue for 23 years was 7.353 billion yuan, +56.10% year-on-year, and net profit to mother was 852 million yuan, +31.24% year-on-year. Q1 revenue in '24 was $1,126 million, and net profit to mother was $29 million, -108.57% year over year. The month-on-month decline in performance was mainly due to inventory combined with the impact of the off-season in the first quarter. Considering that the pace of industry inventory removal is slower than our previous expectations, we lowered the company's 2024-2025 net profit forecast to 776/1,058 billion yuan (previous value of 21.81/29.35 billion yuan), adding a 26-year forecast of 1,347 billion yuan. Compared with the company's 24-year Wind, the average PE value is 16.1 times. Considering the company's accelerated market development and the product is moving towards greater power, the company was given 21.3 times PE in 24 years, with a target price of 95.64 yuan (previous value of 141.23 yuan), maintaining the “gain” rating.
Q1 Decrease in gross margin is due to changes in product structure
The company's gross margin/net margin reached 30.76%/11.78%, -1.70/ -1.73pct; Q1 gross margin/net margin reached 27.47%/-1.70% in Q1, -11.58/20.98pct. The significant decline in Q1 gross margin in Q1 was mainly due to an increase in the revenue share of household systems with low gross margins. The gross margin of the company's products in overseas markets remains relatively stable. The company's sales/management/finance/R&D expenses rates for 23 were 6.71%/3.92%/-1.68%/6.39%, respectively. The year-on-year change was -0.49/ -0.25/+0.33/ -1.00pct, and the overall rate declined steadily in '23.
Q1 Changes in market structure, blooming in many parts of the world
Overall sales of the company's products maintained steady growth in 23, with sales of 686 million inverters, including 532,200 PV grid-connected inverters, accounting for 77.54%; 154,400 photovoltaic energy storage inverters, accounting for 22.46%; overseas sales of 443,700 units, accounting for 64.64%; and domestic sales of 242,700 units, accounting for 35.36%. Battery sales reached 341.15MWh, +27.74% YoY. According to the company's performance report, the company's orders for PV grid-connected inverters in April showed a high month-on-month increase, mainly in domestic and emerging markets such as Brazil, Pakistan, and India. At the same time, the company believes that European household storage inverter product inventories are expected to be digested within 2-3 months, and this year's results are expected to show a trend of low to high trends, and quarterly profits are expected to improve quarterly during the year.
Household systems are growing rapidly, and component price reductions are relatively profitable
The company's 23 years of grid-connected inverters/energy storage inverters/energy storage batteries/household systems achieved revenue of 28.61/15.66/8.69/16.54 billion yuan, +42.99%/-4.67%/+38.66%/+688.92%, gross profit margin 29.43%/55.83%/24.96%/12.94%, year-on-year -0.46/+11.33/+7.18/+2.61 pct.
The company sold 513 MW of household systems in '23, and revenue showed a rapid growth trend. The company's target sales volume for 24 years is 1 GW. Currently, due to lower component prices, the profitability of this business is relatively good. We expect the business's revenue to continue to grow rapidly in 24 years.
Risk warning: The development of the industry fell short of expectations, market competition intensified, and the increase in upstream raw materials exceeded expectations.