Incidents:
The company released its 2023 annual report. The company's 2023 revenue was 2.65 billion yuan, up 76.37% year on year; net profit to mother was 403 million yuan, up 80.2% year on year; after deducting non-net profit of 381 million yuan, up 78.96% year on year; gross margin was 41.01%, down 6.48% year on year. 2024Q1's revenue was 599 million yuan, up 33.81% year on year; net profit to mother was 66 million yuan, up 5.98% year on year; net profit after deducted from mother was 60 million yuan, up 5.04% year on year, and gross margin was 39.54%, down 7.02% year on year.
Comment:
Revenue from energy storage/charging piles increased significantly, and industry policies led to an increase in market demand. By product, in 2023, the company's new energy conversion equipment (energy storage business, etc.) revenue was 910 million yuan (YOY +255.65%); electric vehicle charging pile revenue was 850 million yuan (YOY +99.58%); industrial power supply revenue was 533 million yuan (YOY +4.07%); and battery conversion and testing equipment revenue was 290 million yuan (YOY +15.76%). By industry, the new energy industry's revenue was 2,059 million yuan (YOY +119.05%); the smart grid industry's revenue was 533 million yuan (YOY +4.07%).
In Q1 2024, the company's various business segments maintained a relatively rapid growth rate. Among them, the energy storage business achieved revenue of about 211 million yuan (YOY + 26%); charging and switching services achieved operating income of 231 million yuan (YOY +48%); industrial supporting power supplies of 96 million yuan (YOY +25%); and battery testing and conversion equipment of 56 million yuan (YOY+ 26%). Revenue from the energy storage business has increased significantly. Mainly due to the development of battery technology and cost reduction, energy storage projects are already economical in some application scenarios at home and abroad. Countries frequently introduce policies to speed up the construction of energy storage facilities to promote the rapid development of the energy storage market. In 2023, China's new energy storage capacity reached 31.39GW/66.87GWh, YOY+ 260%. At the same time, the increase in NEV ownership in 2023 highlighted the contradiction between public charging supply and demand, and local governments in China introduced policies to support the construction of charging piles. Demand for charging piles rose rapidly, driving the company's sales revenue for related products. We believe that there is broad scope for future energy storage and charging pile demand, and the company has sufficient momentum for future growth.
The company's overall gross margin remained high, and charging pile profits improved year-on-year. The company's overall gross margin in 2023 was 41.01% (YOY-6.48pct); net margin was 15.13% (YoY+1.73pct).
In Q1 2024, the company's gross margin was 39.54% and net margin was 10.97%. Net interest rates declined in Q1 in '24, mainly due to the conversion of projects under construction to fixed assets after the Suzhou plant was put into operation, and amortization expenses increased. By sector, the gross margin of energy storage in 2023 was 33.13% (YOY-10.67pct), the gross margin of electric vehicle charging piles was 39.61% (YOY+4.32pct), the gross margin of industrial power supplies was 53.65% (YOY-0.78pct), and the gross margin of battery formation and testing equipment was 44.90% (YoY+5.62pct). Among them, the gross margin of energy storage has declined to a certain extent. We believe that the main reason is increased competition in the industry, and the increase in the company's share of the relatively low gross margin market share in the domestic gross margin market, which has lowered the overall gross profit margin; we think it is mainly due to the high competitiveness of the company's products and the dilution of costs due to scale effects.
Seize market opportunities to fully cover customers, and focus on breaking through overseas markets with special focus. By region, foreign revenue in 2023 was 534 million yuan (YOY +81.91%), and domestic revenue was 2,117 billion yuan (YOY +80.60%). In terms of gross margin, domestic gross margin was 37.23% (YOY-2.93pct); overseas gross margin was 56% (YOY-2.36pct). Domestic and foreign national policies have increased the field of charging piles and energy storage, bringing about a boom in energy storage and charging piles at home and abroad. The company has been seizing overseas opportunities in the field of charging piles for 24 years, with the key mission goal of breaking through major customers in key countries or major industry customers to ensure the steady growth of overseas charging equipment business; actively exploring overseas market demand in the energy storage sector and increasing the depth and breadth of overseas project cooperation. Actively explore industrial and commercial energy storage and overseas large storage markets.
Profit forecast and investment rating: We expect the company's 2024-2026 revenue to be 37.36 billion yuan, 51.61, and 6.714 billion yuan, respectively, up 40.9%, 38.2%, and 30.1% year-on-year; net profit to mother is 521, 7.20, and 985 million yuan, respectively, up 29.3%, 38.2%, and 36.8% year-on-year. Maintain a “buy” rating.
Risk factors: Due to fierce market competition, gross margin is difficult to recover, grid investment falls short of expectations, and the risk of fluctuating raw material prices.