The company released the 2023 annual report and the 2024 quarterly report. The performance changed by +18.03%/-26.48%, respectively. Along with improving demand, the company's performance recovered clearly month-on-month, and profits were relatively steady. The quarterly report's performance increased 94.37% month-on-month; maintaining an increase in holdings ratings.
Key points to support ratings
The company's performance in 2023 increased 18.03% year on year: the company released its 2023 annual report, achieving full year revenue of 7.480 billion yuan, an increase of 25.59%; realized net profit to mother of 1,791 billion yuan, an increase of 18.03% year on year; realized deducted non-profit of 1,853 billion yuan, an increase of 20.72% year on year. 2023Q4 achieved a profit of 223 million yuan, a year-on-year decrease of 62.26% and a year-on-month decrease of 26.90%.
2024Q1's performance began to recover month-on-month: the company also released its 2024 quarterly report. In 2024Q1, the company achieved net profit of 433 million yuan, a year-on-year decrease of 26.48% and a year-on-year increase of 94.37%. We believe that as demand improves, the company's performance has clearly recovered month-on-month.
As a result of the micro reverse recall, inverter sales declined in 2023, and the gross margin of the sector remained stable: in 2023, the company's inverter products achieved operating income of 4.429 billion yuan, up 11.95% year on year; gross margin reached 52.33%, up 4.14 percentage points year on year; sales reached 892,100 units, down 33.84% year on year. Looking at the split product structure, energy storage inverters, string inverters, and micro inverters sold 408,700 units, 206,700 units, and 273,500 units respectively in 2023, up 36.69%, a year-on-year decrease of 16.28%, and a decrease of 65.91%, respectively. The recall of German micro-reverse products was the main reason for the decline in sales.
Market demand boosted the rapid growth of energy storage battery pack revenue: due to the increase in global household storage demand and the rapid growth of the energy storage battery and energy storage inverter market, the company sold 127,600 units of energy storage battery products in 2023, up 1092.63% year on year, boosting the company's revenue up 965.43% year on year to 884 million yuan; the gross margin of energy storage battery packs reached 33.87%, a decrease of 1.04 percentage points year on year, and basically remained stable.
The dehumidifier business increased steadily, and heat exchanger sales picked up: the company's home appliance business picked up in 2023 due to the improvement in the macro environment. The dehumidifier business achieved revenue of 704 million yuan in 2023, up 21.51% year on year; gross margin reached 33.67%, up 1.13 percentage points year on year; heat exchanger business achieved revenue of 1,345 billion yuan in 2023, up 8.69% year on year; gross margin reached 9.81%, up 0.49 percentage points year on year.
valuations
Under the current share capital, considering that the company's 2023 performance growth rate was slightly under pressure, but the 24Q1 recovery began, we adjusted the company's 2024-2026 earnings forecast to 5.22/6.89/8.47 yuan (the original 2024-2026 forecast was 5.80/7.42/-yuan), corresponding to a price-earnings ratio of 17.5/13.2/10.8 times; maintaining an increase in holdings rating.
The main risks faced by ratings
Risk of international trade friction; risk of demand growth falling short of expectations; risk of price competition exceeding expectations; risk of exchange rate changes exceeding expectations; risk of technological change.