Incident: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 7.35 billion yuan, +56% year over year; realized net profit of 850 million yuan, +31% year over year; realized net profit without return to mother of 81 million yuan, +29% year over year. In 2024, Q1 achieved revenue of 1.13 billion yuan, -35% year-on-year; realized net profit attributable to mother - RMB 29 million; and realized net profit withheld from non-mother - RMB 35 million.
Comment:
Under pressure to remove storage, the revenue of the energy storage inverter business declined year-on-year. The company sold 530,000 grid-connected inverters in 2023, achieving revenue of 2.9 billion yuan, +43% year-on-year, and a gross profit margin of 29%, which is basically the same; sales volume of energy storage inverters was 150,000 units, achieving revenue of 1.6 billion yuan, -5% YoY, and a gross profit margin of 56%, or +11pct year-on-year. The decline in revenue from the energy storage inverter business is mainly due to inventory backlogs in Europe. As inventory levels gradually return to a reasonable range, the company's energy storage inverter shipments are expected to improve quarterly.
Household system revenue grew rapidly, and component price reductions drove profit improvement. The company's sales volume of distributed household systems in 2023 was 513 MW, achieving revenue of 1.7 billion yuan, an increase of 689% year on year; gross margin was 13%, +2.6 pct year on year. The increase in gross margin was mainly due to the rapid decline in component prices in 2023. The company's holding subsidiary, Yude New Energy, actively lays out distributed household photovoltaic power generation systems. Currently, Yude New Energy is planning to upgrade from a two-piece supply of inverter+photovoltaic modules to a three-piece supply including a distribution box. In the future, it will try to supply a five-piece set to improve the quality of power plants through standardization and systematization of accessories.
Multiple factors combined to cause 24Q1 losses, and we are optimistic that profits will improve quarterly. First, the European market is an important market for sales of the company's photovoltaic inverters and energy storage inverter products. In the context of the European inverter inventory backlog, the company's 24Q1 shipments are under pressure; secondly, the first quarter was a traditional low season for domestic PV installations, so the company's domestic PV inverter business and household systems business were also affected to a certain extent; under the reduced revenue scale, the company's overall cost rate increased dramatically year-on-year, causing the company to lose money. As European inverter inventory levels gradually return to a reasonable range and the company's expansion into other overseas markets, the company's performance is expected to pick up quarter by quarter.
Profit forecast, valuation and rating: Considering that European household storage progress falls short of expectations and competition in the optical storage industry intensifies, we lowered the company's 24-25 profit forecast and added a 26-year profit forecast. The company is expected to achieve net profit of 7.3/9.5/1.17 billion yuan (64% down/ 63% /increase) in 24-26. The current stock price is 21/16/13 times the 24-26 PE. As European inverter inventory levels gradually return to a reasonable range, the company's shipments are expected to continue to improve. We continue to be optimistic about the company's long-term development and maintain a “buy” rating.
Risk warning: PV installation and overseas market expansion fall short of expectations; increased competition may lead to a decline in profits.