Incident: On April 24, 2024, the company released its 2024 quarterly report. During the reporting period, the company achieved operating income of 599 million yuan, +33.81% year-on-year, and achieved net profit of 66 million yuan, or +5.98% year-on-year.
Single quarter gross margin/ net profit margin 39.54%/10.97%, -2.99/-3.01pct yoy, +0.87/-3.23pct month-on-month.
Q1 Performance has been growing steadily, with the storage and charging business as the main driving force. 2024Q1's revenue was 599 million yuan, +33.81% year-on-year, and continued to grow at a high rate. Net profit attributable to mother was 66 million yuan, +5.98% year over year.
The increase in profit fell short of the increase in revenue. This was mainly due to the increase in expenses after the Suzhou plant was put into operation, but there is no scale effect. It is expected that the impact on net profit will weaken after the scale of production reaches a certain level. By business, the storage and charging business is still the main driving force. In the first quarter of 2024, the energy storage business achieved revenue of about 211 million yuan, +26% year over year; charging and switching services achieved revenue of 231 million yuan, +48% year over year; industrial supporting power supplies of 96 million yuan, +25% year over year; battery testing and chemical equipment was 56 million yuan, +26% year over year.
Charging piles: 2024 Domestic and overseas markets are making concerted efforts to achieve breakthroughs with major customers. From January to January 2024, the number of domestic public charging stations increased by 100,000 units, up 39.1% year on year, and is still growing at a relatively high rate.
For the domestic market in 2024, the company is committed to achieving full coverage of industry customers. Since the beginning of the year, the company has joined hands with CNPC to officially launch 14 charging stations in Chongqing; it has jointly built 7 socially operated charging stations with Chongqing Eastern Petroleum, and has joined forces to build a “Huan-Chongqing Line” charging greenway, etc. In addition, the company will actively promote the overseas business of charging piles. The product side will develop charging modules suitable for different scenarios in different countries. The market side aims to break through major customers in key countries or major customers in the industry as a key task to ensure the steady growth of the charging equipment business. We believe that, stimulated by the policies and needs of the new energy electric vehicle industry, the number of new charging stations built in China is expected to maintain a high growth rate, and the company is expected to continue to benefit.
Energy storage: 2024 plans to vigorously develop overseas large-scale storage and open a new chapter of overseas modular high-voltage energy storage. The company is in the first tier of domestic energy storage PCS companies. By the end of 2023, the company's cumulative installed capacity of energy storage worldwide had exceeded 8 GW, and its products covered scenarios such as source grid side, user side, and microgrid energy storage. In 2024, the company's overseas markets will continue to explore and strengthen the depth of cooperation in chemical commercial energy storage projects, and vigorously explore the overseas storage market to complete the product line business layout. Since the beginning of 2024, the company has successfully enabled the construction of energy storage in the North American power grid, helping the 114 Mw/228 MWh grid-side project in Texas, USA to be successfully connected to the grid, which will further consolidate Shenghong's position as a global leader in modular energy storage technology. We believe that in 2024, domestic and overseas storage will still be booming, supporting global energy storage demand to remain high. The company's vigorous development of overseas large storage is expected to help its energy storage business maintain a high level of growth.
Investment advice: As a leading enterprise in power quality equipment, the company has successfully transformed and strengthened the energy storage and charging pile business, comprehensively expanded in various aspects such as technology, products, and customers, and actively promoted the simultaneous expansion of overseas business.
Considering that the energy storage and charging pile industry continues to improve and the company's profitability continues to expand, we expect the company's revenue in 2024-2026 to be 37.64/49.71/6.156 billion yuan, up 41.98%/32.07%/23.85% year on year; net profit to mother is 5.41/7.26/ 919 million yuan, year-on-year growth rate is 34.31%/34.15%/26.56%, EPS is 1.75/2.35/2.97 yuan, respectively, corresponding PE is 18/13/10 times. Maintain an “Overweight” rating.
Risk warning: macroeconomic downside risk; increased industry competition risk; energy storage demand falls short of expected risk; overseas business expansion falls short of anticipated risk.