Key points of investment

Performance was pressured by multiple factors. Net profit due to 2023 fell 38.92% year on year. In 2023, the company achieved operating income of 1.42 billion yuan, an increase of 6.11% year on year; net profit to mother was 220 million yuan, a decrease of 38.92% year on year. Affected by phased overcapacity and high inventories in the photovoltaic industry, the company's inverter sales were affected to a certain extent; at the same time, the company increased investment in R&D and market, and actively introduced R&D personnel and market developers. R&D expenses and market development expenses increased significantly. Coupled with factors such as equity incentives to confirm share payment costs and calculation of impairment preparations, the company's annual profit declined significantly year-on-year.

Continuing to increase investment in R&D, the performance of micro inverse and energy storage products led the industry in 2023. The company's R&D expenses reached 105 million yuan, an increase of 90.75% over the previous year. In terms of research and development, the company has further exploited its leading technical advantages in semiconductors and chips, and implemented research and development of module-level power electronics-related products. It has formed three major optical storage industry ecosystems with miniature inverters as the core: DIY microoptical storage, household small to medium optical storage, and industrial and large optical storage. Aiming at the European DIY small household photovoltaic scenario, the company launched a new EZ1 micro-inverse series product with an input current of up to 20A, which is suitable for high-power components of 182 and 210; in terms of industrial and commercial energy storage products, the company has mastered core technologies such as string inverter control technology and string energy storage integrated cabinet system integration technology; on this basis, it has developed Ocean200L and An400L system products to achieve coordinated control of various ocean subsystems such as batteries, PCS, cooling systems, and fire protection systems, etc. The characteristics of high reliability, high efficiency and friendliness.

With two-wheel drive in domestic and foreign markets, the industrial and commercial energy storage business achieved zero breakthroughs. In 2023, the company achieved sales volume of 842,000 microinverters, a year-on-year decrease of 9.91%, corresponding revenue of 941 million yuan, a year-on-year decrease of 11.61%; sales of 306 industrial and commercial energy storage equipment were achieved, corresponding to revenue of 165 million yuan. In recent years, the application market for the company's micro inverters is mainly overseas. Among them, North America and Europe are currently the two most important markets for micro inverters. They are mainly affected by factors such as the early development of distributed photovoltaic power generation markets in Europe, America, Australia and other countries and regions, as well as mandatory regulations on DC high voltage risk. On the premise of continuing to maintain the market advantages already formed in the European and American markets, the company stepped up its efforts to develop the domestic market, and achieved a zero breakthrough in the industrial and commercial energy storage business during the year. At the same time, it will focus on improving the development and delivery capacity of large-scale projects, promote domestic and international standard certification of energy storage products, help implement more projects, and drive the promotion and application of photovoltaic products in China. At present, the company has reserved more than 10 industrial and commercial user-side projects with a single unit of more than 50 MWh, with a cumulative installed capacity of not less than 500 MWh.

Profit forecasting and valuation

The profit forecast was lowered and the “gain” rating was maintained. The company is a leading global micro reverse enterprise. Micro reverse sales are expected to gradually pick up, and the industrial and commercial energy storage business will contribute additional volume. Considering that overseas demand for micro-inverse products fell short of expectations, we lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026. The net profit for 2024-2026 was 3.23, 4.19, and 529 million yuan respectively, with year-on-year growth rates of 47%, 30%, and 26%, respectively. Corresponding EPS was 2.88, 3.74, and 4.72 yuan respectively, corresponding to PE 25, 19, and 15 times, respectively. Maintain an “Overweight” rating.

Risk warning

Demand for PV installations fell short of expectations; the competitive landscape deteriorated; international trade frictions intensified.