Performance summary: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 6.10 billion yuan, +3.6% year on year; net profit to mother of 780 million yuan, -26.5% year on year; deducted non-net profit of 790 million yuan, -24.9% year on year. In the first quarter of '24, the company achieved revenue of 1.4 billion yuan, -15.6% year on year; net profit to mother of 0.2 billion yuan, -93.7% year on year; deducted non-net profit of 0.1 billion yuan, -95.6% year on year.
Affected by European inventories in '23, inverter sales declined year-on-year; gross margin declined from 23Q4 to 24Q1.
The company's sales volume of grid-connected plus energy storage inverters in '23 was about 740,000 units, down 20.7% year on year, mainly affected by high inverter inventories in Europe and declining growth in household storage demand. Revenue from grid-connected inverters was 4.06 billion yuan, up 1.5% year on year; revenue from energy storage inverters was 410 million yuan, down 58.9% year on year. The comprehensive gross margin of the 23Q4/24Q1 company was 21.5%/24.2% respectively, down from 30% + gross margin in the previous period. The main reason was that inverter prices in overseas Asia, Africa, and Latin America declined, and the 24Q1 overseas low margin regions and domestic sales accounted for a relatively high share.
On the other hand, material costs are higher, and higher material inventory is used in the previous period, which affects the overall gross profit margin.
Overseas markets are gradually recovering, and shipments and profits are expected to recover sequentially in the second quarter. As demand in the overseas grid-connected inverter market recovers, the company's inverter shipments are expected to reach more than 300,000 units in the second quarter, and overseas shipments are expected to reach more than 200,000 units. The overseas market trend is clearly improving. On the other hand, the company's raw material tender prices declined at the end of the first quarter, raw material costs will drop in the second quarter, and gross margin is expected to pick up in Q2.
Household photovoltaic power generation systems and new energy power businesses have maintained rapid growth. In '23, the company's household photovoltaic power generation system business revenue was 1.19 billion yuan, up 106.2% year on year, and gross margin was 60%; new energy power generation business revenue was 290 million yuan, up 117.1% year on year, adding 1.5 GW of operating household photovoltaic power generation system capacity throughout the year.
During the reporting period, the company sold about 5 MW of power plants, and by the end of 23, the distributed power plants were connected to the grid on a scale of about 1.2 GW.
Profit forecast and investment advice: As a leader in string inverters, shipments are expected to reach an inflection point with the end of household storage inverters in Europe. We expect a net profit CAGR of 29.87% over the next three years, maintaining a “holding” rating.
Risk warning: risk of global PV installations falling short of expectations; risk of overseas inventory removal falling short of expectations; risk of raw material price fluctuations and declining company profitability; risk of exchange rate fluctuations.