occurrences

The company publishes an annual report for 2023 and a quarterly report for the first quarter of 2024. In 2023, the company achieved operating income of 1,420 million yuan, a year-on-year increase of 6.11%; realized net profit of 220 million yuan, a year-on-year decrease of 38.92%; realized net profit after deduction of 171 million yuan, a year-on-year decrease of 49.62%. In 2024Q1, the company achieved operating income of 428 million yuan, a year-on-year decrease of 1.83%; realized net profit of 40 million yuan to mother, a year-on-year decrease of 66.06 percent.

Comment:

Affected by the industry's high inventory, sales declined slightly. Now that “photovoltaic+energy storage” has become the standard for the new energy industry, the company has fully deployed “distributed photovoltaic+energy storage” full-scene optical storage solutions with “micro inverse” as the core, including DIY micro-optical storage, household optical storage, and industrial and commercial optical storage.

Throughout 2023, the company achieved sales volume of 842,000 microinverters, a year-on-year decrease of 9.91%, and achieved revenue of 941 million yuan, a year-on-year decrease of 11.61%. The sales volume of intelligent control switches was 1.036,500 units, up 7.39% year on year, and achieved revenue of 161 million yuan, up 13.12% year on year.

The sales volume of energy communicators was 137,000 units, up 20.50% year on year, achieving revenue of 108 million yuan, an increase of 2.48% year on year.

Domestic industrial and commercial energy storage contributed to new growth, and revenue continued to reach record highs. Industrial and commercial energy storage products in the domestic market have achieved zero breakthroughs, becoming a new growth point for the company, and the company's revenue level has remained steady and rising. At present, more than 10 industrial and commercial user-side projects with a single unit of more than 50 MWh have been reserved, and the cumulative installed capacity is not less than 500 MWh. In 2023, the company sold 3.06 million units of industrial and commercial energy storage equipment, achieving revenue of 165 million yuan.

Gather self-propelled optical storage projects to pursue third growth and actively enter the power plant operation circuit. In line with the development of the photovoltaic and energy storage industry and the company's future strategy, the company has strengthened its investment in self-propelled optical storage projects to achieve the company's third growth curve. At the same time, investment and construction of two new fund-raising projects for photovoltaic power plants and energy storage power plants was initiated. Through the construction of new power plant projects, the development opportunities of the photovoltaic and energy storage industry were seized and entered into the power plant operation circuit to meet the market needs of downstream users, which is expected to have a positive impact on the company's long-term development.

R&D expenses have been actively increased, and cost control has become stricter. Based on medium- to long-term strategic planning considerations, the company increased investment in R&D and market, and actively introduced R&D personnel and market developers. The company's R&D expenditure rate in 2023 was 7.37%, an increase of 3.27 pcts over the previous year. The company further strengthened cost control. The cost rate during 2024Q1 was 19.37%. Among them, management/sales/R&D expenses rates were 3.30%, 8.86%, and 6.07%, respectively, with month-on-month changes of +0.52 pcts, -6.43 pcts, and +0.71 pcts, respectively.

Profit forecast and investment rating: We expect the company's revenue for 2024-2026 to be 1,871 billion yuan, 25.41 billion yuan, and 3.471 billion yuan, respectively, up 31.7%, 35.8%, and 36.6% year-on-year; net profit to mother is 2.90, 4.29, and 611 million yuan, respectively, up 31.5%, 48.1%, and 42.5% year-on-year. The current stock price corresponding to 2024-2026 PE is 28.82, 19.46, and 13.65 times, respectively, maintaining a “buy” rating.

Risk factors: risk of inverter demand falling short of expectations; risk of raw material price increase; macroeconomic environment risk, international trade policy risk, etc.