Event: The company released its 2023 annual report and 2024 quarterly report. The company achieved revenue of 7.353 billion yuan in 2023, an increase of 56.10%; net profit to mother was 852 million yuan, an increase of 31.24%. Among them, 23Q4 single-quarter revenue was 1.702 billion yuan, -5.14% year on year; net profit to mother was 41 million yuan, or -110.89% year over year. In a single quarter of 24Q1, the company achieved revenue of 1,126 billion yuan, or -34.50% year-on-year; net profit to mother was -0.29 billion yuan, -108.57% year-on-year.

Household system revenue will increase significantly in 2023, and we look forward to an improvement in grid connectivity and overseas household storage inventory throughout the year.

In 2023, the company's grid-connected inverters achieved revenue of 2,861 billion yuan, with a gross profit margin of 29.43% (-0.46pct); energy storage inverters achieved revenue of 1,566 billion yuan, a decrease of 4.67%, and a gross profit margin of 55.83% (+11.33pct).

In 2023, the sales volume of inverters was about 686,300 units, of which about 532,200 grid-connected inverters were sold, accounting for about 77.54%; the sales volume of energy storage inverters was about 154,400 units, accounting for about 22.46%. The company's overseas inverter sales volume is about 443,600 units, accounting for about 64.64%; domestic inverter sales volume is about 242,700 units, accounting for about 35.36%.

In 2023, the company's energy storage batteries achieved revenue of 869 million yuan, an increase of 38.66%, and a gross profit margin of 24.96% (+7.18pct); household systems achieved revenue of 1,654 billion yuan, an increase of 688.92%, and a gross profit margin of 12.94% (+2.61 pct). In 2023, the company's energy storage battery sales volume is about 341.15 MWh, and domestic household distributed system sales volume is about 513.28 MW.

Rates increased during the 24Q1 single quarter, putting short-term pressure on profitability. Gross profit side: The company's gross margin in 2023 was -1.7 pct to 30.76%; 23Q4 gross profit margin was 45.73%, +10.88pct yoy, 14.54pct month-on-month; 24Q1 gross margin 27.47%, -11.58pct yoy, -18.26pct month-on-month. Rate side: The company's sales/management/R&D/finance rate in 2023 was 6.71%/3.92%/6.39%/-1.68%, -0.49pct/-0.25pct/-1pct/0.33pct year-on-year. Net interest rate: In 2023, the company's net interest rate was -1.73 pct to 11.78%; 23Q4 net interest rate was 23.64%, up 3.02 pcts, 14.81 pcts month on month; 24Q1 net interest rate -1.7%, -20.98 pcts year on year, -25.34 pcts month on month.

Profit forecasting and investment advice. Overseas inventory disturbances have put pressure on the company's revenue in the short term. As the overall inventory removal accelerates, we expect the company's subsequent performance to improve. Overall, we expect the company's net profit to be 7.20/10.05/1,322 billion yuan in 2024-2026, a year-on-year change of -15.5%/+39.6%/+31.4%, maintaining the “incremental” rating.

Risk warning: rising raw material prices, demand for photovoltaics and energy storage falling short of expectations, risk of policy changes.