Incident: The company released its 2024 quarterly report & 2023 annual report. The company achieved revenue of 600 million yuan in 2024Q1, up 33.8% year on year; revenue in 2023 was 2.65 billion yuan, up 76.4% year on year. The company achieved net profit of 70 million yuan in 2024Q1, an increase of 6.0% over the previous year; in 2023, it achieved net profit of 40 million yuan, an increase of 80.2% over the previous year. The low net interest rate in 24Q1 is mainly due to the fact that the Suzhou factory is experiencing a decline in production capacity, which is relatively high, and the first quarter as a whole was a low operating season. In April 2023, the company issued convertible bonds to raise capital for the construction of the “Suzhou 5GW annual production energy storage equipment construction project”. Starting this year, the Suzhou plant will launch production capacity one after another.
Energy storage: The share of revenue has increased significantly, and product reserves are deep to help global development. In 2023, the company's new energy conversion equipment business revenue was 901 million yuan, up 255.7% year on year, accounting for 34.3% of revenue, up 17.3pp from 2022. The company's PCS products are industry-leading. Its PWS1-125M is the world's first silicon carbide version industrial and commercial modular energy storage converter. The company's 30-1000kW full-power range energy storage converter products have all been certified by a third-party certification agency. The 50-250kW series modular energy storage converter became the world's first large-scale grid-connected inverter that also meets the corresponding UL, CPUC and HECO specifications. The company's solid products and technical reserves help the company actively explore and expand its energy storage business overseas.
Charging piles: The business has grown dramatically and is expected to fully benefit from the rapid development of the domestic, European and American charging pile industries. In 2023, the company's electric vehicle charging engine revenue was 850 million yuan, up 99.6% year on year, accounting for 32.1% of revenue, up 3.73 pp from 2022. The company's complete pile products include DC piles and AC piles, integrated and split piles, etc. Charging pile modules cover power levels such as 15kW, 20kW, 30kW, and 40kW. The company is forward-looking into the European charging pile market. It launched European standard charging piles in 2021, and also reached a strategic cooperation with British Petroleum. At the same time, the company also obtained American standard charging pile certification, gradually opening up the US market.
Expense ratio control is good, and the slight decline in gross margin is mainly due to increased competition in the energy storage business market. The company's expense ratio for the 2023 period was 24.3%, down 3.3 pp from 2022. Specifically, the sales expense ratio was 12.5%, down 1pp from 2022, the R&D expense ratio was 8.7%, down 1pp from 2022, and the management expense ratio was 3.6%, down a slight decrease of 0.4pp from 2022. In terms of gross margin, the company's gross margin was 41% in 2023, down 2pp from 2022. The decline in gross margin was mainly due to the decline in gross margin of the energy storage business and the gradual increase in revenue share, but the company's net margin level increased 0.33pp year-on-year compared to 2022, and achieved a net profit margin of 15.2% in 2023.
Profit forecasting and investment advice. EPS is expected to be 1.70 yuan, 2.47 yuan, and 3.20 yuan respectively in 2024-2026, corresponding to dynamic PE 16 times, 11 times, and 8 times, respectively. We believe that the company is a high-quality energy storage PC and charging pile company. It has strong competitiveness when going overseas. It is valued 24 times in 2024, corresponding to a target price of 40.8 yuan, which is the first time it covers a “buy” rating.
Risk warning: Overseas policy risks, the growth rate of the charging pile market falls short of expectations, market competition increases risks, production capacity starts up or falls short of expectations.