Key points of investment
Multiple factors led to a decline in performance growth. The profit side initially improved in the first quarter. In 2023, the company achieved operating income of 6.101 billion yuan, an increase of 3.59%; realized net profit to mother of 779 million yuan, a year-on-year decrease of 26.46%, a gross profit margin of 32.38%, a year-on-year decrease of 1.14 pcts, achieving a net profit margin of 12.77% and a year-on-year decrease of 5.23 pcts. With 2024Q1, the company achieved operating income of 1,397 billion yuan, a year-on-year decrease of 15.56%, a year-on-month decrease of 4.29%, and realized net profit of 20 million yuan, a year-on-year decrease of 93.74%, a year-on-month decrease of 27.16%; achieved a gross profit margin of 24.24%, an increase of 2.75pct month-on-month, a net profit margin of 1.45% and a decrease of 0.46 pct month-on-month. Affected by the decline in new demand from overseas customers due to inventory removal, export sales revenue declined.
Overseas warehousing cycle+domestic product price reduction. In 2023, the inverter business achieved phased pressure. In 2023, the company's grid-connected inverters achieved revenue of 4,064 billion yuan, a year-on-year increase of 1.53%, achieving a gross profit margin of 21.63%, a year-on-year decrease of 5.80pct; the energy storage inverter business achieved operating income of 439 million yuan, a year-on-year decrease of 58.91%, achieving a gross profit margin of 37.08% and a year-on-year increase of 2.75 pcts. In 2023, the total sales volume of the company's inverters reached 746,700 units, a year-on-year decrease of 20.76%. Affected by overseas customers entering the storage cycle and price reductions for domestic products, the company's inverter business was under phased pressure.
The scale of distributed power plants continued to expand, and the household business expanded rapidly. In 2023, the company's new energy power production business achieved revenue of 293 million yuan, a year-on-year increase of 117.06%, achieving a gross profit margin of 60.03%, a year-on-year decrease of 5.37pcts; the household photovoltaic power generation system business achieved operating income of 1,194 billion yuan, an increase of 106.19% year-on-year, achieving a gross profit margin of 59.90%, a year-on-year decrease of 5.57 pcts. By the end of 2023, the company's distributed photovoltaic power plants had a cumulative installed capacity of 1186.71 MW connected to the grid.
New production capacity was implemented in an orderly manner, and the advantages of large-scale production were enhanced
As of December 31, 2023, the company's main business photovoltaic inverters achieved production capacity of 770,000 units/year. In 2024, the company plans to add 1.75 million units/year to the inverter business to gradually achieve large-scale production and enhance the company's core competitiveness. In the future, the company will thoroughly study the market characteristics of each country and provide personalized products and services in a targeted manner.
Profit forecasting and valuation
The profit forecast was lowered and the “buy” rating was maintained. The company is a leading domestic producer of photovoltaic inverters, and its performance is under pressure in the short term due to overseas warehousing cycles and price reductions for domestic products. We lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026. We expect the company's net profit to be 9.66, 12.01, and 1,358 million yuan respectively for 2024-2026, corresponding EPS of 2.41, 3.00, and 3.39 yuan, respectively, and PE 25, 20, and 18 times, respectively.
Risk warning: industry competition risk, cyclical fluctuations in the photovoltaic industry chain, declining gross margin