Core views:
A well-known manufacturer of household optical storage, deeply involved in the European market. The company's main products include photovoltaic energy storage batteries, energy storage inverters, grid-connected inverters, accessories, etc. In 2023, we achieved revenue of 4.473 billion yuan, a year-on-year decrease of 3.01%; net profit to mother was 1,065 billion yuan, a decrease of 6.12% year-on-year. Europe is the company's largest sales market. In 2023, the European revenue for grid-connected inverters/energy storage inverters/energy storage batteries was 5.13/9.77/21.31 billion yuan, with a gross profit margin of 39.52%/52.94%/34.54%.
The new products meet the needs of industrial and commercial savings, and emerging markets are expected to bring business growth. According to data from Chaoden Think Tank, Europe added 9.5 GWh of household storage capacity in 2023, an increase of 60% over the previous year, accounting for 59.01% of the global share. According to IESE data, Germany added 0.169 GWh of industrial and commercial storage capacity in 2023, an increase of 60.8% year-on-year, with potential for market growth. The company has developed 50kW+ high-power energy storage inverters and 100kWh+ high-capacity energy storage batteries suitable for industrial and commercial energy storage, and have been introduced to the market one after another. The company develops cost-effective split low voltage energy storage battery systems, which will be used in emerging markets such as South Africa and Pakistan. According to InfoLink data, the average price of 100Ah lithium iron phosphate energy storage cells including tax was 0.395 yuan/Wh, a year-on-year decrease of 4.8%, and there is plenty of room for future price reductions for energy storage batteries.
The elimination of inverter inventories is nearing its end, and brand recognition+channel potential continues to strengthen. In April 2024, China exported 295 million US dollars of inverters to Europe, an increase of 23.07% over the previous month. According to BNEF data, European household photovoltaic installations are expected to be 23 GW in 2024, an increase of 6.2% over the previous year.
With the entry into force of the European Building Energy Efficiency Directive to drive the adoption of rooftop photovoltaics, the company invested in the development of microinverters to meet household needs. The company has been awarded EuPD's top brand year after year, and is highly recognized in the European market. According to ENF data, the company has 342 dealers, which is among the highest in the industry.
Profit forecasting and investment advice. The company's EPS for 24-26 is estimated to be 3.81/5.45/5.76 yuan/share, respectively. Considering inventory removal, new product iteration, and the decline in energy storage cell prices, it is expected that demand for optical storage will be further released. Referring to comparable company valuations, we think it is appropriate to give the company a 24-year 18-fold PE valuation, corresponding to a reasonable value of 68.64 yuan/share, giving a “buy” rating.
Risk warning. Demand in Europe fell short of expectations; raw material prices fluctuated; market competition intensified.