Brief performance review
On July 30, 2024, the company disclosed its semi-annual report. In the first half of the year, it achieved revenue of 1.43 billion yuan, an increase of 29.8% over the previous year, and realized net profit of 0.18 billion yuan to mother, an increase of 0.02% over the previous year. Among them, Q2 achieved revenue of 0.83 billion yuan, a year-on-year increase of 27.1%, and realized net profit to mother of 0.115 billion yuan, a year-on-year decrease of 3.1%.
Management analysis
The increase in domestic share is dragging down the gross profit margin of energy storage. Overseas shipments are expected to resume after interest rate cuts:
In the first half of the year, the company's energy storage business achieved revenue of 0.465 billion yuan, a year-on-year increase of 19.6%, a gross profit margin of 30.0%, a year-on-year decrease of 5.6 pcts, and a year-on-year decrease of 1.2 pcts compared to 2H23. We expect the decline in gross margin of the energy storage business to be mainly affected by the increase in the share of domestic revenue. The company's energy storage products are mainly medium- and high-power energy storage converters, which are mainly sold to domestic, European and American markets. In the first half of the year, due to high US interest rates and the growth rate of industrial and commercial energy storage installations fell short of expectations, the company's share of domestic low margin products increased. We believe that as the US market gradually enters a cycle of interest rate cuts in the second half of the year, demand in the European and American markets is expected to recover, and overseas revenue share will increase and gross margin may be repaired.
The charging pile business grew rapidly, and profitability declined slightly: in the first half of the year, the company's charging pile business achieved revenue of 0.556 billion yuan, a year-on-year increase of 44.8%, gross profit margin of 38.1%, a year-on-year decrease of 1.4 pct, but remained at a high level. New domestic charging infrastructure increased 14.2% year-on-year in the first half of 2024. Benefiting from excellent product quality and continuous development of overseas markets, the company's charging pile business growth rate was far ahead of the overall growth rate of the domestic industry.
The industrial power supply business continued to improve: in the first half of the year, the company's industrial power supply business achieved revenue of 0.251 billion yuan, a year-on-year increase of 17.4%, gross profit margin of 54.7%, and a year-on-year increase of 1.1 pct. The downstream industrial power supply business of the company mainly targets the high-end manufacturing industry and the photovoltaic industry. Benefiting from the rapid development of the domestic high-end equipment manufacturing industry and the steady growth in the scale of the photovoltaic industry, the demand for the company's power quality business and industrial power supply business continues to improve.
The battery testing business performed well: the battery testing business achieved revenue of 0.126 billion yuan, an increase of 35.5% year on year, gross profit margin of 49.0%, and a year-on-year increase of 3.2 pct. Benefiting from the continued boom in global battery manufacturing, the company's battery testing and chemical business achieved both quantitative and profit increases.
Profit Forecasts, Valuations, and Ratings
According to various business conditions reported by the company, we slightly lowered the company's 2024-2026 net profit forecast to 5.05 (-8%), 6.69 (-13%), and 8.98 (-11%), corresponding to the PE valuation 13, 9, and 7 times, maintaining the “buy” rating.
Risk warning
International trade policy risk; risk of exchange rate fluctuations; risk of increased competition.