H1 revenue increased year over year and profitability declined year over year
The company's H1 revenue in '24 was 1.431 billion yuan, +29.84% year on year, net profit to mother was 0.181 billion yuan, +0.02% year over year, gross margin/net profit margin 39.57%/12.53% year on year, and -1.96/-3.94 pct year on year, mainly due to a decline in gross margin and increased expenses in the energy storage business. Considering the new depreciation and increased R&D and sales expenses of the Suzhou factory, we lowered the company's 24-26 net profit forecast to 0.49/0.65/0.86 billion yuan (previous value 0.54/0.71/0.9 billion yuan), referring to the average PE 18 times the consistent expectations of comparable companies. Considering that the company has technology accumulation and channel advantages and will continue to benefit from the development of the charging and storage industry, we gave the company a 24-year target PE 22 times, with a target price of 34.76 yuan (previous value) 39.79 yuan), maintaining a “buy” rating.
Revenue increased year-on-year, and H1 gross margin declined slightly year-on-year
The company achieved revenue of 0.832 billion yuan in Q2, +27.11% YoY, and net profit to mother 0.115 billion yuan, or -3.12% YoY. In terms of profit indicators, the company achieved gross margin/net profit margin of 39.57%/12.53% in H1 in '24, a year-on-year change of -1.96/-3.94pct, mainly due to the decline in gross margin of new energy power conversion equipment. In 2014, the overall H1 sales/management/ financial/ R&D expense ratios were 25.29%/12.39%/4.11%/-0.02%/8.81%, respectively. The year-on-year change was +1.46/+0.01/+0.24/0.99/+0.23pct. The increase in the financial expense ratio was mainly due to the increase in housing depreciation due to the increase in housing depreciation due to the operation of Suzhou Industrial Park.
Global demand for charging piles has increased, and the company's fast charging products have been launched one after another
The company's revenue from H1 charging and switching services in '24 was 0.556 billion yuan, +44.83% year-on-year, with a gross profit margin of 38.07%, or -1.39pct year-on-year. According to data from the China Charging Alliance, as of June '24, China had accumulated 3.122 million public charging stations, an average monthly increase of 0.081 million over the past year. As the number of new energy vehicles increases, the contradiction between public charging supply and demand becomes prominent. Local governments have introduced charging pile construction policies, and domestic charging pile construction is expected to speed up. The global long-term electrification target for passenger cars and commercial vehicles is clear. According to PricewaterhouseCoopers estimates, demand for charging stations in Europe and China will exceed 0.15 billion by 2035. The company's 400A Mini supercharger has been launched at several sites, and it is expected to seize the fast charging market with its technical advantages.
Energy storage at home and abroad is accelerating, and the PCS competition pattern is relatively stable
The company's energy storage business maintained a high growth rate. In 24, H1 achieved revenue of 0.465 billion yuan, +19.59% year over year; gross profit margin was 30.01%, -3.12 pct year on year. It is estimated that this is mainly due to the increase in the price of upstream raw materials. According to CNESA, the company ranked fourth in terms of energy storage PCS supply scale in China/the world in '23, and the competitive landscape and profitability are relatively stable. We believe that domestic energy storage will remain booming. Neutrally, energy storage is expected to be installed at 72.6 GWh, or +55.8% compared to the same period last year. At the same time, Europe and the US have entered a cycle of interest rate cuts, interest rates have been lowered to improve the profitability of energy storage projects, and the company is expected to continue to benefit from light storage in emerging markets.
Risk warning: Competition in the industry is intensifying, demand for energy storage and charging piles falls short of expectations, and project progress is lagging behind.