Incident: The company released its 2024 semi-annual report. 2024H1 achieved revenue of 0.908 billion yuan, -15% year-on-year, net profit of 0.188 billion yuan, -46% year-on-year, net profit of 0.185 billion yuan, year-on-year net profit of 0.185 billion yuan, year-on-year -44%, gross margin of about 47.5%, 4.7pct; of these, 2024Q2 achieved revenue of 0.58 billion yuan, +19%/74% year-on-month, net profit to mother 0.12 billion yuan, year-on-month %/ +79%, net profit not attributable to mother was 0.119 billion yuan, -26%/+79% month-on-month, gross margin of about 46.6%, and +8.2/-2.5pct month-on-month. The performance was in line with expectations.

2024Q2 slight reverse shipments increased month-on-month, with steady growth throughout the year. The company achieved slight reverse shipments of 0.6142 million units in 2024H1, with a reduction of about 30%. We estimate that the price of a single unit was about 1,090 yuan, with gross margin of about 53%, an increase of 3-4 pcts over the previous year. By market, Europe accounted for about 60%, Latin America & North America each 10% +, and the remainder was domestic and Asian and African markets; of these, 2024Q2 shipped about 0.38 million units, an increase of 16%/67% in the same period. The gross margin was about 53%, basically flat from month to month. The increase in shipments was mainly due to the implementation of the 800W policy in Germany and interest rate cuts in Brazil driving up demand. 2024Q3 was affected by Europe's July-August vacation. Shipments may increase slightly month-on-month. Slight reverse shipments are expected to be 1.5-1.7 million units throughout the year, an increase of 20% +.

Domestic large reserves will double in 2024, and household savings+micro storage will explode in 2025. The company achieved energy storage system revenue of about 0.137 billion yuan in 2024H1, an increase of 60%, gross margin of about 17%, and net profit of about 1.19 million yuan, mainly due to project expenses in the early period. The profit margin is expected to increase. The volume of energy storage systems increased throughout the year, and revenue is expected to double to 0.5-0.6 billion yuan. At the same time, the company is gradually increasing its efforts to develop household storage and micro storage. 1) Household storage: the European market will gradually start this year, and the US will continue to expand and is expected to grow in volume in 2025; 2) Micro Storage: AcCouple micro storage products will be launched in August 2024, and it is expected to launch integrated micro storage products in 2025. The company is expected to ship several thousand units of household storage units in 2024. We expect corresponding revenue to be about 0.03-0.04 billion yuan. In 2025, household savings+micro savings are expected to grow tenfold. We expect revenue to reach 0.3-0.4 billion yuan, contributing to the increase in performance.

Rates increased during the period, and inventory increased slightly. The company's expenses for the 2024H1 period were 0.24 billion yuan, an increase of 100%. The rate for the period was 26.7%, an increase of 15 pcts, of which the 2024Q2 period cost was 0.135 billion yuan, the same increase of 441%/25%, and the period rate was 23.36%, +18/-9pct compared to the previous month; the net operating cash flow for 2024H1 was 0.16 billion yuan, +1218% year over year, of which 2024Q2 net operating cash flow was 0.083 billion yuan, same An increase of 7%; inventory at the end of 2024Q2 was 0.97 billion yuan, up 33% from the beginning of 2024, mainly due to increased inventory preparation in line with sales strategies. The contract debt at the end of 2024Q2 was 0.079 billion yuan, an increase of 63% over the beginning of 2024.

Profit forecast and investment rating: We maintain our previous profit forecast. We expect the company's net profit to be 0.68/1/1.39 billion yuan in 2024-2026, an increase of 32%/48%/39%. The corresponding PE is 22/15/11 times, maintaining the “buy” rating.

Risk warning: competition intensifies, policies fall short of expectations