Incident: The company released its 2024 semi-annual report. 2024H1 revenue was 0.899 billion yuan, up 37%; net profit to mother was 0.088 billion yuan, -35% year over year; gross profit margin 35.6%, -4.1 pct year on year. Among them, 2024Q2 revenue was 0.47 billion yuan, +112%/+10%; net profit to mother was 0.048 billion yuan, +189%/20% month-on-month, gross profit margin 35.4%, and -5.7/-0.5pct month-on-month, mainly due to the increase in the share of industrial and commercial savings at the end of the year combined with the adjustment of warranty expenses to operating costs. The performance was in line with expectations.

Slight reverse shipments increased slightly month-on-month, and shipments are expected to increase 20% + for the whole year. 2024H1's micro reverse and energy communicator business achieved revenue of 0.62 billion yuan. The company is expected to ship about 0.5 million units, an increase of 10% +, of which 2024Q2 achieved revenue of 0.34 billion yuan and micro reverse shipments of about 0.26 million units, a slight increase from month to month, gross margin of about 39%, and a decrease of 1-2 pct, mainly due to the cost impact of warranty costs; by region, the company accounts for about 60% + North America accounts for about 30%, and Latin America is less than 10%. By type, the company still has one Mainly delayed, accounting for 70% +. Looking ahead to 2024H2, slight reverse shipments are expected to increase quarterly. Throughout the year, we expect slight reverse shipments to be 1-1.1 million units, an increase of 20% +.

Industrial and commercial reserves are gradually being increased and are expected to double in 2024. The company's 2024H1 industrial and commercial reserve achieved revenue of 0.178 billion yuan, which has surpassed last year's annual revenue. Among them, the 2024Q2 industrial and commercial savings revenue was about 0.09 billion yuan, an increase of about 10%, and gross margin was about 15%, which remained stable. It is expected that 2024H2 will be delivered centrally for industrial and commercial storage projects, and the company's industrial and commercial reserves are expected to double throughout the year.

Shutoffs increased month-on-month, and gross margins continued to be impressive. 2024H1's shutdown revenue was 0.077 billion yuan, shipping 0.43 million units, and gross margin was about 41%, of which 0.255 million units were shipped in 2024Q2, an increase of 50%, mainly due to strong demand in the US market. The gross margin was about 72%, an increase of 2 pct, mainly due to a slight increase in sales price.

Rates declined during the period, and inventories were gradually digested. The 2024H1 company's expenses for the period were 0.17 billion yuan, up 42%; the cost rate for the period was 19.3%, up 0.8 pct; the cost during the 2024Q2 period was 0.09 billion yuan, +22%/10% compared to the same period, the cost ratio was 19.25%, -14/-0.1 pct; the final inventory of 2024Q2 was 1.52 billion yuan, down 3% from the beginning of 2024, and the contract debt at the end of 2024Q2 was 0.033 billion yuan, up from the beginning of '24 88%; 2024Q2 net cash flow from operating activities was $0.11 billion, up 135% from the same period.

Profit forecast and investment rating: Considering the slight slowdown in the company's micro-reverse shipment growth rate, we slightly lowered our previous profit forecast. We expect net profit to be 0.25/0.34/0.46 billion yuan (previous value was 0.3/0.41/0.51 billion yuan) in 2024-2026, +15%/+35%, corresponding PE is 27/20/15 times. Considering the gradual contribution of the company's energy storage to performance growth, micro-reverse shipments gradually increased, maintaining the “gain” rating.

Risk warning: competition intensifies, policies fall short of expectations