Brief performance review

On August 30, 2024, the company disclosed its semi-annual report. The first half of the year achieved revenue of 3.15 billion yuan, a year-on-year decrease of 17.5%; net loss to mother was 0.024 billion yuan, a year-on-year decrease of 103.2%.

Among them, Q2 achieved revenue of 2.02 billion yuan, a year-on-year decrease of -3.5%; realized net profit to mother of 0.005 billion yuan, reversing losses month-on-month, and a year-on-year decrease of 98.8%.

Management analysis

Affected by European inventories, household storage shipments were under pressure: in the first half of the year, the company sold 0.2785 million inverters, a year-on-year decrease of 33.6%; among them, grid-connected inverters were 0.2559 million units, down 14.7% year on year, and 0.0226 million energy storage inverters, down 81.1% year on year; energy storage battery sales in the first half of the year were 132 MWh, down 45.1% year on year. Affected by the elimination of European household storage inventories, overseas demand has declined, and the company's high-margin energy storage inverters have declined.

Household distributed system sales increased dramatically, lowering the company's overall gross margin level: the company's domestic household distributed system sales volume in the first half of the year was about 404 MW, close to 513 MW sales for the full year of 2023. The gross margin of household systems is lower than that of other main products, 12.8% in 2023. We estimate that household system revenue in the first half of the year accounted for about 30%-40% of the company's overall revenue, which had a certain impact on the company's overall gross margin.

Due to the decline in revenue scale, the company's expense ratio increased by 6.87 pct year on year, and the company's sales/management/ R&D expenses increased by 8.14%/5.12%/8.42% in the first half of the year, respectively, up 2.38/1.68/2.81 pct year on year, mainly due to the year-on-year decline in revenue scale, increased industry competition, and the company's increased marketing investment and R&D expenses. Demand from overseas emerging markets was good in the first half of the year. The company increased R&D testing and certification efforts. Testing and certification costs increased 65% year-on-year in the first half of the year, which is expected to accelerate the launch of corresponding products to achieve penetration.

Multiple Resonance European household storage is expected to pick up, and performance flexibility may gradually be released in the second half of the year: as European inventories continue to be digested, prices of upstream components and batteries fall, and overseas interest rate cuts are implemented, the economy of household storage systems is expected to gradually pick up. Demand for European household optical storage systems is expected to return to a reasonable level in the second half of the year. The company has excellent channels and brand building in the European market, and is expected to fully benefit. It is expected that performance flexibility will gradually be released in the second half of the year.

Profit Forecasts, Valuations, and Ratings

According to the company's semi-annual report and our latest judgment on the industry, the 2024-2026 net profit forecast was adjusted to 0.45, 0.92, and 1.27 billion yuan, corresponding to PE of 26, 13, and 9 times, maintaining the “buy” rating.

Risk warning

Downstream demand falls short of expectations; industry competition intensifies; exchange rates fluctuate greatly.