Incident: On August 30, 2024, the company released its 2024 semi-annual report. During the reporting period, the company achieved revenue of 1.584 billion yuan, or -53.41%; net profit to mother 0.103 billion yuan, -89.44%; net profit without return to mother 0.066 billion yuan, -93.18% YoY; 24Q2 achieved revenue of 0.899 billion yuan in a single quarter, +31.43% month-on-month; net profit to mother 0.069 billion yuan, -85.37% YoY, +103.31% YoY.

Europe's exodus has come to an end, and emerging markets continue to expand. As inverter inventories in the European market returned to normal levels, optical storage exploded in emerging markets such as Asia, Africa, and Latin America. 24H1 China's inverter exports showed a recovery trend. 24Q2's energy storage and grid connections achieved shipments of 0.0377 million units and 0.1222 million units respectively, +55.14% and +154.58% month-on-month respectively. Shipments increased significantly in a single quarter. The company actively carried out market development. In the first half of the year, it successfully cooperated with well-known international companies such as Panasonic Electric and Sharp Energy in the US and Japan markets to achieve product sales; in emerging markets, it successfully achieved product sales in regional markets such as Pakistan, Ukraine, and South Africa. In terms of production capacity, the company has completed the main construction of the second phase of the R&D and production project for 2 GWH energy storage batteries and 1 million photovoltaic inverters per year, providing a strong guarantee for global product delivery.

Leading product development and innovation to achieve full coverage of energy storage scenarios. 24H1 generated R&D expenses of 0.238 billion yuan, a year-on-year increase of 98.73%, accounting for 15.02% of the company's total revenue in the first half of the year. The company insists on product innovation and technology iteration to achieve comprehensive promotion of household storage, industrial and commercial storage, and ground power plants. In the first half of '24, the company launched household low-voltage single-phase energy storage inverters, low-voltage energy storage batteries, micro inverters, etc.; actively laid out industrial and commercial energy storage products, introduced AELIO and TRENE series industrial and commercial energy storage products to the market, and successfully achieved sales; it is developing products such as the X3 GRAND series for ground power plant application scenarios. The company continues to enrich product lines and product application scenarios, seize development opportunities in various market segments, and is expected to achieve long-term diversified growth in performance.

Investment suggestions: Energy storage in Europe is coming to an end. Emerging markets such as Asia, Africa and Latin America are developing rapidly, and the company's market development and product certification are smooth. Combined with the company's future development logic and performance expectations in each sector, the company is expected to achieve operating income of 4.033, 5.265, and 6.274 billion yuan in 2024-2026, and achieve net profit of 0.46, 0.715, and 0.914 billion yuan, with year-on-year increases of -56.8%, 55.3%, and 27.9%, respectively. 5.71 yuan, corresponding PE is 21.9X, 14.1X, 11.0X, respectively. Maintain a “buy” rating.

Risk warning: PV installations fall short of expectations; risk of fluctuating raw material costs; risk of overseas exchange; increased industry competition.