Description of the event

Aero Energy released its 2024 semi-annual report. 2024H1 achieved revenue of 1.584 billion yuan, a year-on-year decrease of 53.41%; of these, 2024Q2 achieved revenue of 0.103 billion yuan, a year-on-year decrease of 89.44%; among them, achieved revenue of 0.899 billion yuan, a year-on-year decrease of 36.96%, an increase of 31.43% month-on-month; and a net profit of 0.069 billion yuan, a year-on-year decrease of 85.37% and a month-on-month increase of 103.31%.

Incident comments

In terms of volume, demand in the European market recovered from a low base in the second half of last year, and the Asian, African, Latin American, and Japanese markets became a new growth point. The company's product sales are concentrated in developed countries such as Europe. It has strengthened its expansion into emerging markets this year, and has successfully achieved product sales in regional markets such as Pakistan, Ukraine, and South Africa. Q2 energy storage inverters, grid-connected inverters, and energy storage batteries are all expected to increase significantly from month to month.

In terms of profit, the company's Q2 gross profit margin was 36.9%, a slight decrease from the same period last year. The first reason is that the company's share of sales of grid-connected products with relatively low gross margins increased compared to last year, and second, the operating costs on the reporting side increased due to changes in accounting standards. In fact, the profitability of the company's products remains at a high level.

According to financial data, the company's expense ratio during the Q2 period was 30.4%, down 4.6 pct from month to month. The company increased investment in market expansion and product development (Q2 R&D expenses of 0.13 billion, a record high). Although the cost ratio declined, it was still high. The contract debt at the end of Q2 was 0.11 billion, a sharp increase of 86% over the previous month, indicating that the company had plenty of orders. Furthermore, the company experienced a credit impairment loss of 0.013 billion in Q2, which affected the release of profit on the reporting side.

Looking ahead, on the one hand, the company is expected to continue to expand its growth through new markets and products, including Pakistan, Ukraine, South Africa, etc., and new products include European commercial cabinets, household low voltage energy storage inverters, low voltage energy storage batteries, micro inverters, etc.; on the other hand, the European market, where the company has an advantage, will also be eliminated along with channel inventory, and demand will continue to pick up. In addition, the US and Japanese markets will also contribute more to the company's performance growth. Driven by more points, more blossoming, the company's future flexibility is more worth looking forward to.

We expect the company to achieve profits of 0.37 and 0.72 billion yuan in 2024-2025, corresponding to PE 27 and 14 times. Continue the “Buy” rating.

Risk warning

1. Deterioration of the competitive landscape;

2. PV installation falls short of expectations.