Incident: The company released its 2024 semi-annual report. In the first half of 2024, it achieved revenue of 3.148 billion, net profit to mother of 0.024 billion, -103.2% YoY, gross profit margin 22.8%, YoY -12.8pct; 24Q2 achieved revenue 2.022 billion, -3.5% YoY, +79.5% month-on-month, net profit to mother 0.005 billion, -98.8% YoY, +117.3% month-on-month, gross profit margin 20.1% , YoY -12.5pct, month-on-month -7.3pct. Performance review: The results for the first half of 2024 were under pressure. The main reason was that European inventories affected the company's shipments declined significantly. Combined with changes in product and market structure, the company's profitability declined. At the same time, the absolute value of the period cost increased year-on-year, resulting in a year-on-year increase of 10.1 pct.

The optical storage inverter business is under relative pressure. It is expected to gradually improve in the future as demand in the European market recovers and the company accelerates its layout in emerging markets. In the first half of 2024, the company sold 0.279 million inverters, down 34% year on year, of which 0.256 million grid-connected inverters accounted for about 92%; 0.023 million energy storage inverters accounted for about 8%. Overseas inverters sold 0.155 million units, accounting for about 56%; domestic inverters sold 0.123 million units, accounting for about 44%. Furthermore, the sales volume of energy storage batteries was about 131.86 MWh, a year-on-year decline of 45%. We judge that as European household storage inventories gradually return to a reasonable level and production schedules and new orders gradually increase, it is expected to show a trend of low and high levels throughout the year. Combined companies accelerate the layout of emerging markets, which is expected to contribute to incremental elasticity in the context of increasing demand in emerging markets.

Shipments of household distributed photovoltaic systems are growing rapidly, and expectations drive performance growth due to scale effects. Household systems were shipped 404 MW in the first half of 2024, close to the level of the full year of 2023 (513 MW). In the future, we determined that with the further increase in shipment volume, the scale of household system revenue is expected to increase, and the company's performance level will improve due to the scale effect. Profit forecast and investment rating: Considering that industry inventory recovery is relatively slow, we revised the company's performance. We expect the company to achieve net profit of 0.43/0.8/0.98 billion in 24-26 (previous forecast value of 0.71/0.89/1.07 billion), -49%/+84%/+23% year-on-year. The PE corresponding to the current stock price is 25/14/11 times, respectively, maintaining a “buy” rating.

Risk warning: demand falls short of expectations; market expansion falls short of expectations; increased competition; fluctuation in raw material prices, etc.