The scale of household photovoltaics continues to expand, maintaining the “gain” rating

24H1 achieved revenue of 28.988 billion yuan, +4.08% year-on-year, net profit to mother of 1.922 billion yuan, +0.97% year-on-year, and net profit of 1.909 billion yuan after deducting non-attributable net profit of 1.909 billion yuan, or +3.61% year-on-year. Under the background of the “county-wide promotion” policy and the price reduction of photovoltaic products, we believe that the company's distributed business is expected to usher in rapid growth. We maintain our profit forecast. We expect the company's net profit to be 4.554/5.505/6.812 billion yuan for 24-26, respectively. Based on the segmented valuation method, the average PE values were 14.6 and 13.5, respectively, according to the 24-year Wind of the comparable low-voltage appliance and photovoltaic companies. Considering that the expected growth rate of the company's low-voltage appliances and photovoltaic business was lower than that of the corresponding comparable company, the company's two businesses were given 10.5 times PE in 24 years and 10 times PE (EPS 1.15/0.97, respectively), corresponding to a target price of 21.77 yuan, maintaining a “gain” rating.

Q2 Profit increased year over year, and gross margin improved markedly

The company achieved revenue of 13.071 billion yuan in 24Q2, +7.94/ -17.88%, net profit to mother of 0.841 billion yuan, +19.85/ -22.13% month-on-month, net profit of 0.877 billion yuan after deducting non-return to mother, +15.94/ -15.04% year on year. Profit growth was good year on year. The month-on-month decline was mainly due to seasonal fluctuations. Q2 The company's gross margin was 28.27%, +4.63/+5.33pct; the net profit margin was 8.93%, and the month-on-month +0.91/0.32pct. The increase in gross margin was mainly due to the improvement of the PV power plant business asset structure and the improvement of operational efficiency. The company's 24Q2 overall/ sales/ management/ R&D/ finance ratio was 14.85/5.12/4.49/2.33/ 2.92%, respectively, +1.82/0.52/0.35/0.07/0.87pct. The overall rate was relatively stable.

Domestic and overseas household photovoltaic businesses are developing well, and the emerging market layout in the energy storage sector is beginning to bear fruit. 24H1's PV business revenue was 17.379 billion yuan, an increase of 5.30%, a gross profit margin of 22.41%, and an increase of 4.14 pcts. 24H1 added more than 6 GW of installed capacity and sold about 3 GW of power plants. As of the first half of the year, the company's photovoltaic power plant operating scale was 19.70 GW, +45.39% year over year. Of these, household PV was 17.38 GW, +55.37% year over year, and the scale of household photovoltaics continued to expand rapidly. The company went overseas into household photovoltaics and launched the PVSTAR self-developed software platform of the overseas brand to provide users around the world with a full range of solutions for optical storage and heating. In the field of energy storage, the company's stock market in North America and South Korea increased steadily in the first half of the year, achieved breakthroughs in the European market, and the layout of channels in Latin America/Pakistan/Brazil/Ukraine began to show results.

Low-voltage electrical business grew steadily, and overseas channel layout opened up

24H1's low-voltage electrical business developed steadily, achieving revenue of 11.487 billion yuan, an increase of 1.70%.

The gross profit ratio was 29.41%, an increase of 2.28 pct, mainly due to an increase in the share of overseas high-margin businesses. The company promoted a global regional localization strategy and global layout, further increased its market penetration rate in Saudi Arabia, Mexico and other countries, and expanded its layout in Peru, Colombia, Italy and Ghana, and achieved steady growth in overseas business. We anticipate that the recovery in downstream demand is expected to drive steady growth in the company's low-voltage appliance business.

Risk warning: Industry competition intensifies; raw material prices fluctuate.