Key points of investment

We have been deeply involved in inverters for 20 years, and the brand has settled deeply, creating a leading supplier of light storage. 1) Deeply cultivate the optical storage circuit and continue to grow in performance: revenue and net profit of 72.25/9.44 billion yuan in '23, an increase of 80%/163%, of which PV inverters accounted for 38.3% and energy storage systems were 24.6%; the gross margin of photovoltaic inverters/energy storage systems was high, 37.93%/37.47% respectively in '23. 24H1 revenue/net profit to mother was 310/5 billion yuan, which continued to grow. 2) Brand+R&D+ channels create the company's core competitiveness: the company's brand value surpassed 100 billion dollars in 24 years and maintained 100% financability over the years; as of 24Q2, it had obtained a total of 4,906 patents; by the end of 24Q2, it had 20+ overseas branches, five major global service regions, 490+ service outlets and hundreds of channel partners, sold to 170+ countries and regions around the world.

With a two-tier pattern, product innovation+global brand+scale advantage, steady profit growth can be expected. Global demand for photovoltaics is growing steadily. We expect the world to add 490 GW of PV installations in 2024, an increase of 21%, and maintain a compound growth rate of 15-20% in the future; in the pattern of two major inverters, the company accounts for more than 30% of the world's share, and is steadily leading the way and enjoying the growth in market demand. The company has product innovation, global brand and scale advantages, and overseas+ distribution boosts gross profit. a) The company has products from centralized to string, from 2kw to 350kw, and continues to iterate and upgrade, forming strong brand and product advantages in the ground market, with strong profitability. b) The company's Europe/Latin America/Asia Pacific market share is 11%/18%/23% respectively. Overseas profits are stronger. European household use (40% +) > European and American ground (40%) > domestic and Indian Middle East (20-30%), and distributed and hybrid product shipments continue to develop, driving the company's grid-connected inverter profits to increase. We expect the company to ship 160-170GW inverters in 24 years, an increase of 30% +, and continue to grow over 25 years.

It has the two major advantages of technology+channel distance, creating a leading energy storage leader. From a global perspective, large storage capacity in China and the US continues to grow rapidly. Large reserves in emerging markets such as Europe, the Middle East, Chile, and Australia began to explode in 24. We expect global storage to maintain a growth rate of 30-50% over the next three years. The company has deep technology+channel advantages, a stable leading position, and a new growth pole in the non-US market: a) Comprehensive products and obvious technical advantages: the company extended from inverters to energy storage integration, long-term exposure to grid-side enterprises, strong application and support capabilities on the power grid side, innovatively proposed power grid stem cell technology, launched 2000V high-voltage optical storage systems, grid-based energy storage, three-electricity fusion, etc., establishing a leading advantage; b) Channel layout+brand strength: the company had 336 global distributors, second in '23, and the brand was strong. Using grid-connected reverse Converters expand energy storage, and naturally have channel advantages.

c) Deeply cultivate high-profit overseas markets and expand new growth poles: Overseas markets focus on product performance and after-sales service. The company continues to receive high-quality orders with technology+brand, and the US has reached the second highest market share. At the same time, orders from the Middle East, Europe and other markets have accelerated, and the non-US market has become a new growth pole. We expect the company to ship 25GWH+ in 24 years and expect 50% + growth in 25-26.

Profit forecast and investment rating: Considering the high gross profit of the company's inverters and energy storage, energy storage shipments will continue to increase in many places next year, and profitability will remain high. We will maintain the company's net profit to mother of 11/14/16.9 billion yuan in 2024-2026, compared to 16.75%/27.14%/20.45%. We gave the company 18xPE in 2025, corresponding to a target price of 122 yuan, maintaining a “buy” rating.

Risk warning: Competition is intensifying, and policies fall short of expectations.