Description of the event

Yuneng Technology released its 2024 semi-annual report. 2024H1 achieved revenue of 0.899 billion yuan, up 36.61% year on year; net profit to mother of 0.088 billion yuan, down 34.56% year on year; among them, 2024Q2 achieved revenue of 0.471 billion yuan, up 111.94% year on year, up 10.16% month on month; net profit to mother of 0.048 billion yuan, up 189.2% year on year, up 19.91% month on month.

Incident comments

The micro inverters and energy communicator business achieved revenue of 0.62 billion in the first half of the year, up 8% from the same period. Sales are expected to increase month-on-month in Q2. In particular, the European balcony photovoltaic market is growing well. The company's slight inverse gross margin is expected to remain relatively stable in the first half of the year. In terms of structure, the European market accounts for the highest share, followed by North America and Latin America. The products are mainly 1 to 2 and 1 to 4.

The commercial and commercial storage business achieved revenue of 0.18 billion in the first half of the year, achieving leapfrog year-on-year growth. Among them, Q2 is expected to increase slightly month-on-month.

The related subsidiary Jiangsu Lingzhu (55% shareholding ratio) achieved a profit of 0.026 billion in the first half of the year. In addition, the switchgear and household storage business also contributed a small amount of revenue and profit.

According to financial data, the company's inventory at the end of Q2 reached 1.52 billion, an increase of 8.6% over the previous month, or due to the expansion of the scale of the industrial and commercial storage business. The slight reverse inventory is expected to be digested. The expense ratio was 19.2% during the Q2 period, which was basically flat from month to month, and is expected to decline after the subsequent expansion of revenue scale. Q2 The company also accrued an asset impairment loss of 0.014 billion (mainly inventory depreciation) and a credit impairment loss of 0.007 billion. As the company's inventory is digested, this portion of the impairment calculation is expected to be recovered.

Looking ahead, as demand in the downstream market continues to pick up, the company's Q3 and Q4 sales growth rate is expected to be higher than in Q2.

As the scale grows, the company's inventory continues to be digested, and inventory is expected to drop to less than half a year by the end of the year. The company launched optical storage hybrid micro reverse EZHI in the first half of the year to cater to the DIY solar low light storage market. The subsequent sales scale is expected to grow rapidly, leading to increased performance.

The commercial and commercial storage business is developing at an accelerated pace, and there are plenty of orders in hand.

We expect the company to achieve net profit of 0.27 and 0.49 billion yuan respectively in 2024-2025, corresponding to PE 25 and 14 times.

Maintain a “buy” rating.

Risk warning

1. Deterioration of the competitive landscape;

2. PV installation falls short of expectations.