Key points of investment:
Affected by the channel inventory backlog, the company's 24H1 performance is under pressure. The company mainly provides overseas customers with energy storage batteries, energy storage inverters and grid-connected inverters, which are mainly used in distributed photovoltaic energy storage and photovoltaic grid-connected fields. Affected by intense competition in the industry and channel inventory backlog, the company 24H1 achieved revenue of 1.584 billion yuan, a year-on-year ratio of -53.40%, a net profit of 0.103 billion yuan, or -89.44% year-on-year, after deducting non-return net profit of 65.7627 million yuan, or -93.18% year-on-year. 24H1's comprehensive gross profit margin was 38.26%, -2.47pct year-on-year.
Emerging markets gradually broke through, and 24Q2 performance improved markedly from month to month. The main sales areas of the company's products are concentrated in developed countries such as Europe, including Germany, the Czech Republic, Italy, the United Kingdom and Spain. The company actively expanded emerging markets while consolidating its original advantageous regions. In the first half of 2024, the United States and Japan cooperated smoothly with well-known international companies such as Panasonic Electric and Sharp Energy to achieve product sales and achieve product sales in emerging markets such as Pakistan, Ukraine, and South Africa. Demand from emerging markets increased rapidly in the second quarter. In 24Q2, the company achieved revenue of 0.899 billion yuan, +31.43% month-on-month, net profit to mother of 69.0461 million yuan, -85.37%, and +103.31% month-on-month. 24Q2 performance improved significantly.
Continue to strengthen R&D and enrich the product matrix. The company continues to pay attention to research and development of new technologies and products, and is optimistic about the industrial and commercial energy storage market. It launched a variety of industrial and commercial energy storage products in the first half of 2024, and successfully achieved sales, including AELIO series and TRENE series products, which cover 50-100kW, can provide 100-215 degree electric energy storage support, and support the parallel expansion and operation of 10 systems. The company's industrial and commercial energy storage products use full-stack self-research. The core modules PCS, BMS, and EMS were all completed through independent research and development. In addition, the company has also launched household low-voltage single-phase energy storage inverters, low-voltage energy storage batteries, micro inverters, etc., and is developing the X3-GRAND series for terrestrial power plants.
Actively lay out production capacity to enhance large-scale effects. The company increased the degree of production automation and overall production efficiency through fund-raising projects to expand production of energy storage batteries and energy storage inverters. In addition, the company has completed the main construction of phase 2 GWh of energy storage batteries and 1 million photovoltaic inverters per year, providing a guarantee for product delivery.
Profit forecasting and valuation. We expect the company's net profit to be 0.393 billion yuan, 0.584 billion yuan, and 0.851 billion yuan respectively in 2024-2026. With the elimination of European household storage inventories, the recovery of downstream demand, and the rise in demand in emerging markets, we expect the company's performance and profitability to gradually recover. Referring to the valuation situation of comparable companies, we gave the company 28-30 times PE in 2024, with a corresponding reasonable value range of 68.82-73.73 yuan. For the first time, coverage gave it a “superior to the market” rating.
Risk warning. Inventory removal in Europe fell short of expectations; downstream customer order demand fell short of expectations; market competition intensified.
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