Core views

The company released its 2024 semi-annual report, and its performance maintained year-on-year growth, mainly due to steady domestic growth and smooth progress overseas. The company's photovoltaic inverters were delivered in batches to the Middle East market in the first half of the year, and are expected to be released in the future; the company's share in the Indian market also ranked high; energy storage received orders for PCS products from the US, and delivery is expected to begin in the second half of the year. Looking forward to the future, the company's photovoltaic and energy storage business is expected to continue to expand. Markets such as the Middle East and the US are expected to develop rapidly, and profitability can be maintained or improved as overseas share increases and R&D continues to iterate.

occurrences

The company released its 2024 semi-annual report. 2024H1 achieved revenue of 1.926 billion yuan, a year-on-year decrease of 11.53%; achieved a return to mother of 0.161 billion yuan, an increase of 18.90% year-on-year; and achieved deducted non-performance of 0.157 billion yuan, an increase of 21.71% year-on-year. Among them, the second quarter of 2024 achieved revenue of 1.215 billion, a year-on-year decrease of 21.98% and a month-on-month increase of 70.74%; achieved return to parent performance of 0.11 billion, an increase of 11.12% year-on-year and an increase of 114.52% month-on-month; achieved deducted non-performance of 0.11 billion, an increase of 13.42% year-on-year and a month-on-month increase of 134.62%.

Brief review

2024Q2 achieved year-over-year growth, in line with market expectations

2024H1's performance attributable to mother and non-performance increased by about 20% year over year. Among them, Q2 performance still achieved a year-on-year increase of 11% despite the year-on-year decline in revenue. In the first half of the year, gross margin increased by 5.62 pct year on year, and net margin increased by 2.24 pct year on year. The operating quality was good, in line with market expectations.

The photovoltaic business increased year-on-year, and overseas markets continued to break through

The company's 2024H1 photovoltaic inverter business obtained revenue of 1.383 billion yuan, up 6.20% year on year, mainly due to the increase in the company's overseas inverter business; gross margin was 22.46%, up 2.60 pct year on year. According to relevant statistics from S&P Global and Wood Mackenzie, in 2023, the company ranked fourth in global shipments of photovoltaic inverter products, and inverter shipments maintained the top ten global industry position for 11 consecutive years. Overseas market shipments have increased rapidly. The company's ground power plant inverters have completed the layout of major global photovoltaic market countries including the United States, Europe, the Middle East, India, and Southeast Asia, and distributed product certification in major European countries. Currently, overseas shipments are mainly in the Middle East and India. According to the company's official account, in the first half of the year, the company successfully supplied a 1.016GW high-efficiency centralized inverter booster to Saudi Arabia's AlkaHFAH solar power plant project, and large-scale shipments have already been made.

Energy storage maintains market leadership, and gross margin has increased dramatically

The company's 2024H1 energy storage business achieved revenue of 0.507 billion yuan, a year-on-year decrease of 37.96%, gross profit margin of 22.67%, and a year-on-year increase of 10.85pct. The decline in revenue was mainly due to the decline in the company's integrated business. The company focused on the PCS product business, and gross margin increased significantly. In overseas markets, the company's high-power energy storage PCS products have received multiple 100 MW project orders in the North American market, and delivery is expected to begin in Q3. In terms of products, the company recently unveiled a new generation of 400kW string energy storage converters at the RE+ exhibition site in the US. This product is specially designed for the US market and can be easily applied to various application scenarios represented by large-scale ground energy storage, leading the string converter to officially enter the 6.25MW era.

Investment recommendations and performance forecasts

The company is a leader in centralized photovoltaic inverters and energy storage PCS in China. On the basis of maintaining growth in the domestic market, the company has a high market share in the Middle East and India. The US market has already received energy storage PCS orders, and it is expected to achieve good results in the future, driven by overseas markets. The company's net profit due to mother in 2024, 2025, and 2026 is estimated to be 0.548, 0.783, and 1.049 billion yuan, respectively, with valuations of 23, 16, and 12 times, respectively.

Risk analysis

1) Demand side: The growth rate of installed domestic energy storage fell short of expectations, and the growth rate of new energy investment declined; overseas energy storage demand fell short of expectations, and overseas carbon neutrality progress was slowing down.

2) Supply side: The supply of power electronic devices such as IGBTs is tight, and the progress of localization falls short of expectations; prices and processing costs of raw materials such as copper, aluminum, and steel have risen.

3) Policy aspects: Support policies related to energy storage fell short of expectations; compensation standards for capacity electricity prices fell short of expectations; electricity spot market progress fell short of expectations; electricity peak and valley price differences fell short of expectations.

4) In terms of the international situation: international trade barriers have deepened, exports have been blocked; local production requirements have increased and costs have risen; international conflicts have led to rising shipping costs and extended delivery times.

5) Market side: Increased competition has led to lower gross profit margins and profitability of energy storage batteries, integrators, and PCS manufacturers than expected; the company's market competition strategy is wrong.