Incident: On September 23, 2024, the company announced the 2024 restricted stock incentive plan (draft). The number of restricted shares to be awarded is 0.069 billion shares, accounting for approximately 1.88% of the company's total share capital of 3.69 billion shares on the day the draft incentive plan was announced. A total of 745 people were awarded incentives for the first time under this incentive plan, and the initial award price was 5.56 yuan/share.

Equity incentives target steady growth in performance, demonstrating the company's confidence in continued growth. This incentive plan is based on the company's arithmetic average value (1.517 billion yuan) of deducted non-net profit for 2024/2025/2026. The target values for the 2024/2025/2026 deducted non-net profit growth rate were 81%/200%/239%, respectively, and the corresponding deducted non-net profit was 2.75/4.55/ 5.14 billion yuan; the trigger values were 45%/140%/171%, respectively, and the corresponding deducted non-net profit was 2.2/3.64/4.11 billion, respectively. This equity incentive corresponds to a steady increase in target performance, demonstrating the company's confidence in continued growth.

The balance between volume and price is strengthened by overseas channels, and component profit margins are reversed first. In 2024, H1's component shipments were 14.5 GW, achieving revenue of 15.5 billion yuan and corresponding gross margin of 16.5%. The company makes a comprehensive balance between price and shipment volume, actively reduces shipments in loss-making regions, prioritizes profit, relies on its overseas channels and production capacity advantages to increase the share of shipments in high-profit markets such as the US, and reverses profit margins first under the prevailing loss situation in the industry. In the third quarter of 2024, the company expects to ship 9.0-9.5GW of components. As prices of silicon materials, components, etc. gradually stabilize and the effects of inventory impairment weaken, profits are expected to pick up further.

The energy storage business has entered a harvest period, and there are plenty of orders in hand. In 2024, H1's energy storage shipments were 2.6 GWh, achieving revenue of 4.08 billion yuan, and a corresponding gross margin of 23.3%. Delivery of the company's large reserves of early energy storage projects and signed energy storage contract orders began this year. It is expected that the third quarter's energy storage shipment volume will be 1.4-1.7 GWh, and the annual shipment volume will be 6.5-7.0 GWh. As of the end of H1 2024, the company had an order reserve of about 66 GWH of energy storage systems, and the amount of the signed contract in hand was 2.6 billion US dollars. As the company's second growth curve, energy storage has entered the harvest period after a long period of hard work and accumulation, and future growth can be expected.

Investment advice: The company insists on implementing diverse global brand strategies, facing increasingly complex global political risks and industry overcapacity situations, firmly establishing global channels and brand advantages, and taking the lead in getting out of the bottom of the industry cycle. We maintain the company's profit forecast for 2024-2026. We expect the company's net profit to be 3.653/4.805/6.222 billion yuan in 2024-2026, maintaining a “buy” rating.

Risk warning: PV installed demand falls short of expectations; overseas market expansion falls short of expectations; overseas policy risks.