Outstanding performance, increasing the frequency of dividends and enhancing the level of return for investors

Deye Co., Ltd. released its 2024 three-quarter report, and the company achieved operating income of 8.02 billion yuan in the first three quarters of 2024, yoy +26.72%. Achieved net profit of 2.24 billion yuan, yoy +42.81%, realized net profit deducted from non-mother of 2.083 billion yuan, yoy +22.04%. Among them, 2024Q3 achieved revenue of 3.27 billion yuan, qoq +14.1%, yoy +128.2%, net profit due to mother of 1.004 billion yuan, qoq +25.1%, yoy +229.5%, net profit without return to mother 0.921 billion yuan, qoq +24.9%, yoy +187.5%, gross margin and net margin were 44.5%/30.7%, respectively. Since 2024, gross margin and net margin have continued to increase month-on-month . The 2024Q3 sales/management/R&D/finance expense ratios were 2.8%/2.8%/4.2%/0.0%, respectively, -0.1/+0.4/+0.0/ -1.9pct, respectively. The increase in financial expenses was a decrease in exchange gains and losses for companies appreciating RMB during the quarter. At the same time, the company plans to distribute a cash dividend of 1.2 yuan (tax included) per share. Based on the company's total share capital of 0.64 billion as of October 29, a total cash dividend of 0.77 billion yuan (tax included) will be distributed this time. Considering the impact of the South Asian rainy season, domestic typhoons, and increased financial expenses since 2024Q3, we slightly lowered the company's profit forecast for 2024-2026. The company's net profit for 2024-2026 is estimated to be 3.192/4.106/5.392 billion yuan (originally 3.391/4.491/5.817 billion yuan), EPS is 4.95/6.36/8.36 yuan, corresponding to the current PE price of 18.2/14.1/10.8 times. Maintain a “buy” rating.

Demand from multiple markets has emerged, and the scale of revenue and profit has steadily increased

Through a forward-looking layout for markets including Pakistan, India, and Southeast Asia, in the first three quarters of 2024, the company captured the emerging market demand in Pakistan, Ukraine, India, the Philippines, Myanmar and other places after the price reduction of optical storage products in the first three quarters of 2024, and further expanded the coverage of the company's product sales. At the same time, the company has driven the sales scale of battery packs through inverter sales, and has achieved a rapid expansion in the company's revenue scale.

Increase investment in new product research and development to ensure core competitive advantage

The company continues to develop new products for various market segments and application scenarios. A new generation of high-voltage 80kW three-phase energy storage inverters was launched for industrial and commercial energy storage scenarios. In response to the balcony light storage scenario, micro inverse products and balcony energy storage products that make more use of balcony light storage products were launched.

Risk warning: Competition in the Asian, African and Latin consumer optical storage markets has intensified; new product development falls short of expectations.