Key points of investment:

The company's net revenue and profit declined year-on-year in 24Q3

The company achieved revenue of 2.912 billion yuan in the first three quarters of 2024, a year-on-year increase of -28.43%; realized net profit of 0.357 billion yuan, or -48.41% year-on-year; realized net profit of 0.329 billion yuan without return to mother, or -51.36% year-on-year. In the third quarter of 2024, the company achieved revenue of 1.02 billion yuan, a year-on-year increase of -18.11%; achieved net profit of 0.138 billion yuan, or -27.86% year-on-year; realized net profit of 0.122 billion yuan without return to mother, or -34.87% year-on-year.

High pressure on overseas household storage inventories suppresses the release of company performance

The company achieved revenue of 1.02 billion yuan in 2024Q3, -3.78% month-on-month. We believe that overseas shipments were blocked mainly due to the backlog of household storage inventory. As downstream inventory is gradually digested, we expect the company's subsequent shipments to resume month-on-month growth.

Profitability increased month-on-month, and the cost rate increased slightly month-on-month during the period

The company's 2024Q3 gross profit margin was 33.11%, -2.04pct year on year, +0.16pct month-on-month, net profit margin 34.61%, 22.87pct yoy, +14.33pct month-on-month. The company's gross margin and net profit margin increased month-on-month. The 2024Q3 company's cost rate for the period was 16.62%, +2.92pct, +1.81pct, sales/management/R&D/finance expense ratios were 8.17%/2.99%/6.15%/-0.69%, respectively, +1.80pct/0.23pct/1.44pct/-0.55pct, and -0.47pct/0.20pct/-0.28pct/2.35pct. The increase in the financial expense ratio was mainly due to the year-on-year increase in interest received by deposit products and the calculation of large deposit slips Interest income has increased, and as the company's revenue resumes quarterly month-on-month growth, we expect the probability that the company's fee rate will drop to a normal level.

Profit forecasting and investment advice

As the rate of inventory removal from European households fell short of expectations, we lowered the company's performance expectations. We expect the company's 2024-2026 revenue to be 4.668/5.928/7.362 billion yuan (previous value: 81.80/102.18/billion yuan), up -14%/27%/24% year on year, and net profit to mother of 0.602/0.723/0.906 billion yuan (previous value 11.29/13.80 billion yuan), respectively, up -29%/20%/25% year on year, corresponding to current value PE is 19/15/12 times, respectively. Given the company's overseas energy storage business layout, it is expected that in the future, household storage in Europe and other places will achieve rapid growth and maintain a “buy” rating.

Risk warning

The promotion of domestic industrial policies falls short of expectations; demand for overseas energy storage falls short of expectations; there is a risk that the competitive landscape will deteriorate; and there is a risk that poor performance will have a negative impact on valuations.