Performance situation: Operating cash flow has improved markedly, and operating conditions are steady

The company achieved operating income of 49.95 billion yuan in the first three quarters of 2024, an increase of 7.61% year on year, and realized net profit to mother of 7.6 billion yuan, an increase of 5.21% year on year. Looking at 24Q3, the company achieved net profit of 2.64 billion yuan, a year-on-year decrease of 7.96% and a month-on-month decrease of 7.76%; net profit of non-return to mother was 2.5 billion yuan, a decrease of 10.57% year-on-year and a decrease of 10.76% month-on-month, mainly due to an increase in domestic PV inverter shipments+a drag on the back of confirmed revenue from US storage projects. In terms of profitability, the company's 24Q3 gross margin/net margin was 29.52%/14.16%, respectively, +0.02pct/-1.81 pct month-on-month, respectively. The gross margin remained relatively stable. The decline in net profit and loss was mainly hampered by the decline in exchange profit and loss due to the appreciation of RMB. The company's net cash flow from 24Q3 operating activities was 3.4 billion yuan, or +3.6/5.5 billion yuan month-on-month. With the delivery of the company's Q4 power plants and overseas projects, the cash flow situation is expected to continue to improve.

Optical storage business: Delayed orders are expected to be delivered centrally in Q4. Short-term disturbances will not change the long-term upward trend

In terms of inverters, the company's Q3 shipments increased steadily from month to month. Product shipments in the Chinese domestic market account for a relatively high share. Prices and profit conditions in the company's single market segment are relatively stable. Subsequent deliveries with overseas orders are expected to restore profitability. In terms of energy storage system integration, the company's Q3 shipments increased month-on-month. Since orders for some major storage projects in Europe and the US need to be connected to the grid and confirmed, the actual yield was slightly less than the shipment volume. Looking ahead, the company has plenty of on-hand orders in high-profit overseas markets. As Europe and the US enter a cycle of interest rate cuts, the pace of connecting to the grid accelerates. Early delays in order acceptance are expected to be delivered centrally in Q4, supporting performance improvements. Judging from its core competitiveness, the company's products, costs, and brand advantages have built high barriers. With technological upgrades such as high-capacity cell iteration, grid construction, etc., and the expansion of overseas production capacity, we believe that the company's global competitiveness and share are expected to be further consolidated, fully benefiting from the high demand for optical storage.

Investment advice

We expect the company's net profit to be 11.702/13.901/16.682 billion yuan in 2024-2026, corresponding to 16/13/11 times PE, maintaining a “buy” rating.

Risk warning

Global optical storage demand falls short of expectations; company order delivery falls short of expectations; changes in overseas trade policies