The company's 24Q3 revenue was 1.796 billion yuan, -2.20%/-11.17%, net profit due to mother was 0.032 billion yuan, -78.64%/+550.84%, after deducting not 0.023 billion yuan, -83.68%/+216.19% month-on-month. The year-on-year decline in revenue profit was mainly due to overseas inventory factors, and overseas sales of the company's inverters and batteries fell sharply year on year. 24Q3 gross margin/ net margin reached 23.41%/2.92%, +3.27/+1.74pct month-on-month. The cost ratio reached 19.60% during the 24Q3 period, +1.93pct. Of these, sales/management/R&D/finance were +0.43/+0.18/+0.75/+0.58pct respectively, mainly due to a decrease in revenue base. We believe that with the inflection point of overseas warehousing, the company's profitability is expected to pick up next year and maintain the “gain” rating.

Overseas warehousing is under pressure and actively lays out in emerging markets

The combined slowdown in overseas warehousing demand has affected the company's inverter shipments, putting pressure on sales and performance. By the end of September '24, the company's inventory balance reached 2.77 billion yuan, up 1.05 billion/0.19 billion month-on-month, the company's contract liabilities reached 0.274 billion, and decreased 0.073 billion/0.007 billion month-on-month, and the company's inventory pressure was still strong. We estimate that the company shipped about 15 to 0.2 million units of Q3 photovoltaic inverters and energy storage inverters, and the company is still under a lot of pressure to ship. To this end, the company strongly encourages sales teams to go overseas and lay out emerging markets, which is expected to open up new growth poles for the company.

Launch new commercial and commercial storage products and set incentive goals

In October, the company launched a new 50/60kW smart photovoltaic inverter for the industrial and commercial storage sector. This new product has 4 MPPT channels and a high current of 21A. While bringing in more power generation, it also has the characteristics of low noise and easy installation, and is popular among small and medium-sized industries. On October 9, Gude's world-class factory with an annual output of 0.3 million units of hot air energy was officially put into operation, marking a solid step for the company in the field of heat pumps. In addition, the company issued an equity incentive notice in September. The incentive targets are 24-25/24-26/24-27 with revenue of 20.68/35.05/52.99 billion yuan and net profit of 1.32/2.18/3.21 billion yuan, which shows the company's confidence in performance growth.

Lower the shipment volume assumption and maintain the “increase in holdings” rating

Considering the high pressure on the company to go overseas and the demand side is under pressure, we lowered the company's net profit forecast for 24/25/26 to 0.123/0.533/0.73 billion yuan (previous value 0.776/1.058/1.347 billion yuan). Referring to the 25-year Wind of comparable companies, the average PE value is 20 times. Considering the company's accelerated market development, the product is moving towards greater power, giving the company 26 times PE in 25 years, with a target price of 57.20 yuan (previous value of 95.64 yuan), maintaining the “gain” rating.

Risk warning: The development of the industry fell short of expectations, market competition intensified, and the increase in upstream raw materials exceeded expectations.