The company released its 2024 three-quarter report, and the results for the first three quarters decreased by 99.03% year-on-year. The company's profitability was under pressure, and with the improvement of the shipping regional structure, the third quarter results achieved month-on-month growth. Maintain an increase in holdings rating.

Key points to support ratings

Results for the first three quarters of 2024 fell 99.03% year on year, and 2024Q3 performance improved month-on-month: the company released the 2024 three-quarter report, achieving revenue of 4.943 billion yuan in the first three quarters, a decrease of 12.51% year on year; realized net profit to mother of 0.009 billion yuan; decreased 99.03% year on year to achieve net profit without deduction of 0.032 billion yuan, a year-on-year decrease of 103.58%. 2024Q3 achieved net profit of 0.032 billion yuan, a year-on-year decrease of 78.64% and a month-on-month increase of 550.84%.

Revenue declined year on year, and profitability was under pressure: In the first three quarters of 2024, the company's comprehensive gross margin fell 11.13 percentage points year on year to 23.00%, and the comprehensive net margin fell 14.75 percentage points year on year to 1.15% year on year. In the first three quarters of 2024, the company's expense ratio increased 7.06 percentage points year-on-year to 20.99%. Among them, the company's sales/management/ R&D/financial expenses ratio was +1.85/+1.29/+1.92/+2.00 percentage points year-on-year, respectively, to 7.9%/4.84%/7.96%/0.29%.

The sales regional structure may have improved in the third quarter: According to the company's disclosure, in the first half of 2024, the company's comprehensive gross margin was 22.76%, down 12.79 percentage points from the previous year. Among them, the gross margin of grid-connected inverters is about 25%, the gross margin of energy storage inverters is about 45-50%, the gross margin of energy storage batteries is about 30%, and the gross margin of domestic household system development business is about 10-15%. We believe that the company's gross margin was low in the first half of the year, mainly due to the relatively high revenue share of products in the domestic market with low profitability. The structure of the company's overall sales area is expected to improve since the third quarter. Among them, the proportion of overseas sales in overall sales is expected to increase month-on-month, driving the company's profitability improvement in the first three quarters.

Release a stock incentive plan and set an incentive target: On September 4, 2024, the company issued a restricted stock incentive plan (draft). The number of restricted shares to be granted is 1.7587 million shares. The performance assessment target is: 2024-2025/2024/2026/2024-2024-2027 operating income of not less than 20.68/35.05/52.99 billion yuan, respectively, or net profit of not less than 1.32/2.18/3.21 billion yuan, respectively, showing that the company is Confidence in performance growth.

valuations

Under the current share capital, combined with the company's current shipping and profit pressure, we adjusted the company's 2024-2026 earnings forecast to 0.53/2.28/3.36 yuan (the original 2024-2026 forecast was 2.89/3.73/4.53 yuan), corresponding to a price-earnings ratio of 100.4/23.4/15.9 times; maintaining an increase in holdings rating.

The main risks faced by ratings

Prices of raw materials have risen above expectations; new business expansion has fallen short of expectations; price competition has exceeded expectations; PV policies have fallen short of expectations; demand in the energy storage industry has fallen short of expectations.