A veteran of photovoltaic inverters, the optical storage business spurred growth. The company was founded in 2012, acquired the photovoltaic inverter business of the world's top 500 Emerson in 2014 and absorbed the core R&D team. Entered the energy storage market in 2017, mainly engaged in R&D and production of energy storage PCS. Listed on the Shenzhen Stock Exchange in 2020. Photovoltaic inverters are the company's largest business, followed by energy storage, accounting for 58%/39% of revenue in '23, respectively. In terms of profitability, the gross margin of photovoltaic inverters was steady, and the gross margin of energy storage increased rapidly. The gross margins of 24H1 inverters and energy storage were 22.46%/22.67%, respectively, an increase of 2.6 pct/10.85 pct, respectively.

Inverters: We have been deeply involved in photovoltaic inverters for many years. The domestic ground market is basically stable, and the overseas high-margin market has blossomed a lot. The PV market is booming. Global PV installations are expected to be 490/590 GW in 24/25, and will maintain a 15% + growth rate in the future. Inverters have the characteristics of light assets, high ROE, and high turnover, and are the best track for new energy sources. The company has been deeply involved in inverters for many years, ranking fourth in global shipping market share in 23 years, and in the top ten market share for 11 consecutive years. The company has a complete product line, with centralized+string products with a full power range of 3KW-8.8 MW. Among them, centralized ground is the company's advantage, and the project experience is rich. 1) Domestic: The domestic ground market is the company's basic market, with stable demand and stable market position. Domestic PV installations are expected to be 240/260 GW in 24/25, and will maintain a growth rate of about 10% in the future, with ground-based power plants accounting for about 1/2. The company has deep centralized technology and is deeply tied to the five big four small groups, and its market position is stable. Domestic ground shipments are expected to be 16-18 GW in '24, and will maintain steady growth in '25. The gross margin is about 20%. The gross margin is about 5% higher than that of the centralized type. 2) Overseas: Overseas shipments start quickly, and high-margin market expansion boosts company profits. The company's inverters are expected to account for 30% + of overseas revenue in '24, and is expected to continue to increase in '25. a) Indian market: rising electricity prices+economic improvement in power plants+policy promotion, demand is rising. India's PV installed capacity is expected to exceed 20/30 GW in 24/25, and the company will account for about 30% of the Indian market in '23, and has a stable position for 7 years. The company expects to ship about 6GW in India in '24, continue to increase in '25, with a gross profit margin of 20%; b) Middle East market:

Economic improvement+policy promotion. Tenders for large-scale power plants have begun, and the company is rapidly expanding based on ground power plant experience+product economic advantages. The Middle East PV installation is expected to be about 10/20 GW in 24/25, and the company's share in the Middle East market is about 20% in 24, and it is expected to continue to increase in the future.

It is expected that the Middle East will ship 2GW in '24, with orders in hand for 3-4 GW. Shipments are expected to double in '25, and the gross profit margin is 25-30%. 3) Distributed products: Domestic/overseas distributed shipments are expected to be 6GW/ 1GW+ in 24 years, and distributed shipments in 24 years account for about 20% of total inverter shipments.

Energy storage: Global energy storage is booming, the domestic market is doubling, the US market 0-1 ushered in a GW level breakthrough, and the Middle East and Africa market is about to expand. We expect the world's largest storage capacity to reach 104/250 GWh in 24/25, an increase of 48%/45%, and is expected to maintain 30% + growth in the future. Among them, China and the US have large installed capacity and growth rates, and the official start of the interest rate cut cycle is expected to further drive demand growth. 1) Domestic: Domestic PCS leading products and energy storage products are comprehensive, and domestic shipments are expected to double in 24 years. Relying on years of intensive inverter technology, the company has also formed 125 to 8000 kW full-power PCS, including centralized and string systems, in terms of energy storage. The company's domestic PCS shipment market share remained in the top two for three consecutive years. Domestic PCS shipments are expected to be 6-8 GW in 24, nearly doubling from the previous year. 2) Overseas shipments ushered in a breakthrough. a) North American market: System integrators have a low PCS self-supply rate, and they still need to outsource a large number of PCS. The company has a large market space as an independent supplier of PCS, and also has a price advantage of about 20% compared to overseas manufacturers such as PE and SMA. The company expects to ship 1GW in North America in '24, with a high gross profit of 40% +; India's production capacity can handle future North American policy risks. b) Middle East Africa: The business model is mainly for owners to sign contracts with integrators, integrators purchase PCS, and the company cooperates with integrators such as Ningde and BYD to go overseas to achieve rapid expansion using the advantages of partners. Shipments began in '25, with a gross margin of 35-40%.

Profit forecast and investment rating: We expect the company to have a net profit of 0.515/0.935/1.284 billion yuan in 24-26 years, compared with +80%/+81%/+37%. At the same time, the company's photovoltaic inverters and energy storage PCS have accelerated overseas expansion. It is expected that shipments will continue to increase next year, and profitability is expected to continue to increase with overseas expansion. We gave the company 25 x PE in 25 years, corresponding to a target price of 65 yuan. The first coverage gave it a “buy” rating .

Risk warning: Increased competition, risk of changes in international trade and industry policies, and global expansion falling short of expectations.