Core views

The company released its 2023 annual report. For the first half of the year, the company's revenue was 1,065 million yuan, +107.3%; net profit for the first half of the year was 348 million yuan, +72.7%; net profit after deducting non-return net profit of 332 million yuan, +72.6% year-on-year. Affected by industry inventories, the company's Q2 shipments are under slight reverse pressure. It is expected that inventory will gradually recover after consumption. Q2 The gross margin declined month-on-month, mainly due to the increase in the share of the large storage product structure of the company's expansion, while slightly inverted products still maintained high gross profit; furthermore, the company is in the new product development period, and the R&D expenses ratio has risen sharply.

occurrences

The company released its 2023 annual report. For the first half of the year, the company's revenue was 1,065 million yuan, +107.3%; net profit for the first half of the year was 348 million yuan, +72.7%; net profit after deducting non-return net profit of 332 million yuan, +72.6% year-on-year. Q2 Looking at a single quarter, the company's revenue was 485 million yuan, +70.2% year on month, -16.5% month on month; net profit of 172 million yuan, +50.3% year on year, -7.9% month on month; net profit after deducting net profit of 159 million yuan, +48.3% year on year, -2.4% month on month.

Brief review

Profitability: Q2 gross margin decreased month-on-month, R&D expense ratio increased sharply ① Gross profit margin was 42.78%, year-on-year -3.3pct, of which Q1/Q2 was 46.41%/38.43%. Gross margin fell significantly, stemming from the increase in revenue share of low-margin businesses such as large storage systems; net profit margin was 32.57%, -6.7pct, of which Q1/Q2 was 30.27%/35.44%.

② The cost rate for the company period was 11.36%, +6.3 pct, sales/management/R&D/finance expense ratio was 8.5/5.2/8.2/ -10.5%, year on year +1.1/+0.2/+2.6/+2.4 pct; during the Q1/Q2 period, the cost rate was 16.55%/5.13%, respectively. In the second quarter, the R&D expense rate increased by 4 pct and the financial expense rate decreased by 14 pct.

Performance split: Q2 slightly reversed shipping pressure

Revenue from micro-inversion and monitoring equipment was $883 million, of which 890,000 units were micro-inverse units (56/340,000 units for Q1/Q2) and 101,100 units of monitoring equipment; gross margin for Q2 is expected to remain the same month-on-month.

Expense side & inventory changes: New products expanded, R&D personnel expanded significantly ① Financial expenses: Due to fluctuations in the exchange rate of the US dollar and the euro, confirmed exchange earnings of 42.14 million yuan in the first half of the year; as well as interest income of 7146 million yuan;

② R&D expenses: R&D expenses were 86.95 million yuan, +205.4% year-on-year, mainly to meet strategic development needs such as new product development, technological innovation, and product iteration. The company introduced more R&D personnel, which led to an increase in overall remuneration, and the 2022 equity incentive plan increased the share payment expenses for R&D personnel. At the end of the reporting period, the company had 302 R&D personnel, double the number compared to the same period last year.

③ Inventory: At the end of the reporting period, the company's inventory was 818 million yuan, a slight increase from the end of the first quarter, an increase of 176 million yuan compared to the end of '22; of these, raw materials, products in stock, and goods in stock were 198, 0.64, and 405 million yuan, compared to +0.82 million, -0.28 million yuan, and +286 million yuan respectively at the end of '22.

Profit forecasts and suggestions: We expect the company's performance in 2023-2025 to be 70,120,000 yuan, and 1.75 billion yuan. The corresponding valuations are 30.1, 17.6, and 12.1X, respectively, and continue the “buy” rating.