Financial Services Association, January 27 (Editor Square) The inverter industry is dawning. After five consecutive months of month-on-month decline in exports, it finally ushered in month-on-month growth in November and December. Sunshine Power, the leading company that sells the most photovoltaic inverters in the world, released its annual performance forecast on Monday evening. It surpassed institutional expectations, and its stock price rose by nearly 8% the next day. Since December 13, Deye Co., Ltd., which is rapidly developing household inverters, has had the biggest cumulative increase in stock price of 69.83%.

As exports of photovoltaic inverters grow, many industry insiders said that this indicates that inventory removal may have come to an end, and inverter companies are expected to see an improvement in performance. However, companies such as Jinlang Technology, Goodway, and Yuneng Technology disagree on the question of when to expect inventory removal to end.

Recently, however, news broke that two major overseas leaders have laid off their employees and shut down their factories. Related reports show that on January 21, SolarEdge, an Israeli photovoltaic inverter manufacturer that has been in the top ten global inverter shipments all year round, announced plans to lay off 900 employees. Previously, the company had stopped production in Mexico and reduced production capacity in China. Furthermore, on December 18 of last year, US solar equipment manufacturer Enphase Energy said it would lay off about 10% of its employees worldwide.

▌Is the inverter industry recovering at the dawn? Sunshine Power had a maximum pre-profit of more than 10 billion dollars last year, and the stock price of Deye Shares surged 70% in more than a month and the inventory removal process attracted much attention

After the market on Monday, Sunshine Power released a performance forecast. It expects net profit of 9.3 billion yuan to 10.3 billion yuan in 2023, an increase of 159%-187% over the previous year. The company's net profit for Q3 was 2,869 billion yuan. Based on this calculation, the Q4 net profit is expected to be 2,077 billion yuan to 3,077 billion yuan, a change of -28% to 7% from the previous month. This week, several institutions, including Western Securities, Fangzheng Securities, Minsheng Securities, and Dongwu Securities, released research reports stating that Sunshine Power's Q4 or 2023 performance slightly exceeded expectations.

In the performance forecast, Sunshine Power stated that the global new energy market continued to grow rapidly during the reporting period, and the company's core businesses such as photovoltaic inverters, energy storage systems, and new energy investment and development achieved rapid growth. At the same time, benefiting from factors such as the appreciation of foreign currency exchange rates and the decline in shipping costs in the first half of the year, the company's net profit returned to mother increased dramatically. Also, according to media reports, Sunshine Power Investor Hotline staff said that considering that the increase in the company's net profit in 2023 was caused by a combination of favorable factors such as falling freight rates and exchange rates, the gross profit level may return to a normal level in 2024, but overall revenue should still increase.

In terms of the secondary market, Sunshine Power opened high on Tuesday, surging 8% during the intraday period. Another listed company in the inverter industry, Deye Co., Ltd., has had the biggest cumulative stock price increase of 69.83% since December 13. On the other hand, the stock price performance of many listed companies in the inverter industry last year can be called “bleak and miserable”. For details, see the Financial Federation's previous report (the Golden Age of Inverters came to an end: the “Big Four King Kong” was on the list of the top ten bears during the year, Yuneng Technology, Hemai, etc. were “double killed by Davis” in stock prices, performance “double killed by Davis”, and high European inventories, etc.).

Sunshine Power's performance forecast exceeding expectations and the recent stock price performance of Deye Co., Ltd. also confirm the current state of recovery in the inverter industry from the side. After five consecutive months of month-on-month decline, inverter exports finally rebounded in November. In November, China exported 560 million US dollars of inverters, an increase of 1% over the previous month. According to the latest data released by the General Administration of Customs this month, domestic inverter exports reached 595 million US dollars in December, an increase of 6.25% over the previous month, for the first consecutive month of February.

Among them, exports to Asia, North America, and Latin America improved significantly. In December 2023, exports to India, the United States, and Brazil increased by 93.6%, 59.8%, and 30.1%, respectively.

On the US market side, on January 16, the US Energy Information Administration (EIA) released a short-term energy outlook report. At the end of 2023, the US power sector's operating scale > 1MW cumulative PV installed capacity was 93.2 GW, which is expected to reach 129.6 GW by the end of 2024. Huachuang Securities analysts Huang Lin and Sheng Wei reported on January 22 that related industry chain companies are expected to benefit from the EIA's revised 24-year US PV installation forecast. As component prices fall, combined with policy-side stimulus and lower interest rate expectations, US demand is expected to achieve high growth or greater elasticity. It is recommended to focus on companies with a high share of the US market, such as Artes, Jinko Energy, Trina Solar, Sunshine Power, and Deye Co., Ltd.

The European region is currently still in the inventory removal stage. The amount of inverters exported domestically to the Netherlands fell by 40.5% month-on-month in December. Last year, due to European inventory removal, etc., many PV inverter companies' performance in the first three quarters was under pressure. As exports of photovoltaic inverters grow, many industry insiders said that this indicates that inventory removal may have come to an end, and inverter companies are expected to see an improvement in performance.

Jinlang Technology received an agency survey on January 10 to answer “How is overseas inventory removal?” When asked, he said that it is quite obvious that they are connected to the grid and removed. Specifically, in the European market, grid-connected energy storage is faster than energy storage. Currently, the European energy storage market still has inventory in the first quarter. Overall, overseas market demand is optimistic. Goodway said on an interactive platform on January 16 that the company's own inventory of finished products is at a reasonable level, and inventory removal in the inverter industry is still gradually improving. Goodway previously stated during an agency survey on November 10 last year that demand for the company's products has begun to slowly pick up in the fourth quarter, and it is expected that the industry's inventory removal will end in the first quarter of this year.

However, according to a report by the “Science and Technology Innovation Board Daily” last month, Yuneng Technology said in an interview: “Basically, we can (clean up) inventory one after another until around the second quarter. Although we have inventory, production is still gradual, which is equivalent to producing while removing inventory, so there is no way to see an increase in revenue data all of a sudden.” The Sunshine Power Securities Department said, “It will still take time to remove the inventory. 2024 will probably be better.”

Furthermore, the Red Sea incident and the like are also affecting the progress of inverters being removed from inventory. Yuneng Technology said on an interactive platform on January 25 that Europe is one of the company's main overseas markets, accounting for a relatively high share of inventory and business volume. The impact of the Red Sea incident on European market demand is not ruled out, and the company will closely monitor the development of the incident.