Description of the event

Linyang Energy released its 2024 semi-annual report. 2024H1 achieved revenue of 3.463 billion yuan, a year-on-year increase of 7.86%; net profit to mother was 0.599 billion yuan, an increase of 3.02% over the previous year.

Incident comments

In the energy storage sector, delivery scale increased year-on-year. 2024H1 Lin Yang successfully completed the supply and grid connection of several energy storage projects. Among them, the company's Anhui Wuhe Scenery and Solar Integrated Storage Base Energy Storage Phase II project was successfully connected to the grid; in terms of external system delivery, the company achieved the supply of multiple 100 megawatt projects, such as: CGN Jiangsu Rudong 200mW/400MWh shared energy storage power plant project and Anhui Wuwei 100mW/200mmH shared energy storage project. Affected by price reductions in the industrial chain, the company's 2024H1 energy storage sector was definitely worth around 0.74 billion yuan (including a small amount of energy savings), a year-on-year decrease. However, benefiting from the company's new end-to-end energy storage lifecycle business chain business model, the company's profitability has remained good. Looking ahead to the whole year, the company's energy storage delivery scale is expected to continue to grow. With breakthroughs in industrial and commercial energy storage and overseas share, gross margin is expected to remain at a good level.

In the new energy sector, progress is in line with expectations, and profits have remained good. 2024H1's power plant transfer sales revenue was 0.948 billion yuan, mainly due to the transfer of power plants in the first half of the year and the final payment of the project last year. As the price adjustment in the industrial chain increased, the gross margin reached 16%. With components in the second half of the year, the profit from price cuts is expected to continue to be good. 2024H1, the company added more than 200MW of grid-connected power plants. Currently, the scale of the company's own power plant is 1.1 GW, and the power generation capacity is relatively stable. The revenue from 2024H1 is 0.42 billion yuan.

The smart sector is progressing steadily as a whole. The company won the bid of 0.65 billion yuan for the first batch of the State Grid South Network in 2024H1. Overseas products have covered more than 30 countries and regions around the world. The overall revenue growth rate of the smart sector was relatively steady. The revenue scale for the first half of the year was 1.15 billion yuan. Due to the pace of order delivery, gross margin increased by about 39% compared to 2023. Looking at the whole year, the smart sector is expected to maintain steady growth.

In terms of financial data, 2024H1's R&D expenses were 0.115 billion yuan, an increase of 0.55pct to 3.32%, indicating that the company attaches importance to R&D investment. The company's 2024H1 operating cash inflow was 0.465 billion yuan, of which Q2 reached 0.788 billion yuan, which was corrected and greatly improved from month to month, providing stable cash flow for the company's steady development.

We expect the company to achieve a net profit of 1.2 billion yuan in 2024, which is 11 times PE.

Risk warning

1. Deterioration of the competitive landscape;

2. PV installation falls short of expectations.