occurrences

On August 30, 2024, the company released its 2024 semi-annual report. 2024H1 achieved operating income of 3.148 billion yuan, a year-on-year decrease of 17.5%, and realized net profit to mother of -0.024 billion yuan, changing from positive to negative year-on-year, achieving a gross sales margin of 22.8%, a year-on-year decrease of 12.8%.

Among them, the 2024Q2 company achieved operating income of 2.022 billion yuan, a year-on-year decrease of 3.5%, a year-on-month increase of 78.5%, and achieved net profit of 0.005 billion yuan, changing from negative to positive, achieving a gross sales margin of 20.2%, a year-on-year decrease of 12.5 pcts, a year-on-month decrease of 7.3 pcts, a net sales margin of 1.2%, and an increase of 2.9 pcts month-on-month, from negative to positive.

Short-term blocking of overseas inverter shipments affects performance

Affected by the overseas inventory cycle, the overseas sales scale of the company's inverters declined, which had a great impact on the company's performance, and at the same time, the profit structure declined. 2024H1 sold about 0.2785 million inverters, down 33.6% year on year. Sales of grid-connected and energy storage inverters declined. Among them, sales of grid-connected inverters were about 0.2559 million units, a decrease of 14.7% year on year, and sales of energy storage inverters were about 0.0226 million units, a decrease of 81.1% year on year. In terms of market area, the company's overseas sales volume of inverters was about 0.1552 million units, a year-on-year decrease of 49.6%, accounting for 55.7% of the sales structure, a year-on-year decrease of 17.7 pcts. 2024H1 released the 33kW, 36kW, and 40kW SDT G3 series photovoltaic inverters for household use, expanding the power range of SDT series products to 40kW, with a maximum efficiency of 98.7%, effectively increasing power generation.

Focus on R&D investment to maintain product advancement

The company focuses on technology research and product upgrades, and continues to increase R&D investment. 2024H1 invested 0.26 billion yuan in R&D, up 23.8% year on year, accounting for 8.4% of total revenue, up 2.8 pcts year on year. In the field of grid-connected inverters, the company's technological advancement is mainly reflected in topology research, control algorithms, industrial design, etc. The products have passed many international authoritative certification tests including TV Rhein, TV SÜD, BV, and CQC certification. By the end of June 2024, the company had 470 authorized intellectual property rights, and 60 new items were added to 2024H1.

Profit forecasting and investment advice

We expect the company's revenue for 2024-2026 to be 7.89/10.62/13.73 billion yuan, respectively, 7.3%/34.6%/29.3% year-on-year; net profit to mother is 0.49/0.94/1.28 billion yuan, respectively, with year-on-year growth rates of -42.7%/91.9%/36.5%, respectively. EPS was 2.01/3.86/5.28 yuan respectively. Affected by the overseas inventory cycle, the company's overseas shipments have been blocked in stages, and revenue and profits are under pressure. The company is expected to use the advantages of high-quality products and overseas certification to open up room for long-term growth and maintain a “buy” rating.

Risk warning: risk of changes in overseas policies; increased industry competition; large fluctuations in raw material prices