China Guolian Securities released a research report stating that the new energy industry in 2024H1 is under temporary pressure, and leading companies in various sectors show strong alpha characteristics. With the dual effect of the slowing growth rate of photovoltaic installed capacity demand and the large release of new technology production capacity, competition in the photovoltaic industry has intensified, causing a significant impact on sector profitability, and operationally stable companies are expected to cross the cyclical trough. For the wind power sector, offshore wind catalyzes accumulation, and the industry's prosperity is expected to continue to improve; for the energy storage sector, price declines lead to performance pressure, and the potential of overseas emerging markets is gradually emerging, recommending attention to top companies with a wide distribution network. In the lithium battery sector, the performance of battery segments is outstanding. As the industry clears out or nears its end, it is recommended to focus on new technological innovations and leading companies with strong alpha characteristics.

In 2024H1, the net profit attributable to the owners of the parent companies in the new energy industry decreased by 56.10% year-on-year, ranking 27th out of all 30 industries. According to the analysis of the net profit attributable to the owners of the parent companies in sub-industries, nuclear power (yoy-4.3%), power grid equipment (yoy-18.0%), energy storage (yoy-18.7%), wind power (yoy-21.2%), lithium battery (yoy-28.7%), and photovoltaic (yoy-104.1%) all experienced year-on-year declines.

Photovoltaics: Intensifying competition affects sector profitability, and operationally stable companies are expected to cross the cyclical trough.

In 2024H1, the sample companies in the sector achieved a revenue of 599.55 billion yuan, a decrease of 15.7% year-on-year; achieved a net profit attributable to the owners of 3.73 billion yuan, a decrease of 95.3% year-on-year; with a gross margin of 13.6%, a 7.9 percentage points decrease year-on-year. With the dual effect of the slowing growth rate of photovoltaic installed capacity demand and the large release of new technology production capacity, industry competition has intensified, causing a significant impact on sector profitability, and operationally stable companies are expected to cross the cyclical trough.

Wind Power: Offshore wind catalyzes accumulation, and the industry's prosperity is expected to continue to improve.

In 2024H1, the sample companies in the sector achieved a revenue of 149.44 billion yuan, a 0.5% year-on-year increase; achieved a net profit attributable to the owners of 8.85 billion yuan, a 21.2% year-on-year decrease; in 2024Q2, the sample companies in the sector achieved a revenue of 87.6 billion yuan, a 2.2% year-on-year decrease; achieved a net profit attributable to the owners of 5.4 billion yuan, a 16.1% year-on-year decrease. With the industry entering an accelerated construction phase, future catalytic accumulation is expected, and the industry's prosperity is expected to experience a reversal.

Energy storage: Price decline puts pressure on performance, opening up incremental space in emerging markets.

In 2024H1, the sample companies in the sector achieved operating revenue of 783.4 billion yuan, a year-on-year decrease of 2.0%; net income attributable to the parent company was 84 billion yuan, a year-on-year decrease of 18.7%; in 2024Q2, the sample companies achieved operating revenue of 457.8 billion yuan, a year-on-year increase of 7.0%; net income attributable to the parent company was 511 billion yuan, a year-on-year decrease of 13.2%. The potential of overseas emerging markets is gradually emerging, and it is recommended to pay attention to top companies with a wide range of channels.

Lithium batteries: Battery performance is impressive, focusing on new technologies and overseas expansion.

In 2024H1, the sample companies in the sector achieved revenue of 962.233 billion yuan, a year-on-year decrease of 3.9%; net profit attributable to the parent company was 56.725 billion yuan, a year-on-year decrease of 28.7%; in 2024Q2, the sample companies achieved revenue of 530.077 billion yuan, a year-on-year increase of 1.1%; net profit attributable to the parent company was 34.687 billion yuan, a year-on-year decrease of 18.4%. As the industry undergoes consolidation or approaches its final stage, it is recommended to focus on new technological innovation and leading companies with strong alpha attributes.

Power grid equipment: Ultra high voltage construction is steadily progressing, and distribution networks may see new growth.

In 2024H1, the sample companies in the power grid equipment sector achieved operating revenue of 321.01 billion yuan, a year-on-year increase of 6.2%; net income attributable to the parent company was 18.85 billion yuan, a year-on-year decrease of 18.0%; in 2024Q2, the sample companies in the power grid equipment sector achieved operating revenue of 179.42 billion yuan, a year-on-year increase of 6.2%; net income attributable to the parent company was 11.18 billion yuan, a year-on-year decrease of 14.8%. Overall, in the first half of 2024, revenue remained robust, and it is expected that the industry chain will maintain a growth trend under the direction of accelerated investment in ultra high voltage construction and distribution networks.

Investment recommendation: Focus on leading companies with a dominant position and new technological innovation.

In 2024H1, the emerging electric power industry is under pressure in this stage, and leading companies in various sectors have shown strong alpha attributes. The following sectors are recommended for attention:

1) Photovoltaic: Sungrow Power Supply (300274.SZ), Longi Green Energy (601012.SH), Flat Glass Group (601865.SH), Juhe Materials (301295.SZ), Longhua Technology Group (300263.SZ), ATS (688472.SH, CSIQ.US), etc;

2) Wind Power: Ningbo Orient Wires & Cables (603606.SH), Jiangsu Zhongtian Technology (600522.SH), Dajin Heavy Industry (002487.SZ), Haili Wind Power (301155.SZ), Shanghai Taisheng Wind Power Equipment (300129.SZ), etc;

3) Energy Storage: Sineng Electric (300827.SZ), Deye Company (605117.SH), Kehua Data Co., Ltd. (002335.SZ), Shenzhen Sinexcel Electric (300693.SZ), etc;

4) Lithium Battery: Contemporary Amperex Technology (300750.SZ), EVE Energy Co., Ltd. (300014.SZ), Hunan Zhongke Electric (300035.SZ), Guangzhou Tinci Materials Technology (002709.SZ), Shenzhen Capchem Technology (300037.SZ), Shenzhen Kedali Industry (002850.SZ), Sunwoda Electronic (300207.SZ), etc;

5) Power Grid Equipment: China XD Electric (601179.SH), XJ Electric Co.,Ltd. (000400.SZ), NARI Technology (600406.SH), Hexing Electrical (603556.SH), Jinneng Technology (688676.SH), Mingyang Electric (301291.SZ), etc.

Risk Warning: The risk of significant fluctuations in raw material prices; the risk of changes in overseas policies affecting exports; the risk of continued low bid prices.