In terms of revenue, the overall performance of Q3 was weak, with Sungrow Power Supply, Sineng Electric, and Shenzhen Sinexcel Electric all experiencing a slowdown in year-on-year revenue growth in Q3, while the other two companies saw a year-on-year decline; except for Sungrow Power Supply which saw a slight increase on a quarter-on-quarter basis, the revenue of the other four companies in Q3 all declined on a quarter-on-quarter basis.
Finance and Economics APP learned that Ping An Securities released a research report stating that due to seasonal factors, the performance of Q3 of photovoltaic and energy storage power inverters was generally weak on a quarter-on-quarter basis, but the growth potential in the main track is still sufficient, with the Q3 revenue of photovoltaic and energy storage power inverter companies improving year-on-year and profit performance varying. By selecting 11 representative domestic photovoltaic and energy storage power inverter companies, an analysis of Q3 performance was conducted. In the first three quarters, the revenue and profits of inverter companies were under pressure year-on-year, with 6 out of 11 companies experiencing a year-on-year decline in revenue, and 8 companies experiencing a year-on-year decline in net income. This was partly due to the larger revenue and profit base in 2023, and also due to factors such as the decline in demand for distributed photovoltaics and energy storage in Europe, inventory backlog, reduced demand for residential energy storage in South Africa, and the continuous decline in prices of components and large-scale energy storage in China.
The main points of Ping An Securities are as follows:
Due to the summer holidays in Europe, the third quarter usually belongs to the off-season.
Looking at quarterly revenue, among the 11 sample companies, 8 companies had positive year-on-year revenue growth in Q3, with only 3 companies having positive quarter-on-quarter revenue growth. The revenue improved year-on-year but declined on a quarter-on-quarter basis, consistent with the seasonal situation. Looking at net profit for a single quarter, 5 companies had positive year-on-year net profit growth, and 5 companies had positive quarter-on-quarter net profit growth, showing varied profit performance. Based on the company's business layout, the bank categorized the 11 sample companies into three groups: 'large-scale energy storage and photovoltaic power station inverters,' 'distributed photovoltaics and energy storage,' and 'micro inverters,' and conducted business reviews and performance evaluations for each group.
Large Machines: Overall, Q3 performance was weak, with Sineng and Sungrow showing profit growth.
The bank selected Sungrow Power Supply, Sineng Electric, Ates, Kehua Data, and Shenzhen Sinexcel Electric as representative companies in the large machine segment of photovoltaic and energy storage (high-power photovoltaic inverters, energy storage inverters, and large-scale energy storage systems). In terms of revenue, the overall performance of Q3 was weak, with Sungrow Power Supply, Sineng Electric, and Shenzhen Sinexcel Electric all experiencing a slowdown in year-on-year revenue growth in Q3, while the other two companies saw a year-on-year decline; except for Sungrow Power Supply which saw a slight increase on a quarter-on-quarter basis, the revenue of the other four companies in Q3 all declined on a quarter-on-quarter basis.
In terms of revenue, the revenue of participant Q3 has decreased or the growth rate has slowed down. Besides factors such as the off-season of summer vacation and the impact of typhoons on exports, it is also related to the company's own revenue recognition pace. In terms of profit, Sungrow Power Supply and Sineng Electric's net income attributable to the parent company in the first three quarters is increasing, with year-on-year growth rates of 5% and 45% respectively. The profit increase of Sungrow Power Supply is relatively small, with delayed project revenue recognition, and subsequent profit is expected to be released gradually after confirmation. Sineng Electric's Q3 profit is impressive, mainly due to the increase in the proportion of overseas business and the cost reduction in R&D assisting in the improvement of the gross margin.
Distributed: Q3 revenue and profit were weak month-on-month but improved year-on-year.
The bank selected DeveloShares, Ginlong Technologies, GoodWe, and Ailuo Energy as representative enterprises of distributed photovoltaic energy storage. In terms of business layout, DeveloShares and Ailuo focus more on energy storage, and the layout of new energy business is mainly overseas; Ginlong and GoodWe focus more on photovoltaic string inverters, and the business layout covers both domestic and international markets.
In the first three quarters, DeveloShares and Ginlong Technologies' revenue increased year-on-year, mainly benefiting from the growth in emerging markets in Asia, Africa, and Latin America. The other two companies were to some extent impacted by weak demand in Europe. Looking at the third quarter, the revenue of major participants improved year-on-year, weakened month-on-month, and performance was greatly affected by seasonal factors in Europe and emerging markets. In the third quarter, DeveloShares, Ginlong Technologies, and Ailuo Energy's net income attributable to the parent company increased year-on-year, with growth rates of 230%, 155%, and 34% respectively, showing improvement in profit compared to the low base period.
Micro Inverters: Hemai has excellent profitability, and Yuneng Technology's Q3 performance is impressive.
The bank selected Hemai Shares and Yuneng Technology as representative companies in the micro-inverter sector. In terms of business structure, the revenue contribution of micro inverters and power optimizers for both companies in the first half of the year was over 75%, with the main regions contributing to performance being Europe. Yuneng Technology has expanded into the domestic industrial and commercial storage business and contributed a significant revenue increase in the first three quarters.
In the first three quarters, both companies saw a year-on-year decrease in net income attributable to the parent company, mainly due to the decline in demand in the European market. In the third quarter, Hemai Shares achieved a net income of 0.058 billion yuan, a decrease of 13% year-on-year; Yuneng Technology achieved a net income of 0.062 billion yuan, an increase of 33% year-on-year. In the third quarter, with the impact of summer vacations in Europe, both major participants saw a decrease in net income attributable to the parent company on a quarterly basis or a slowdown in growth. Yuneng Technology actively expanded into industrial and commercial storage businesses beyond micro-inverter operations, to some extent offsetting the downturn in European demand, showing a relatively better performance quarter-on-quarter.
Investment Recommendation: Select outstanding companies in overseas large storage, emerging market household storage, micro inverters, and other industries for investment.
Recommendation: Sungrow Power Supply (300274.SZ), a leading enterprise in the offshore energy storage industry with outstanding profitability; DeYe Stock (605117.SH), a strong player in the household energy storage emerging markets with excellent profitability.
Suggestion: Sineng Electric (300827.SZ), making smooth progress in overseas energy storage with significantly improved profitability; Hemai Stock (688032.SH), a leading domestic micro inverter manufacturer, expected to benefit from the recovery of the European market and the rise of balcony scenarios.
Risk Warning: 1. The risk of demand growth in various markets falling short of expectations. 2. The risk of intensified global market competition. 3. The risk of tightened market restriction policies.
